The Renters' Rights Bill is set to usher in a new era of accountability for landlords. It will include fresh civil penalties designed to discourage unfair and illegal practices. As long as property managers know the rules, it will be easy to avoid non-compliance.
Fines reach from £5,000 for initial breaches to a staggering £40,000 for serious or repeated offences. Landlords must navigate these regulations with great attention to detail.
Two types of fine
As the table below shows, property managers could face two different fines for these breaches.
- For a first prohibited payment, the civil penalty is a fine of up to £5,000. This has the potential to rise to £30,000 if another breach is made within five years of the first.
- For a first or minor breach of compliance, the Local Housing Allowance (LHA) may impose a civil penalty of up to £7,000. For serious or repeated non-compliance, the civil penalty may increase to up to £40,000.
Breaches leading to civil penalties
Failing to provide the tenant with tenancy terms in written form
Landlords will be required to give the tenant a written statement containing the terms of the tenancy. Until the Renters' Rights Bill comes into effect, it is unclear the exact content that should appear within it. The need for a written statement means an oral agreement won't be binding for landlords.
Currently, landlords are required to provide tenants with the How to Rent guide at the start of a new tenancy. Failure to provide this can impact a landlord's ability to use a Section 21 eviction notice. The current civil penalties associated with this are subject to change.
Failing to state the proposed rent
Landlords will no longer be able to advertise or offer a proposed letting in writing without stating the exact proposed rent amount.
Purporting to let for a fixed term
Landlords will not be able to claim to let for a fixed term after the Renters' Rights Bill passes into legislation. Whether it be accidental or deliberate, a landlord will receive a civil penalty if they grant a fixed-term tenancy after the commencement date.
Breaching prohibition of rental bidding rule
The Renters' Rights Bill will prohibit rental bidding, ensuring that the advertised rent is the final price. This also means the property manager will not be able to accept anything higher than the proposed rent. Once it's passed into law, landlords will have to adhere to this rule.
We can help with avoiding the potholes of creating a tenancy agreement after the implementation of the Renters' Rights Bill. Our blog details exactly what to include.
Breaching PRS Landlord Database obligations
An active, up-to-date entry is needed on the PRS Landlord Database for the property and the landlord. This needs to be up and running before a property is marketed, advertised and let.
According to the bill, a landlord or block manager cannot knowingly provide false or misleading information to the database. There is currently no estimated date for when the database will be functioning.
Asking for or accepting pre-tenancy rent payment
After the Renters' Rights Bill, accepting rent for an assured tenancy before it commences will be prohibited. Landlords will not be allowed to accept a pre-tenancy rent payment or encourage a potential occupant to make a prohibited rent payment.
Breaching the Decent Homes Standard
The Decent Homes Standard (DHS) has existed since 2004 and applies to the social housing sector. The Government will now apply it to the private rented sector. However, it's not clear what this will demand.
There is no civil penalty for failing to meet the DHS, but it works in tandem with the Housing Health and Safety Rating System (HHSRS), where landlords can pick up penalties.
If a landlord fails to meet HHSRS standards, such as if a Category 1 Hazard is found (meaning there is a serious risk to health and safety), enforcement action is taken. They will be given a timeframe for remedial works to be carried out, which they must complete. If the landlord fails to do so, the LHA can impose a civil penalty.
Discrimination in tenant selection
It will be illegal for landlords to discriminate against tenants who receive benefits or those with children when choosing who to let their property to. This means no family will be denied a home when they need it.
Landlords and block managers can assess potential occupants according to affordability but must not reject them automatically based on benefits.
Misleading tenants about possession or serving invalid notices
Possession grounds are changing. The Renters' Rights Bill seeks to abolish Section 21 of the Housing Act 1988, so Section 8 will be the only means of terminating a tenancy.
Landlords cannot force a tenant to leave using a false possession notice or knowingly misuse a Section 8 notice. They are also prohibited from serving a notice to quit or asking a tenant to go without using the prescribed Section 8 form. Breaching PRS Landlord
Ombudsman obligations
An ombudsman will be appointed to cover all private landlords. All landlords will be required to join it.
This means a Local Housing Authority (LHA) can impose a civil penalty for breaches of any regulations. As stated above, it is not currently known when the ombudsman will be set up.
Marketing, letting and licensing in a restricted period
A landlord cannot market a property for letting, let or license for a period of 12 months from a possession order where they obtain possession using:
- Ground 1 — where a landlord or family member intends to occupy the property.
- Ground 1A — where a landlord intends to sell the property.
Final thoughts
The substantial civil penalties outlined in the legislation underscore the Government's commitment to protecting tenants and ensuring fair housing practices. Landlords must proactively adapt to these changes and thoroughly understand their obligations to avoid costly fines and legal repercussions.
Fixflo can help you get ahead of these changes. Get your quote today!
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