Landlord Insurance Tips - Get Prepared for The Immigration Act 2014

Landlord Insurance Tips - Get Prepared for The Immigration Act 2014

From the 1st December 2014, important changes to the Immigration Act 2014 (Act) will come into effect, which will have a significant impact on Landlords and Letting Agents in terms of tenant checks and referencing.

These provisions will require private landlords to determine whether new tenants have the right to rent before letting a property to them.

The onus is, therefore, directly transferred to the Landlord to ensure that they are complying with regulation.

The Act’s requirements will initially apply to:

  • Landlords in Birmingham, Walsall, Sandwell, Dudley and Wolverhampton;
  • New tenancy agreements starting on or after 1st December 2014; and
  • All adults aged 18 and over living at the property.

What Are The Requirements?

Under the Act, landlords must review the documentation of anyone who applies to rent a property, and determine whether he or she has the ‘right to rent’.

Checks must be carried out on ALL the potential adult occupiers of the property and must be performed BEFORE the tenants move in.

According to the Home Office, there are four basic steps of conducting an initial right-to-rent check:

  1. Establish who will be living in the property;
  2. Obtain original versions of the acceptable documents for all adult occupiers;
  3. Check the documents in the presence of the holder; and
  4. Make copies of the documents, date them and keep them safe.

If landlords discover that an individual does not have the right to rent, they are prohibited from letting a property to that person.

In some cases, initial checks will show that a person only has the right to reside in the United Kingdom for a limited time.

In these cases, landlords must perform a follow-up check. If a follow-up check shows that a person no longer has the right to rent, the landlord must make a report with the Home Office.

Who Qualifies As Having The ‘Right To Rent’?

Those with a ‘right to rent’ include British citizens, EEA and Swiss nationals and those with permission to enter and remain or work in the United Kingdom.

Are There Any Exclusions?

Additionally, the Act does not apply to the following:

  • Accommodations involving local authorities
  • Student accommodations
  • Leases more than seven years in length
  • Social housing
  • Mobile homes
  • Hostels and refuges
  • Care homes, hospitals and hospices

Checks Must Be Documented & Retained

Landlords who are covered by the Act are required to correctly maintain and store the documents for the full duration of a tenancy and for at least a year after it has ended.

After the rental period has ceased, documents must then be kept safely and securely and be destroyed within six years.

What Are The Potential Penalties for Non-Compliance

Landlords who fail to comply with the requirements of the Act, or who are found letting a property to a person who does not have the right to rent could face significant fines up to £3,000.  

Unless you can provide the required documentary proof, a Property Owner could face action, underlining the need for good housekeeping.

Will The Act Be Expanded Across The UK?

The Home Office has already indicated that the new requirements are likely to be expanded to the rest of the United Kingdom.  

As such, it is vital that all landlords, whether or not they are already covered by the Act, should familiarise themselves with the Act’s requirements.

Developing a Risk and Compliance Policy

Most Landlords will already have a robust risk management policy in place incorporating physical protections which will support their Landlord Insurance programme as well as moral and financial risks.  We would recommend revising current procedures to include these new checks and balances as soon as possible so that it becomes a part of your standard tenant acquisition process.

Where Can I Find Additional Information?

For more information on the Act itself and the detailed requirements, please visit the Home Office’s guidance, located here: www.gov.uk/government/publications/right-to-rent-landlords-code-of-practice

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