The immigration status of residential tenants: the new law

Posted: 10/12/2014

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New checks, forming part of the Government’s "Britain first" immigration policies were introduced in Birmingham, Walsall, Sandwell, Dudley and Wolverhampton on 1 December 2014. This is only phase 1 and a decision on whether to extend the scheme more widely is expected after the May 2015 general election. 

These new "Right to Rent" checks require residential landlords in the pilot areas (or their agents) to conduct pre-letting checks into the immigration status of all proposed residential occupiers. Landlords could find themselves liable to fines of up to £3,000 per illegal occupier if they rent to illegal migrants without carrying out the checks.

Advice to landlords

Landlords are advised to:

• incorporate the new checks into existing procedures for taking references and checking a tenant’s credit rating;
• formulate a pre-letting procedure that involves:
• making enquiries into who will actually be using the property and retaining a copy of those enquiries;
• obtaining copies of acceptable immigration documents for all identified occupiers;
• recording the date of the right to rent check;
• diarising the expiry date of any temporary rights to remain in the United Kingdom and ensuring that re-checks take place;
• retaining immigration documents for the period of the tenancy plus 12 months after the tenancy ends;
• ensure management/agency agreements cover the duty to carry out immigration checks;
• factor into letting appraisals the additional administrative costs of carrying out the new checks.

Finally, when acquiring residential property, additional enquiries ought to be raised so that the purchaser can establish:

• whether any occupiers have temporary rights to stay in the United Kingdom;
• the dates those temporary rights expire.

The original landlord who enters into a letting remains responsible under the scheme, even after they sell the property. However, the new landlord is responsible for carrying out any repeat checks required after they acquire the property. 

Comment

The Immigration and Security Minister, James Brokenshire, said: "The right to rent checks are quick and simple". Landlords are hoping that turns out to be the case. However, the Draft Code itself runs to 31 pages, so perhaps the Royal Institute of Chartered Surveyors is closer to the mark with its warning that the new checks could create more red tape for landlords and letting agents.

The detail - What is the relevant legislation?

The relevant legislation is pt 3 of the Immigration Act 2014. Section 22 of the 2014 Act prohibits landlords from allowing adult illegal migrants (those over the age of 18) to occupy premises under a "residential tenancy agreement". However, under s.24, landlords can avoid paying the penalty for ravention by demonstrating that prescribed checks were undertaken. 

When do the checks apply?

They only apply to "residential tenancy agreements". These are defined in s.20 as letting arrangements entered into where:

• a rent is payable;
• the "premises" are occupied as "a person’s main or only home"; and
• the arrangement is not excluded under Sch.3 of the 2014 Act. 

Subject to the above, the new checks apply to all types of residential letting arrangements (written and unwritten), including assured shorthold tenancies, leases, licences, tenancies at will and sub-tenancies. Agreements for any of those arrangements are also covered.

The definition of "premises" is wide. It includes caravans and houseboats as well as traditional residential premises. 

Guidance on what constitutes "a person’s main or only home" is contained in the Draft Code of Practice s.3.3 published by the Government in September 2014. Section 3.4 of the Code clarifies that checks will not be required in relation to hotels, guest houses, bed and breakfast accommodation etc, unless the occupier plans to stay for more than a short period. The Draft Code states that:

"As a guide, the Home Office would consider that bookings of three months or more may indicate that a person is using the accommodation for a purpose other than leisure purposes, and could be intending to use the accommodation as their only or main home."

What lettings are excluded?

The letting arrangements listed in Sch.3 of the Act are excluded. These are detailed but broadly, the checks will not be required for the following types of accommodation:

• social housing accommodation (where the immigration status of prospective occupants is already checked);
• certain student accommodation (including halls of residence, any accommodation provided for students directly by a higher educational institution and residency agreements in private residential properties where the student has been nominated to occupy the property by a higher educational institution);
• accommodation in hospitals, hospices, care homes, hostels and refuges; and
• accommodation provided by an employer to an employee in connection with their employment.

Also excluded are lettings:

• entered into for seven years or more (which do not contain a break during the first seven years);
• already in existence when Pt 3 comes into force. Where an occupier has a right to renew such lettings, those renewals will also be excluded if they are between the same parties;
• where there is a statutory right of succession (eg protected Rent Act 1977 tenancies).

Landlords do not need to check the immigration status of an occupier in any of the above circumstances.

Who needs to comply?

• "Landlords" in the broad sense of the word (ie anyone renting out accommodation for people to live in anywhere in the United Kingdom). This includes subletting and sharing arrangements (and catches people taking in a lodger). Buy to let landlords and private individuals could also be affected;
• providers of accommodation to paying guests who use the accommodation as their main residence (see the Draft Code of Practice s.3.3); This could catch owners of hotels, guest houses, bed and breakfast providers, etc;
• letting agents, managing agents and relocation agents who agree to carry out the checks on behalf of the "landlord". Note, however, that responsibility for completing the checks must be transferred to (and accepted by) the agent in writing.

Obviously, adults intending to live in rented accommodation anywhere in the United Kingdom will also need to comply by providing documentary evidence of their right to rent. 

What are the penalties for non-compliance?

Landlords could face fines of up to £3,000 per illegal migrant. The actual penalty level will be determined on a case-by-case basis depending upon various factors, including whether a penalty has been levied before, whether there are multiple illegal migrants and whether the person breaking the rules is a private individual. It should also be noted that a penalty cannot be levied if the illegal migrant has not occupied the premises for 12 months or more. 

How will the checks be made?

Section 5.1 of the Draft Code sets out the four basic steps to conducting the right to rent check:

• establish the adults who will live in the property as their only or main home;
• obtain original versions of one or more of the acceptable documents (set out in the Draft Code) for those adult occupiers;
• check the documents in the presence of the holder of the documents (either in person or via live video link);
• make copies of the documents and retain them with a record of the date on which the check is made. 

There is a useful document checking process diagram in the Draft Code. The Home Office has also published a Right to Rent checker that landlords can use (please click here). 

How long do the documents need to be retained?

The documentary evidence of the occupier’s immigration status (either an electronic or hard copy) must be retained for the duration of the letting and for 12 months afterwards.

What sorts of documents need to be examined?

A list of acceptable documents is set out in the Draft Code and includes a UK/EU/Swiss/diplomatic passport, national ID cards and biometric residence cards.

When should the checks be undertaken? Do they need to be repeated?

Generally, the checks need to be carried out before the letting arrangement is entered into. Where the original pre-letting checks show that a proposed occupier has a temporary right to remain in the United Kingdom, the initial checks should be undertaken not more than 28 days before the letting is entered into and the checks will need to be repeated every 12 months or (if longer) when the occupier’s temporary right expires. 

What about discrimination and data protection laws?

When complying with the new requirement, landlords need to avoid discrimination. The checks should, therefore, be made against all occupiers indiscriminately and at the same time as other pre letting checks would normally be undertaken.

Landlords will also need to ensure that they comply with their responsibilities under the Data Protection Act 1988 as they will be copying and retaining an occupier’s identity documents/personal data.

This article was published in the Landlord and Tenant Review in November 2014.

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