Landlords may be forced to check the immigration status of prospective tenants before allowing them to rent a property from next year or face a potential hefty fine, under rules in the new Immigration Bill.
The Government says it will enforce the stricter rules on one location in the UK in two months' time to check a tenant's right to be in the country - the location of which is yet to be announced. These rules could then be rolled out across the country.
Those who fail to check a new tenant’s immigration status could face a fine of up to £3,000 if the slip-up means they have someone in their property who is in the country illegally.
The measures are part of the Government’s work in tackling rogue landlords who provide substandard or illegal accommodation, with stories of low-paid immigrants living in ‘bed sheds’ rife in certain pockets of Britain.
Office for National Statistics data shows 85 per cent of migrants who have been in the UK for less than a year end up in private rented housing.
The rules may come as a shock for some landlords, particularly the army of 'accidental landlords' that has emerged following falls in house prices after the financial crisis that meant some owners could not sell and instead chose to let their property.
A new report from AXA has suggested 38 per cent of landlords fail to vet tenants.
The Royal Institute of Chartered Surveyors warns the move could create more red tape for landlords and letting agents. The charges may result in even higher administration fees for those moving to a rental home.
Many private landlords already make checks on tenants' identity and credit status - but not all do.
Darrell Sansom, managing director at AXA Business Insurance, said: ‘Landlords are under more scrutiny and subject to heavier legal penalties than ever before.
‘HMRC launched a crackdown on landlords whose tax affairs aren’t in order this March, and May’s Immigration Bill introduced fines for landlords who fail to check a tenant’s right to be in the country.
‘While legislation toughens, we need to make sure that enough is being done to inform and educate landlords.’
AXA has warned landlords that they are leaving themselves exposed to terrible tenants by failing to carry out basic checks, especially those who are ‘accidental’ landlords.
Its data shows there are 8.3million tenants in Britain, as more people choose – or are forced – to rent in the midst of soaring house prices.
But of this figure, 60 per cent admit to breaking rental agreement terms in the past, with 26 per cent of tenants having paid their rent late at some point, 18 per cent have kept pets without permission and eight per cent have sub-let to someone else, again without permission.
At the most serious end of the scale, eight per cent of tenants admit to committing a crime on the landlord’s premises and a similar figure say they've had the police called to the property.
Landlords do carry a legal responsibility to ensure that their premises are not used for criminal purposes. Despite the potential for misdemeanours happening in their property only five per cent carry out a criminal record check, while a third never visit during the rental.
Under the Misuse of Drugs Act, landlords can face prosecution if a tenant is found to be producing cannabis or other banned substances on their property.
Last year, we highlighted a case of a landlord who rented out a property - to only be tipped off four months later that it was being used a cannabis factory.
And despite many landlords relying on rental income to cover expenses such as mortgage payments and basic living costs, few of them check if their tenants have the means to pay their rent. Just under a third of landlords carry out a credit check, ask for employer references or ask for references from previous landlords.
Tenancy agreements are also an important part of the picture, giving the landlord a firm foundation to evict non-paying tenants or claim damages for financial loss caused by the tenant.
AXA found that landlords are getting better on this front – this year’s study revealed that 75 per cent of rentals are now based on a formal agreement, compared to just 52 per cent at the beginning of 2013.
Darrell adds: ‘During the recession, we saw a significant increase in the number of accidental landlords – people who never expected to rent out their property, but couldn't sell a former home or needed the additional income. With a booming rental market, they aren't going anywhere.
‘When you first start renting out property, you may not realise all the legal implications and duties involved. Last year, for instance, we found that a third of these landlords are, often inadvertently, breaking laws on safety checks, and a quarter have the wrong or no insurance.’
Elsewhere, AXA built a profile of the riskiest tenant in Britain by analysing the figures – male, aged between 18 and 25, in the £700 to £1,500 per month rental bracket and located in West Midlands.
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