Landlord fines: How much are the charges and how do you avoid them? - Total Landlord Insurance

March 4, 2024
Total Landlord Insurance
Landlord fines: How much are the charges and how do you avoid them? - Total Landlord Insurance

In the past, bad landlords could pretty much get away with any type of behaviour. Some let poor quality, even downright dangerous homes, often causing their tenants significant suffering. And that damaged the reputation of landlords in general, giving good landlords a bad name that they don’t deserve.

But with the plethora of new letting laws that have come into force in England over the last 15 years, the regular introduction of schemes such as local licensing, tenant deposit protection and right to rent checks among others, there are now significant penalties in place for landlords that don’t meet their obligations. This has resulted in standards being massively improved for tenants, and hopefully a reduction in the number of bad landlords out there, which is great news.

However, with approaching 200 different rules and regulations landlords have to meet to let a property legally – and the possibility of numerous legal updates every year – it’s very easy for a landlord to end up being fined, often unintentionally breaking a rule they weren’t even aware of. These days, to stay on top of your legal obligations and avoid penalties, you’ve got to be either extremely well informed, or engage the very best letting agents in the private rented sector.

What are landlords being fined for – and how much?

If you type ‘landlord fined’ into a search engine, you’ll get page after page of stories about landlords being fined up and down the country – and we’re not talking about a few hundred pounds here and there. Many landlords have ended up being fined thousands and even tens of thousands, while some have committed such serious breaches they’ve actually been sent to prison.

Nigel Lewis, Head of Content at LandlordZONE, explains:

“The number of fines has been increasing, largely because the number of selective and HMO licensing schemes is rising across the UK and, now that the number of big fines for non-compliance with licensing schemes is also ramping up, more and more are over £100,000 where once it was a rare thing.

Some of the most recent stories LandlordZONE has covered show landlords are being hit with all sorts of fines. For example,
rent-repayment orders have been rising every year - just 73 were made in 2018, rising to 282 in 2019 and 349 in 2020. One council, Tower Hamlets, has helped, in total, 299 renters claim back £1,043,047 in rent repayment orders up to the end of 2023."

Two most recent cases show a rogue Brent landlord ordered to pay more than £9,000 for ignoring notices to improve his dangerous property, failing to repair a range of hazards and another involving a landlord with property in Ealing. This absentee landlord was stung with a £1.44 million penalty after he continually broke planning rules.

The Housing Act 2016 states that tenants (also known as ‘contract holders’ in Wales) can make an application for a rent repayment order (RRO) where their landlord has committed an offence during their tenancy if applications are made within 12 months of the offence. If successful, the application can result in up to 12 months of rent payments being repaid to the tenant.

What can landlords be fined for?

The issue with the laws around letting is that they don’t just come from one government department, or one act of Parliament or statutory instrument, they can come from many, and this makes it difficult to keep up to date with the rules – and the fines that go with them.

It’s made even more complicated by the fact that, on top of national laws, there are rules and schemes set by individual local authorities.

Here are some of the most common fines to be aware of:

Penalties for not having an up-to-date gas safety certificate

You could not only be fined thousands of pounds for breaching these rules, but also face a criminal conviction and jail time. Here is our ultimate guide for keeping up with gas safe rules and regulations.

Fines for electrical safety breaches

These can be up to £30,000. Read our guide for more information about why you need an electrical safety certificate.

Penalties for not protecting deposits

If you don’t protect your tenant’s deposit you may be liable to pay compensation of up to three times the deposit amount. So that this doesn’t happen to you, read our guide to find out more about protecting deposits.

Penalties for breaching the right-to-rent rules

The Government has significantly increased the fines issued to landlords or their agents for breaching the rules under the ‘Right to Rent Scheme’. These higher penalties came into force on 13 February 2024 - find out more in our ultimate guide to right to rent checks.

HMO licence fines

Not having a licence for an HMO is one of the most common reasons for awards of rent repayment orders. On top of this, the fines can be huge. There is no limit to the fine a court can impose. So, in addition to the fine, if the tenants apply for a rent repayment order, they can claim back up to a year’s worth of the rent they’ve paid to you.

It's commonly believed that a maximum fine for renting out an HMO without a licence is £20,000. That is not the case, potentially the fine is unlimited. Barnet council issued a fine of £49,900 in 2019. Read our ultimate guide to letting an HMO property and our guide to landlord licensing for more information. 

Landlord fines for illegal eviction

These can be extensive, especially if you end up in court. Not only will you have to compensate the tenant – and it’s up to the court to decide that amount – but you’ll also have legal fees to pay. Read our ultimate guide to handling the eviction process for more information.

Can you get fined for not having landlord insurance?

When it comes to landlord insurance, there’s no legal obligation to secure it, but it’s crucial to understand that normal buildings and contents insurance won’t cover you for things that go wrong with a rented property. In addition, if you have a mortgage, your lender may require landlord insurance as part of their terms and conditions.

Not having a landlord insurance policy also means that you are not covered for public liability and third-party claims. This, potentially, is your biggest risk. Fail to insure your building and your greatest possible loss is the building itself, fail to insure for people getting injured, or even killed, through your own neglect, and a claim could run to millions – this cover is essential.

HMRC fines

Although not a huge fine, you should be aware of the £100 penalty for not complying with the latest Capital Gains Tax (CGT) reporting or self-assessment submission and payment deadlines. In April 2020, the rules changed for residential property sales, so you have to submit a CGT return to HMRC and make a payment on account within 30 days of the sale or other disposal of the property – in addition to your normal tax return. Read more about the penalties for late payment.

Five additional implications for landlords who are fined or jailed

Over and above the fine itself, there are five significant things you might not have thought about that could impact you – not only as a landlord, but in your local community, at work and even within your family:

1. Being unable to evict your tenant

In some cases, breaching letting laws could not only result in fines, it could also stop you from evicting your tenant.

Three key breaches where this would apply are:

1a. Failing to give your tenant certain required documents at the start of their tenancy (and keep proof), including:

  • a copy of the Energy Performance Certificate (EPC)
  • gas and electrical safety certificates
  • the Government’s ‘How to rent’ guide
  • prescribed information for deposits – and you must have protected the deposit within 30 days of receipt

1b. If the tenant has requested a repair on the property and you haven’t responded within 14 days – either made the required repairs or stated what you’re going to do to resolve the problem

1c. Not having secured the correct local licence to let

So, it’s important to understand that if you breach certain rules, even if your tenant stops paying their rent, you might not be able to evict them if that should become necessary. In that case, you could end up with a double financial penalty: a fine and a non-paying tenant staying in your property.

2. Being placed on a ‘rogues’ register or council website

If you’re caught breaking the law or local rules and regulations for letting, you may be added to an online database of ‘rogue’ landlords, which will depend on where your properties are. In London, you may appear on the London Rogue Landlord Checker (this also applies to agents), which anyone can access. In other areas, some councils will publish the fines they have handed out on their own website, as Oxford City Council does this.

In addition, from an insurance perspective, if you don’t abide by some laws, your insurance might even be invalidated.

Steve Barnes, Head of Broking at Total Landlord explains:

"It’s essential for landlords to abide by local authority regulations or statutory conditions regarding gas, fire and electric regulations as well as being honest about whether you have had any claims, convictions or CCJs. If not, this could invalidate the policy. In addition, some convictions or claims could increase premiums or worse still, result in a NO quote from insurers.”

3. An unwanted press story

With housing stories - a regular feature in the press - any report of a landlord mistreating tenants is always going to attract attention, both locally and nationally. So, if you’re fined by the local council, taken to court or appear on a rogue landlord register, there’s a high likelihood that even small fines will be picked up at a local level. Larger fines, especially if they’re accompanied by a jail sentence, most likely go national.

4. Incur further court costs and legal fees

If you end up in court for breaking the law, not only will you have to pay any fine the court imposes, you may also have to engage and pay a legal firm to defend you – on top of any court fees. And, as we’ve highlighted in the media reports above, that could mean you ending up tens of thousands of pounds out of pocket for legal costs.

5. Banned from being a landlord

As if it’s not enough to be fined, listed as a ‘rogue’ landlord and possibly have your name in lights in the press, if your offence is considered serious enough, you could also receive an order banning you from being a landlord. This penalty, which came into effect in April 2018, also includes your details being published on a specific database of banned landlords that local authorities can access.

Despite the fact that many offences can lead to a banning order – anything from not carrying out appropriate fire safety regulations through to evicting a tenant unlawfully or being violent – the good news is that receiving one is rare. In the first three years since the law came into force, only 39 agents and landlords in England were given banning orders. Nevertheless, avoiding this scenario is clearly a must for any landlords that want to be successful.

Three ways you can avoid being fined

The laws, rules and regulations that landlords have to abide by come from several different sources. You’ve got central government laws that apply across the whole of the UK, as well as those that are set separately by the governments of England, Wales, Scotland and Northern Ireland, and then regulations that are specific to each local authority – and the latter aren’t always great at communicating changes, such as the introduction of licensing at a local area level.

In our view, it’s extremely difficult for landlords to keep up to date with all the laws, especially if you have a full-time job that isn’t within the property market.

During the Covid andemic, a whopping 47 rules and regulations were changed – some within a matter of days – and, to be honest, some you could have blinked and missed!

To make sure you don’t get fined, added to a ‘rogue database’ or, worse still, get jailed or banned for letting a property, here are three resources that will help you stay on the right side of the law:

1. Sign up to a free landlord update service

There are several out there, including our Total Landlord newsletter and LandlordZONE articles. The LandlordZONE Forum is also a good source of information where you can ask questions. These can give you an idea of what’s coming up that will affect landlords, as well as cover recent court updates that might influence the latest interpretation of the law, and provide expert guidance on how to carry out your job as a professional landlord.

It is also important to keep up to date with the latest laws - read our guide to legislation for landlords for comprehensive guidance.

2. Join a landlord association or local authority landlord group

Whether it’s the National Residential Landlords Association (NRLA), a local landlord group in your area or even your local authority, engaging with other landlords is an essential part of being successful – and that includes not getting fined!

These groups are not only invaluable when it comes to understanding how to stay on the right side of the law, they’re also great local resources for networking, finding out about the best places to invest, the latest trends in lettings and who to work with to save money on property repairs.

This is a ‘minimum level’ investment from a landlord perspective to avoid ending up in trouble with the law. And don’t forget, any money you need to spend on joining a landlord group can be claimed back in tax relief. Find out more in our guide to the benefits of joining a landlord association.

3. Work with qualified agents who are part of a redress scheme

There are two organisations that run the legally required redress schemes for agents: The Property Ombudsman and our own Property Redress Scheme.

When you employ an agent, it’s essential to check they belong to one of these schemes. If they don’t, they’re breaking the law and are clearly not an agent you should be trusting with your property(ies).

It’s important to be aware that although you can pass some of your responsibilities as a landlord over to an agent, you are still  liable for legal breaches. The terms and conditions (contract) you sign with the agent should clearly explain everyone’s responsibility, then if something goes wrong and the agent fails in their duties, you can pursue them via the redress scheme.

A good letting agent – one that:

  • doesn’t compete on price
  • fulfils its obligations to understand and keep track of the laws to let a property
  • has few, if any complaints against it
  • hardly ever has to carry out an eviction
  • always pays the rent to landlords on time – is worth its weight in gold to a landlord

Find more guidance in our guide to choosing a letting agent.

What to do if you’re facing fines for letting, as a landlord

If you engage fully and cooperate in a timely manner with your local authority and any other agency, such as the health and safety executive, that can issue fines, it should never come to this.

If you’re facing a fine or court – and especially if being jailed is a possibility – it’s well worth engaging a legal firm to defend your situation.

There are lots of reasons that might have led to you falling foul of the law, and some of them may help mitigate your circumstances, reducing the fine or even avoiding a ban and prison.

Unfortunately, simply not being aware of the rules and regulations isn’t a defence! But if you’ve had other issues that led to delays in getting things done that were required to fulfil your legal obligations – for instance, if historical COVID-19 restrictions prevented you from securing the certificates you needed – then a lawyer should be able to help reduce the impact of any penalties.

You will need to use a legal firm that specialises in landlord and tenant law – and ideally one experienced in your particular legal breach.

For example, if you think you may have illegally evicted a tenant, Paul Shamplina and his team at Landlord Action can help. Working on evictions is what they do every day, and you can even call them for some free initial advice to help you better understand your situation.

So, do be aware not all landlords who are fined are ‘bad’; often it’s just a lack of knowledge landlords have about their legal obligations. Not being aware of a new licensing scheme, or a tenant reporting you to the council that you haven’t carried out repairs within a reasonable time – which could simply be a mistake on your part. Still, the repercussions could be significant for you. Even if it wasn’t directly your fault, or an error by your agent caused the problem, ultimately, as the landlord, the buck stops with you. And it’s you who will be penalised.

Our media partner, LandlordZONE, offers exclusive insights and breaking news on the latest developments in the private rented sector. Keep up to date with everything you need to know by subscribing to LandlordZONE, the UK’s largest online landlord property news website.

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