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

October 14, 2021
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 didn’t deserve.

But with the plethora of new laws that have come into England over the last 15 years, the regular introduction of schemes such as local licensing, and tenant deposit protection, 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.

However, with the 168 rules and regulations landlords have to meet to let a property legally – and the possibility of numerous updates every year – it’s very easy for a landlord to end up being fined for 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 yourself or engage the very best experts 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 back 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 that they’ve been sent to prison.

Nigel Lewis, editor of 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 RROs were made in 2018, rising to 282 in 2019 and 349 in 2020.”

In another case, a landlord couple was fined a total of £58,000, not because there was a problem with the accommodation – it was even stated at the tribunal that the landlords were “the very opposite of serial offenders” who flouted the law – but because, naively, they hadn’t secured the required licence, they ended up with an HMO licence fine.  

And one landlord was jailed after admitting to tax fraud at Canterbury Crown Court. He had previously been fined £4,000 for allowing a flat to be let overcrowded and for not repairing a gas boiler, breaking gas safety regulations.

What can landlords be fined for?

The issue with the laws around letting is that they don’t just come from one government department, 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. For more information about electrical safety find out what you need to do and when.

Penalties for not protecting deposits

You may have to repay the tenants up to three times the deposit amount. So this doesn’t happen to you, find out more about protecting deposit.

HMO licence fines

These can be huge, as there is no limit to the fine a court can impose. In addition, the tenants can apply for a rent repayment order, claiming back up to a year’s worth of the rent they’ve paid to you.

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.

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.

Finally, although it’s not a huge fine, you should be aware of the £100 penalty for not complying with the latest Capital Gains Tax (CGT) reporting 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.

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:

  1. Failing to give your tenant certain required documents at the start of their tenancy (and keep proof), including:
  2. a copy of the Energy Performance Certificate (EPC)
  3. gas and electrical safety certificates
  4. the Government’s ‘How to rent’ guide
  5. prescribed information for deposits – and you must have protected the deposit within 30 days of receipt
  6. 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
  7. 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. 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.

In addition, from an insurance perspective, if you don’t abide by some laws, your insurance might even be invalidated. Steve Barnes, Associate Director at Hamilton Fraser Total Landlord Insurance 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, could even 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, but you may also have to engage and pay a legal company 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.

5. Banned from being a landlord

As if it’s not enough to be fined, listed as a ‘rogue’ 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 wants 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 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 pandemic, 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 ensure 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 own Hamilton Fraser Total Landlord Insurance newsletter and LandlordZONE articles. These can give you an idea of what’s coming up that will affect landlords, as well as cover the latest 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 worth keeping up to date with our information on legislation for landlords.

2. Join a landlord association or local authority landlord group

Whether it’s the National Residential Landlords Association, 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 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.

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 likely to be liable for legal breaches. The terms and conditions 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 168 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

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

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

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 COVID-19 restrictions prevented you from securing the certificates you needed – then a legal company should be able to help reduce the impact of any penalties.

You will need to use a legal company 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, such as not being aware of a new licensing scheme or a tenant reporting to the council that their landlord hasn’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 and 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.

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