Right to Rent and Ban on Tenants’ Fees – A Festive Double Whammy for Buy-to-Let Landlords

On 1 December new criminal penalties came into force for landlords who knowingly let their property to an illegal immigrant. “One Million Landlords at Risk of Imprisonment,” screamed the headline in Landlord News! All this, coming hard on the heels of the Chancellor’s Autumn Statement commitment to introduce a ban on charging fees to tenants, might unnerve even the most hard-headed amongst the buy-to-let community. Not only must he now check the immigration bona fides of his tenants, but he can’t even charge them a fee for the privilege.

The new criminal penalties attach to landlords who have “reasonable cause to believe” that their tenant might not have the right to be in the country. Fines of an initial £1,000 per illegal tenant rise to £3,000 per tenant for repeat offenders, who also risk 5 years in prison. Lodgers are caught by the legislation too, meaning that if you rent out a room in your house, you have to conduct an immigration health check on your paying guest.

Agents will doubtless be expected to take up the principal responsibility to vet the passports and utility bills of prospective tenants, but the criminal sanctions apply to agents as well, so they might well try to throw the liability back on to their landlord clients; especially if their extra work as de facto immigration officers must be carried out free of charge. The Chancellor is committed to introducing the ban on tenant’s fees “as soon as possible”. Brits without passports may find that landlords and agents are unwilling to take the risk.

It is hard to envisage how legislation could prevent agents from simply upping the fees that they charge to landlords, who may, in turn, add something to the rent to compensate. But the government’s collective changes to the buy-to-let landscape over the past two years have effectively decimated the take up of new buy-to-let mortgages, and there is evidence that small landlords are simply abandoning the business all together and selling up in a falling market.

The buy-to-let boom came out of the repeated raids by successive Chancellors on personal pensions, and was fuelled by the collapse in house prices following the great recession. There can be few examples of a government pulling the rug so quickly from under an industry that has grown up as a result of its own actions elsewhere in the economy. Buy-to-let landlords face further decreases in their income as the tax breaks on mortgage interest are phased out over the next few years.

One wonders how the JAMs (just-about-managing) are helped by policies that can only result in the decline in availability of private rental property, and the likelihood of increased rents as a result.

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Roderick Campbell

Partner, Head of Commercial Property

Roderick has specialised in property law for 30 years. He trained with Hart Brown, qualifying in 1985 and became a Partner in 1990. He specialises...

Partner, Head of Commercial Property

Roderick Campbell

Roderick has specialised in property law for 30 years. He trained with Hart Brown, qualifying in 1985 and became a Partner in 1990.

He specialises in all aspects of non-contentious commercial property work including freehold and leasehold acquisitions and disposals; residential development work; options; conditional contracts, development agreements and land promotion agreements. He acts for a broad range of clients including property companies, developers, owner/occupiers and SMEs.

Hart Brown is recognised in the Legal 500 for real estate work in the South East and the entry states “Roderick Campbell provides “practical and pragmatic advice” and is a “first class” communicator.”

In 2008 he published a book on “Methods of Securing Development Land Overage”. He also holds an LLM Masters Degree in Advanced Commercial Property Law with distinction.

He is a member of the Law Society Property Group and LawNet Commercial Property Group.

His most memorable case was acting for a landowner on the grant of an Option Agreement concerning an M25 service area which lasted for some 12 years between exchange and completion!

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