I make no apology for this tabloid-style blog that seeks to frighten its readers by listing the most ‘popular’ ways a landlord can break the law!

Every business has its own industry-specific legislation and regulations. For landlords, however, it’s a whole new ball-game. I’ve written before about how much the private rental sector is subjected to a never ending stream of legislation. It’s true – blink and you miss a new Act, an amendment, or deadline.

Being a landlord – of even just one property – can be a full time job. After all, you’re running a business with all the skilled management, marketing and admin roles you need to adopt to make it a profitable one. Then there’s the legislation for landlords… frankly you need help.

There’s lots of guidance out there on your responsibilities as a landlord – all of it well-meaning, but none of it stressing the insidious nature of neglecting just one element of your legal duties. Even the government website fails to highlight how one simple ‘error’ can in fact snowball into a frightening penalty-fest.

So I feel it’s my duty as a responsible letting agent to highlight where the legal trip wires can be found. There are 19 (at the moment).

Security deposit 

I start with an area of law that catches out the poor record-keeper. Even £1 over an allowed amount could land you a hefty fine. If you make the same mistake with multiple tenants, you’ll reach the maximum fine (£30,000) in no time. Then, it’s the threat of a custodial sentence.

1. Not protecting a security deposit in an authorised scheme within 30 days of receipt.

Penalty: up to 3 x the deposit.

2. Not serving prescribed information relating to the security deposit within 30 days of receipt.

Penalty: up to 3 x the security deposit and loss of Section 21 possession rights.

3. Taking more than 5 weeks’ rent as security deposit (or 6 weeks’ rent if the annual rent exceeds £50,000).

Penalty: up to £5,000 for the first offence (civil), or £30,000 for subsequent offences (criminal) plus a banning order, unless your local authority wants to prosecute the criminal offence, in which case it could carry a custodial sentence.

4. Renewing a tenancy contract without returning the amount of the security deposit that exceeds 5 weeks’ rent.

Penalty: up to £5,000 for the first offence (civil), or £30,000 for subsequent offences (criminal) plus a banning order, unless your local authority wants to prosecute the criminal offence, in which case it could carry a custodial sentence.

Fees and charges

The Tenant Fees Act 2019 makes it very clear what landlords can charge their tenants (a ‘permitted payment’). To me, it’s a ridiculous Act and we’ve had to be both strategic and detailed in anticipating every eventuality so our fee is both competitive and inclusive.

5. Charging administration / referencing / credit check fees.

Penalty: up to £5,000 for the first offence (civil), or £30,000 for subsequent offences (criminal) plus a banning order, unless your local authority wants to prosecute the criminal offence, in which case it could carry a custodial sentence..

6. Charging extra for bills and making a profit.

Penalty: up to £5,000 for the first offence (civil), or £30,000 for subsequent offences (criminal) plus a banning order, unless your local authority wants to prosecute the criminal offence, in which case it could carry a custodial sentence.

Safety, maintenance and repairs 

This can be ‘rogue landlord’ territory – and with good reason.

7. Not checking gas appliances every year.

Penalty: imprisonment or a fine of up to £20 000, or both, for each offence. If the case is then referred to the Crown Court the maximum penalty may be imprisonment, or an unlimited fine, or both.

8. Not ensuring the electrical installation is safe at the start and throughout a tenancy.

Penalty: fine of up to £30,000.

9. Not providing working smoke alarms on each level of the property.

Penalty: fine up to £5,000.

10. Breaching health and safety legislation (HHSRS), eg overcrowding.

Penalty: fine of up to £30,000 for each offence and confiscation of up to 12 months’ rent received under a Rent Repayment Order.

Being an ethical and profitable landlord are not mutually exclusive. There’s no excuse for endangering people’s lives in the (mistaken) belief you are saving money.

Due diligence

Few people like admin but if you really do struggle with the detail, then the law will have a field day with you:

11. Not providing all the prescribed tenancy information before the start of a tenancy.

Penalty: up to 3 x the security deposit and loss of Section 21 possession rights.

12. Advertising a property to rent without an EPC.

Penalty: fixed penalty of £200 per dwelling and loss of Section 21 Possession rights.

13. Renting a property with an EPC rating below E.

Penalty: fine up to £4,000 and/or a Publication Penalty.

14. Operating an unlicensed HMO.

Penalty: fine of up to £20,000.

15. Not checking tenants’ Right to Rent.

Penalty: unlimited fine and up to 5 years in prison.

16. Not serving the MHCLG How to Rent guide before a tenancy starts.

Penalty: up to 3 x the security deposit and loss of Section 21 possession rights.

17. Incorrectly claiming finance costs on your tax return.

Penalty: HMRC will kindly work that out for you and then throw the book at you!

Tenant relationship

These last 2 are pure common sense, but given the horror stories that hit the press on a regular basis, one can only assume education in basic decency is necessary:

18. Entering the property without proper notice (except in an emergency).

Penalty: fine up to £5,000 and 6 months in prison (Protection from Eviction Act 1977).

19. Removing tenant’s belongings or changing the locks.

Penalty: fine up to £5,000 and 6 months in prison (Protection from Eviction Act 1977).

If the landlord tenant relationship has failed so epically that you have to resort to the above, you probably shouldn’t be managing your own rental property anyway!

Legislation for landlords – it won’t go away

You’ll notice how many of the above breaches of the law carry an additional loss of Section 21 possession rights. So, notwithstanding the penalty you incur, you also impact upon your own legal rights!

Being a landlord is an important role in society. It also has every chance of being a profitable one, but only for those landlords who conduct themselves as business-owners. Typically, they call on professionals to carry out specialist work, such as keeping on top of legislation and management.

 

 

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