Enforcement and compliance—new penalties for landlords in the private rented sector

Local housing authorities will gain broader powers to issue civil penalties of up to £7,000 per breach for a wide range of contraventions, including:

• failing to provide required tenancy information
• purporting to grant a fixed term tenancy
• purporting to give oral notice to end a tenancy
• attempting to rely on possession grounds that do not in fact apply
• marketing or letting a property in breach of new restrictions

Repeat or serious offenders may face criminal prosecution and fines of up to £40,000.00, particularly where they mislead tenants into surrendering tenancies or issue unlawful notices. Notably, if a tenant leaves the property without a court order having been obtained and it is later shown that the possession ground was misused, this may trigger an offence.

The Bill introduces the concept of a mandatory redress scheme for all private landlords — bringing them in line with letting and managing agents. This will give tenants an avenue to independent complaint resolution where issues are not addressed directly, although the details of the proposed scheme will not be known until secondary legislation is enacted.

Additionally, a new private rented sector database will be established. Landlords will be required to register and maintain up-to-date records of their properties and tenancies. The details of this will be contained in secondary legislation, but it is expected that entries may include details of enforcement action, financial penalties, and banning orders imposed upon a landlord— all of which could be made publicly available.

Where possession is sought on grounds such as the landlord intending to sell or move in, there will be strict limits on remarketing the property for a set period, which will usually be 12 months from the date of the landlord’s notice. Letting or advertising the property in breach of those rules may result in enforcement action. 

This aims to prevent misuse of possession grounds and promotes transparency in landlord intentions, but there are also concerns that, as drafted, the legislation risks removing much needed market flexibility. For example, a landlord who genuinely intended to sell a property and obtains possession in advance of the sale, may not be permitted to re-let the property in the event that sale falls through, as to do so could amount to an offence. A sale falling through, or a landlord’s personal circumstances changing post recovery of possession, are not unusual occurrences, so there will be no little interest in seeing how Local Authorities decide to proceed in such circumstances.

Local authorities have long had enforcement powers relating to privately rented property. A concern has often been that there is a lack of awareness, on the part of tenants and also the local authorities as to the scope of the powers that already exist. Local authorities are often also grappling with limited funds and competing priorities. This has led to inconsistent enforcement across the country. 

Whilst many of the new and enhanced powers that will be brought into play by the Renters Rights Bill will make for encouraging headlines for anyone concerned about poor housing conditions and the risks of new possession grounds being abused by landlords and agents, it will have to be seen how the new powers are in fact exercised in the face of stretched budgets. There has to be a risk that the powers will simply not be used as a result of a lack of awareness or funding.

For landlords who are willing to remain in what is likely to be a significantly more heavily regulated private rented sector, it is vital that they:

• review internal processes and ensure accurate record-keeping
• ensure tenancy agreement templates have been updated
• seek expert advice on their legal rights and obligation
• understand the new possession grounds and their evidential requirements

Letting agents should be ready to advise clients on the new enforcement landscape and help them stay ahead of their obligations.