Hubble, bubble, toil and troublesome fines

Whether a parking ticket or a speeding fine, even a nominal amount is enough to put you in a mood darker than a witch’s cape. However, these would be a positive treat compared to some of the gruesome offering landlords can fid themselves on the receiving end of if they’re not careful.

So, pop a brew on to boil and we’ll run through the most spooktacular fines in the sector, and more importantly how to avoid them!

HMO hidden costs

All HMO landlords will be aware of the potential pitfalls of the sector, with the additional rewards come a whole heap of additional responsibility.

However, with the introduction of the Licensing of Houses in Multiple Occupation 2018 regulation on October 1st, things got even more complicated for this part of the market.

The main change was the requirement for property that is home to five or more people from two or more separate households is considered a licensable HMO, and must be licensed by their local housing authority.

Failure to obtain a license is punishable by a fine of up to £30,000 and/or prosecution.

In addition to the requirement for a licence, HMO landlords are required to ensure that all of the bedrooms that they let meet new size guidelines. Rooms must meet the following criteria:

• 4.64 square metre for a bedroom occupied by a child under 10 years old
• 6.51 square metre for a bedroom occupied by a person over 10 years old
• 10.22 square metre for a bedroom occupied by two people over 10 years old

A landlord has 18 months (from October 1st 2018) to manage any undersized rooms, but in this time, they must be resized to fit the specifications, or taken out of service. Failure to do so is a breach of licencing conditions - a criminal offence – and the landlord could face prosecution in magistrates court and/or unlimited fine. Alternatively, the council could issue a penalty notice of up to £30,000, and the landlord’s HMO licence could be revoked.

For more information on HMO guidelines, you can view a detailed webinar on HMO licensing here: https://www.urban.co.uk/landlord-university/advice...

Letting property without a licence

HMO landlords aren’t the only ones who have to keep on top of licensing conditions. With more and more local authorities exploring selective licensing schemes in a bid to better manage the local housing stock, many single residential landlords are finding themselves facing licensing requirements.

Selective licensing, which makes it a requirement for every private rented property in a specified geographical area to be licensed, failure to obtain a license is punishable by a fine of up to £30,000 and/or prosecution.

It is worth noting that if a landlord is prosecuted for failing to obtain a licence (among other offences), a tenant or local authority can apply for a Rent Repayment Order. An RRO allows the tenant to reclaim up to 12 months’ worth of rent from the landlord.

Failure to carry out a Right to Rent check

Since their introduction in February 2016, Right to Rent checks have become a standard part of the lettings process.

However, there are still landlords who are unaware of the legal implications of failing to carry out the checks, and tenants who slip under the radar.

The fine system for carrying out the checks operates on a sliding scale, with different rates for different types of accommodation, and whether or not the landlord is a ‘first time offender’.

The scale is set as:

Type of propertyFine for first time offenceFine for repeated offencesLodgers in private accomodation£80£500Tenants in rented accomodation£1,000£3,000

The penalty can be cut by 30% is you pay up within 21 days, but the best bet is to make sure that the check is carried out properly in the first place. You can remind yourself of the procedure here: https://www.urban.co.uk/landlord-university/advice...

The bar was raised on December 1st 2016 with regards to punishment for failing to carry out the checks, with the penalty hiking from a fine, to a potential five prison sentence and unlimited fine for landlords who continually fail to carry out the checks.

Illegal conversions

Sadly, it is rare that a week goes by that we don’t see an example of Housing Officers discovering miserable tenants living in shoddy conversion, or even the terrible examples of ‘beds in a sheds’ that we see popping up across our towns and cities.

Sadly for the industry, it is illegal conversions like these that contributes to much of the PRS being tarred with the ‘rogue landlord brush’, an unfair comparison against the thousands of hard-working landlords who provide a safe, comfortable home for their tenants.

There are countless television programmes dedicated to sniffing these terrors out, and stamping down on the shoddy behaviour – and it is satisfying to see that often they receive hefty fines that hopefully go some way to putting a stop to their actions.

Any landlord who owns a property that has been illegally converted could face huge fines, including those for breaching planning permission and enforcement orders. Landlords will also be ordered to pay back any proceeds that were gained from the property through rental income. Fines often run into tens, even hundreds of thousands of pounds, and can even be finished with a spell in prison.

Safety

A landlord has a huge responsibility to ensure the safety of their tenants, and there are plenty of safety-focussed regulation to abide by to make sure there is no chance of tripping up.

However, with such a big responsibility, there’s also a hefty price to pay for getting these regulations wrong. Some of the safety -focussed legislation carried understandably high costs for non-compliance, so it is important to know your right from wrong here, and not just from a financial point of view – this legislation is designed to keep your tenants safe, and failing to comply with it could leave you with more than a bill on your conscience.

Everyone knows the importance of making sure you have your gas safety certification in order, and that your property’s gas appliances and flues must be checked annually by a registered Gas Safe engineer (www.gassaferegister.co.uk), with the resulting document circulated to your tenants within 30 days.

You must also make sure that you have appropriate carbon monoxide alarms fitted throughout the property where required. Failure to carry out a gas safety check doesn’t just land you with a potential fine of £6,000, it could also mean you are unable to gain possession of your property using a section 21 notice if you attempted to. On top of this, a lack of carbon monoxide alarms could cost an additional £5,000.

Electrical safety should spark concern too. Whilst single residential property landlords in England don’t yet have a requirement to carry out electrical testing (although this is likely to be in place sooner rather than later) Under the Landlord and Tenant Act, a landlord has a responsibility to maintain adequate safety standards to electrical installations and wiring. Failure to do so could land you with a bill of up to £20,000.

With regards to fire safety in the home, it is vital to ensure that you have a smoke alarm on every floor of the property, and that they are in full working order. The ramifications of a fire taking hold in an un-alarmed residential property are awful, and accordingly the penalties are high. You could be facing unlimited fines, possible prison terms, invalidated insurance and even manslaughter charges should the worst happen – a horrific price for everyone to pay for the cost of a smoke alarm.

In addition to the main dangers in the home, there are plenty of other issues that can still be a real cause for concern – and a costly if not addressed correctly. The Housing, Health and Safety Rating System (HHSRS) is a system used by local councils to itemise and addresses 29 hazards found in the home, and offers a penalty and enforcement system

The issues that the system addresses are:

Physiological Requirements

• Damp and mould growth
• Excess cold
• Excess heat
• Asbestos (and MMF)
• Biocides
• Carbon monoxide and fuel combustion products
• Lead
• Radiation
• Uncombusted fuel gas
• Volatile Organic Compounds

Protection Against Infection

• Domestic hygiene, pests and refuse
• Food safety
• Personal hygiene, sanitation and drainage
• Water supply for domestic purpose

Protection Against Accidents

• Falls associated with baths
• Falling on level surfaces
• Falling on stairs and steps
• Falling between levels
• Electrical hazards
• Fire
• Flames, hot surfaces
• Collision and entrapment
• Explosions
• Position and operability of amenities
• Structural collapse and failing elements

Psychological Requirements

• Crowding and space
• Entry by intruders
• Lighting
• Noise

A local authority will respond to a notification of a hazard in a home and have the ability to serve a series of notices on the landlord to request that the issue is rectified. Failure to comply with a statutory notice could, however, lead to a prosecution and/or fine in the Magistrates Court, or a fine of up to £30,000.

Notices do not only incur a potential fine if ignored. If your property has been subject to an enforcement notice issued by the council, you are unable to serve a section 21 on your tenant for six months after the serving of the notice.

With so much to think about, a helping hand can be useful when it comes to safety. Join the NLA's Simon Ward, and Urban.co.uk's Adam Male on Tuesday, January 8th at 7pm for a free webinar, as they navigate through the safety issues facing landlords in today's market, giving a complete overview of the legal requirements a landlord has with regards to managing safety in a rented residential property.

You can register for free here

Energy efficiency

April the 1st 2018 saw the introduction of the Minimum Energy Efficiency standards (MEES), a regulation that requires all rental properties in England and Wales to have an EPC rating of an E or above. From this date, landlords with properties that have an EPC of F or G were no longer allowed to let the property out to a new tenant or renew an existing contract, with the regulations applying to all existing contracts by April 2020.

There are plenty of exemption for those who couldn’t comply by this date (you can read about them here https://www.urban.co.uk/landlord-university/advice... ) however, for landlords who did not register an exemption and hoped to sneak under the radar, the fines are as costly as an inefficient boiler.

The penalties operate on a sliding scale, with fines set at 10% of the property’s rateable value for the first three months of uncompliant letting (with a minimum penalty of £5,000 and a maximum of £50,000) before moving up to 20% of the rentable value after three months (with a minimum penalty of £10,000 and a maximum of £150,000).

Deposits

A deposit is a vital step for many landlords, but it must be managed correctly, or you can end up being trapped in your very own safety net.

A tenant, or indeed anyone who has contributed to the deposit, can claim compensation of up to three times the amount of the deposit if you have not managed the deposit correctly.

If you receive a deposit from a tenant, register the deposit with one of the three government approved deposit schemes within 30 days – these are MyDeposits (https://www.mydeposits.co.uk/), the Tenancy Deposit Scheme (TDS) (https://www.tenancydepositscheme.com/) , the Deposit Protection Scheme (DPS) (https://www.depositprotection.com/).

Once you have registered the deposit, you must provide your tenant and anyone who has financially contributed to the deposit, a copy of the prescribed information, within 30 days. This includes:

• Contact details for yourself or your agent
• The name and contact details of the tenancy deposit scheme that is being used to protect the deposit
• Information about the purpose of a tenancy deposit
• How the tenant can apply to get the deposit back at the end of the tenancy
• What happens if there is a dispute about the deposit.

If you fail to take these steps, you could find yourself in hot water!