Understanding Right to Rent – video recording

Recording transcription:

Jason: Hello, everyone, and good evening. Thank you for joining us for this evening’s talk. Today we’re going to be having a live talk and Q&A with David Cox of ARLA to get a greater understanding of Right to Rent, the new legislation that came in at the start of this month.

My name is Jason Charles and I work for Rightmove. I’m one of webinar and online training managers and today I’ll be here really just to act as a facilitator to help ensure that we run smoothly.

You can ask questions as we go along, however unless they’re really relevant to what we’re talking about at that precise moment in time or if lots of you are asking the same things, we won’t stop David to interrupt. What we will do is save those for the Q&A at the end, which will be good and very informative. Today’s session is going to last for about 20 to 30 minutes including Q&A, so if you haven’t had dinner yet, don’t worry, we won’t keep you away from dinner for too long.

So before we start today’s webinar or talk, I just want to launch a quick poll. The main purpose of this is I just want to get a feel for who’s in the room and just want to see who we’ve got on the line. So at the moment your screens should have turned blue and the question is, “What best describes you?” – I’m a self-managing landlord, I’m a landlord who is using a letting agent, I’m both of the above, or I’m just a letting agent. This talk is open to everyone, so we encourage you all to get these votes in. A

At the moment, there’s a bit of a landslide. It’s the first time we’ve actually run this seminar and talk, so it’s a great guess to see who’s on the line at the moment.

So I’m going to close this in just a second, so anyone who hasn’t voted yet, now’s your chance. Okay. So that’s now closed. So there is a large percentage of people on the line that are self-managing landlords. So hello and welcome to you guys.

About 10% are landlords that are using a letting agent, and there are indeed quite a good number of letting agents on here as well, which is fantastic.

So now that we’re all familiar with how this session’s going to run, the questions, and some of the polls, I’d like to take this opportunity to hand over to David. Now this is a live handover and David is in a completely different part of the country to where we are…we’re based in Milton Keynes…so your screens will quickly flicker as I put David in the driving seat. So thank you very much. There we are. Over to you David.

David: Brilliant. Thank you very much, Jason, and good evening everybody. Thank you for coming to the right to rent seminar. As Jason said, my name’s David Cox. I’m the managing director of ARLA, the Association of Residential Letting Agents. We’ve been very much involved in the development of the right to rent with the Home Office, and I’m in touch with them at the moment on more than a daily basis to make sure that what started a few weeks ago on the 1st of February is working for landlords and for letting agents.

Now over the course of this evening, we’re going to go through what the right to rent checks are that are contained within the Immigration Act 2014, what you need to do to comply and how you comply, the Landlord Checking Service where you can ask the Home Office for help, and tools and guidance. So let’s start off. And just before we do start off, Jason, I’m just going to ask you to do the poll on how many of you normally and routinely will take ID before you grant a tenancy to a prospective tenant?

Jason: Okay, perfect. So once again the screen should have gone blue, as David said. The question is, do you normally take ID before letting a property? So you’ve got another four choices, yes, no, sometimes, and not normally. Votes are coming in. It’s very positive landslide for this question, David, you’ll be pleased to know. I’m just going to give the last of you a quick prod if you haven’t voted yet. Then I’m going to close this poll and I’ll share these results on screen for you now.

So as you can see, 94% of you have come in and said, “Yes, we do take ID before letting a property.” Three percent of you have said no, 2% are on sometimes, and 2% said, not normally. So I’m just going to hide these results and I’ll pass it back over to you David.

David: Brilliant. Thank you. That’s exactly the sort of response that I was expecting. We’ve done a lot of in-person seminars on the right to rent checks over the last few weeks and certainly that is exactly what we expect. The vast majority will normally take ID beforehand and therefore really you’re doing the right to rent checks already without necessarily realising that you are.

So right at the top of the screen there, it does say existing best practice is to check ID before the tenant moves in. That best practice has now effectively become a legal requirement under the Immigration Act and you need to undertake a check that the person has the legal right to live in the UK before you grant the tenancy.

Now one of the things I would start with is this legislation comes from the Home Office. It’s immigration law, it’s not tenancy law. So for the next few minutes, take everything you know about tenancy law out of the window because it doesn’t really correlate very well to the immigration checks.

First and foremost, the change at the moment, the biggest change is you’re probably taking ID on the tenants, those that are going to on to the tenancy agreement. Under the right to rent checks and the Immigration Act, you need to undertake right to rent checks on all adult occupiers in the property.

So whether or not they’re on the tenancy agreement, if they’re going to be living in the property, you need to make sure they have the right to live there. It’s all adults. You don’t need to do it on anybody under the age of 18, but if you’re not sure if they’re 18 or older, it’s probably best practice and a good idea to do the check anyway. It’s better to be safe than sorry.

You need to keep those checks and you need to make sure that you’ve seen the original document and the physical person both at the same time. You need to take a copy of the ID…and we’ll come to what the ID is a little bit later…and you need to retain that copy for 12 months after the end of the tenancy. And the check, the legal requirement is seeing the physical person and the original document.

If you don’t do it, you are liable for penalties of up to £3,000 per illegal occupier. The way it will work is it’s a fixed penalty notice, very similar to a car parking ticket. The Home Office will come in and will be able to ask to see that you have demonstrated that you’ve done the ID check.

And this is one of the areas that, particularly people who read the trade press on a regular basis, it’s a bit of an inconsistency with legislation, because technically you don’t need to do it on British citizens. There’s no need to do the right to rent check on a British citizen, however if the Home Office come and ask, you have to prove that everybody has the right to rent. And therefore, the only way you can prove that a British citizen is a British citizen is to do the right to rent check.

For the first offence, it is a fine of £1,000. For all subsequent offences, it’s £5,000. So take an example of a four-bed student property for example. You’ve got four illegal immigrants in the property. That would be £1,000 for the first one, and £3,000 for each of the other three, totalling £10,000. It can literally take five minutes to do those checks from the Home Office reporting agency.

When you’re not sure somebody has the right to rent, they don’t have the documents, some of the things we’ve picked up in the pilot area and over the last few weeks is documents have been stolen, documents have been lost, documents are with the Home Office. There is a Home Office telephone helpline. There’s also the Landlord Checking Service, which we will come onto later.

Now when you do find that a tenant no longer has the right to live in the UK or as an existing tenancy it’s coming up for a change in tenancy in some way, there is no need to evict the tenant. Now what you will need to do is notify the Home Office that there is an illegal immigrant living in your property, but you don’t have to evict them. There is no legal requirement at this moment to evict anybody.

To avoid liability on your part for subletting, make sure you’ve got a very clear clause in your tenancy agreement that says, “You’re not allowed to sublet without the express prior written permission of the landlord, which shall not be unreasonably withheld.” That way, if they don’t ask you and they just move somebody else in, they are liable for the penalty because in that situation they’re acting as the landlord because they’re the tenant who’s subletting to another tenant. If they do ask, make sure that you do the right to rent check on that sub-tenant before they move in.

Make sure you obtain original versions of the documents. Now particularly for the agents involved on tonight’s talk, if you are using third-party referencing agencies, referencing houses, they can confirm whether a document is genuine. They can’t do the check for you. The actual right to rent check is the physical person and the original document. Photocopies aren’t acceptable. They’ve got to be the original documents and you need to photocopy those original documents and keep them among our files. Make sure of course that you retain them somewhere safe for at least 12 months after the end of the tenancy.

What is acceptable ID? First and foremost, who has the right to rent in the UK? Any British citizen, any citizen of the European Economic Area, which is the EU plus Norway, Iceland, Lichtenstein, and Switzerland. They have indefinite leave to remain in the UK. They always have the right to rent. People from outside the EU and outside the European Economic Area will be on time-limited visas. So they will only have a limited right to remain in the UK.

Now you will need to see, for example, you’ve got up here List A, Group 1. The easiest one is passports and if you’ve got a passport, all you need to do is photocopy the relevant pages of the passport that’s got their photo and personal details on it. Once you’ve done that, they have the right to remain in the UK, you never need to worry about it again.

Another example of what’s in List A, Group 1, things like national identity cards, as you can see on the slide. But it’s documents that effectively have both a picture and the personal details of the individual. The only exclusion is a driving license. And a driving license falls into List A, Group 2.

Now in this one you need a combination of two documents because they don’t always guarantee the right to live in the UK. Now a driving license, for example, although it’s got your personal details and your photo on it, British driving licenses have been being issued to illegal immigrants over the last few years. Not deliberately but they have been and therefore that’s why driving license is in List A, Group 2.

Now List A, Group 2 also provides a permanent right to remain, but it’s also for people that have lost certain documents. So if that somebody has been mugged recently and they don’t have their driving license, there is a whole list. And what I would recommend everybody do is go onto the Home Office’s website, type in right to rent either into Google or on gov.uk, and there is a 32-page document that goes through all of the various types of ID that is acceptable.

For example, we’ve got a UK birth certificate here. A European birth certificate would also be acceptable, a marriage certificate, and we’ve got down there a letter from the UK police force confirming that the holder’s been a victim of crime and ID has been stolen. Now List A, Groups 1 and 2 provide permanent right to remain in the UK. Once you’ve got either the single document from list A or a combination of two documents in list B, you are effectively good to go. You don’t need to worry about it any further.

However, we then come onto List B. Now that is where people have a limited right to remain in the UK. They are on a visa. Those you need to see a current document. So List A, List B, if you’ve got a driving license, a passport, they can be either current valid passports or they can be expired ones, it doesn’t matter because if you’ve got a UK passport, you’ve got the right to live in the UK.

These documents in List B are time-limited. There are visa stamps in the passports and therefore you need to take a check of both the picture pages with the people’s details in and the page of the document when their visa expires. When their visa expires is really important for the follow-up checks that we’re going to come onto later.

There are about half a dozen different documents. What is particularly interesting as well is people from English-speaking nations. Something that we found in the pilot area is that landlords and agents were getting slightly confused with places like the U.S., Canada, India, Australia. Countries that speak English as their native languages, but they’re not actually part of European Union. So if you are having American, Australian tenants, they will have a time-limited right to remain in the UK. And time-limited rights vary from 12 months to 5 years, particularly if you’re on an ancestral commonwealth visa. Those are generally quite long visas.

Now one thing you do need to make sure is that you check when that visa expires, because you will need to do a follow-up check at the end of the expiry of the visa. Now where you’ve got time-limited rights, as long as there’s one day left on the visa after the start of the tenancy, you’ve got the right to rent to that person.

Now if they’ve only got 1 day, you will need to redo the checks in 12 months’ time. If they’ve got longer, effectively the rule is you have to do the follow-up checks 12 months after the initial check or the expiry of the visa, whichever is longer. So somebody that’s got 3 months left on the visa when you do the check, you need to check them in 12 months’ time. If they’ve got three years left, you need to check them in three years’ time. And that’s where it doesn’t follow the normal renewal cycle of tenancy.

It’s also important that you have to do the checks…and this is where some of the language that is used by the Home Office doesn’t really translate into normal tenancy language…you need to do the checks before you grant the tenancy. Now the Home Office takes the view that granting the tenancy is signing the contract. It’s not when you hand over the keys and they’re moving.

So you need to do these checks before you sign the contract with the tenant, irrespective of when they then move in. Therefore, if you’re doing follow-up checks, it’s 12 months for the expiry of the visa. In the 12 months’ situation, it’s 12 months after you did the initial checks before you sign the contract, not necessarily when they move in.

If you don’t do those checks, you will be liable to get a full penalty of either 1,000 or 3,000, depending whether it’s a first offence. If you do, during the follow-up checks, discover that a tenant no longer has the right to remain in the UK, you must report to the Home Office. And if you find out that they haven’t got it and do nothing, you will still be liable for the checks.

Something that’s come up a lot of the time during the right to rent seminars that we’ve been putting on is, what if the tenant refuses and won’t give you the documents? In that situation, I really think the only option you’ve got is to make the report to the Home Office that you think maybe there’s an illegal immigrant in your property. That is the only way you’ll produce what is known as the statutory excuse, the way to avoid the penalty.

Let’s move on to if they haven’t got the documents, they’re claiming the documents are at the Home Office. This is where the Home Office’s Landlord Checking Service comes into force. The Home Office does take documents and retain documents from people that have limited rights to remain. It’s when they’re reapplying for visas, applying for full UK citizenship and residency, indefinite leave to remain. So just because they haven’t got the documents doesn’t mean that they’re not genuine. It could really mean that their documents are with the Home Office.

The Home Office has got a Landlord Checking Service. So if the documents are at the Home Office, the prospective tenant, the prospective occupier will have a code from the Home Office on the letter. You will need to put in the code onto the Landlord Checking Service together with the name and their date of birth, all of which will be on the letter from the Home Office.

Then you will get a response from the Home Office within 48 hours, which will either be a green yes or a red no. If you get a green yes, then you don’t need any other documentation. You’re good to go for 12 months and that is what you need to keep. If you get a no, you can’t let the property to the tenant.

Now in the pilot area, they had a service level agreement of getting back to everybody within 48 hours. They’ve achieved 100% on that. Generally, they’re getting back to landlords and agents within about six hours. The best we’ve heard is pressing go on the website to get a response in 20 minutes.

In the event you don’t hear back within 48 hours, the system will automatically send you a yes, which will allow you to rent the property to the prospective tenant. Again I just want to clarify if it’s a follow-up check, even if you get a no back, you need to make a report to the Home Office but you don’t need to evict the tenant.

There’s also a telephone helpline. It’s a local rate call, 0300 069 9799. They have a fully staffed team there and we’re certainly getting quite a lot of responses back and feedback from members at the moment that it is working very well.

Just moving on to the final slide before we move on to the questions. If you want additional help, go and speak to a letting agent. We’ve been training all our members up and down the country for the last two months in the run-up to the right to rent check.

We’ve also been heavily involved in what was known as the pilot area or now phase one in the West Midlands. So we sit on the minister’s implementation panel and are provided a huge amount of feedback. We are passing that information on to our members so that they are always up to speed. So first and foremost, do go and speak to a letting agent. They will have a huge amount of knowledge on right to rent checks.

You can also go onto gov.uk, search for right to rent. If you type in right to rent into Google, the first thing that comes up is the gov.uk pages. We’ve got a huge FAQ, frequently asked question section on the website, so please do look at that. And one thing I would recommend is that there is a code of practice to help you deal with this, some examples in there. Again it’s on the Home Office’s website and our website. Do have a look at that, do download that.

If you’ve still got questions, that is the telephone helpline for the Home Office and I’ll say it again, 0300 069 9799. And with that, I think we’ve got about 5 or 10 minutes left for questions, so Jason, I think I’ll pass it back over to you. Thank you very much, everybody.

Jason: Excellent, thank you. So I’m just going to switch back to me being in control for a second and I’ll share my screen. So has that worked? Perfect. Okay, good. So there have actually been lots of questions coming through, so thank you everyone for typing those in and apologies I didn’t interrupt David as we went through, but it would have interrupted the flow. David, can you still hear me okay?

David: I can indeed, yeah.

Jason: Perfect. Good, okay. So the first question. This one came up quite a few times actually and it was, “Can we keep electronic copies of the documents? Will these be acceptable or do we need physical paper records?”

David: No, you can keep electronic documents. What you can’t do is receive electronic documents. So you have to have the physical original document. You can photocopy it. If you want to photocopy it and then scan it into a system so that you’ve got it electronically, that’s absolutely fine. But you can’t receive an electronic document. It has to be the original document. Even notarised copies will not be acceptable. It has to be the original.

Jason: Okay. And that leads us onto the next question quite well. So Fred asked, “Has the tenant physically got to come back with his document for the follow-up check?”

David: Yes. Again, you have to see the physical person and the original document. With follow-up checks, they will have a new stamp in their passport. So you’ve got to check that they’ve got the new stamp and take a copy of the new stamp. That will reset the time scales. So if it’s less than a 12-month new stamp, you’ve got to recheck in 12 months or again at the end of the visa, whichever is longer.

Jason: Okay. Somebody else has asked, I think it was Sarah, she said, “If someone falls into category A,” which is I think you’re a UK resident or a permanent right to rent, “Does that mean that you have to do any follow-up checks?”

David: Not if they have a permanent right to rent in the UK. For a British citizen, for a European Economic Area citizen, somebody from the EU, once you’ve got the original document, you need to do nothing more than keep it on file for at least 12 months after the tenancy has ended. You only need to do follow-up checks on people that are coming from outside the EU effectively.

Jason: Okay. That’s great. So we’ve had a couple of questions from some of the letting agents who are on the line. So Lewis has said, “If I am an agent on a letting-only basis it’s just a tenant find, am I liable to check after 12 months or when the visa expires?”

David: That’s a really interesting question and one we’ve had quite a few times at our right to rent seminars. It depends what is in your terms of business with your landlords. Now on let-only services, it’s going to be up to you whether or not you offer to do the follow-up checks. Liability will pass to you because the legislation does say that if you’ve got a written agreement with your agent to undertake referencing…which I’m fairly sure every agency contract has that in there…then the agent will take liability for right to rent checks.

But on a let-only, effectively your contract with the landlord ends when you hand over the keys, at which point it’s an additional service that I know an awful lot of agents are providing to their landlord clients. But you need to probably go into your terms and conditions, make it very clear on a let-only that once your service is completed, it will be the landlord’s responsibility unless you have a contract otherwise.

Jason: Okay, good stuff. Nadia has asked, “Good evening. Is this new legislation applicable to only new tenants or new tenancies or currently tenants in properties? Do you have to check the guys that you’ve already got in?”

David: It only applies to tenancies that started on or after the 1st of February, 2016. Unless you are in the pilot area or what is now known as phase one. And the phase one area are the councils of Birmingham, Sandwell, Dudley, Wolverhampton, and Walsall, when you would have needed to have started doing this from the 1st of December, 2014. It doesn’t apply to existing tenancies, but do bear in mind, if you’ve got a flat-share for example and one person moves out and you move somebody else in, if you create a new tenancy when the new person moves in, you have to do the right to rent checks on everybody living in the property.

Jason: Okay, perfect. Here’s a tricky one for you. So Ricky has asked, “If somebody is coming from abroad to work and provides electronic copies, are they still permitted to move into a property?”

David: No, I’m afraid. That is one of the tricky parts of this. If somebody is coming from abroad, they have allowed an exclusion so that if somebody is coming from abroad, you can do the right to rent check after you’ve signed the contract…so after you’ve granted the tenancy in Home Office-speak…but you must do the right to rent check before you’ve executed the tenancy. And by that, I mean when you hand over the keys.

So if somebody’s coming from abroad, you can sign the tenancy in advance. When they arrive in the UK, they have to come to you to pick up the keys and at that point, you do the right to rent check. If they don’t have the right Group A, you can’t give them the keys. Otherwise, you’ll be liable for the penalty.

Jason: Okay, perfect. We have another question that got sent in previously so, “Is there guidance if a suspected fake ID is used?”

David: This is really an interesting one. We’ve pushed very hard with the Home Office. Landlords and agents are not expected to be border force agents. If it looks genuine, it will be accepted. If it looks like it’s been written on the back of a fag packet, you’re probably going to be liable for the penalty. But if it is a good forgery, you will not be held liable. For the agents using that are using the tenant referencing agencies, they are all geared up at the moment now to do document verification services. And landlords, you can also use the referencing houses for document verification purposes and they will be able to tell you whether a document is genuine or faked. But effectively if it looks genuine, you won’t be liable for the penalty.

Jason: Okay. Hannah asked a very good question earlier, which I said I’d keep to the end. “What would happen if I take over the management of a property and did not rent the property to the tenants that are currently there and I don’t have access to their tenancy agreements or any ID? What would I do in that scenario? So if I’m taking over an existing tenancy?”

David: Right. So if you’re taking over an existing tenancy with tenants in situ, liability will lie with the original landlord or agent, depending on who did it. But to protect yourself, if you haven’t got any documentation confirming the right to rent and the tenancy started after the 1st of February this year, it’s probably a good idea to protect you and to protect your landlord that you do the right to rent check again. Technically under the legislation, it is about who will be liable is who granted the tenancy, who signed the contract. But as we are still very much…we’re only a few weeks into this, I’m certainly suggesting to my members that you take the double-braces [SP] approach and if you haven’t got the documents, make sure you get them.

Jason: Okay, good stuff. So someone who’s written in said, “The Post Office provides a document verification service. Can we use this to validate right to rent documents?”

David: You could use it potentially if they’ve got the ability to do it. You can certainly use it to verify the veracity of the document, to check that it’s a genuine document, but the Post Office referencing agencies can’t do the actual legal check. If you’ve got the document, you’ve been to the Post Office to say that yes, that is a genuine document, you still need the physical person in front of you.

Jason: Okay, perfect. We’re going to come into the last couple of questions now if that’s okay. Thank you to all the questions that are coming in and sorry if we haven’t quite managed to get round to yours. We’ve just got a last few, either a worried parent or somebody who said, “I’m worried about the checks. But do guarantors need to undergo the right to rent checks?”

David: No, they don’t as long as they’re not going to be living in the property. A student one is probably a fine example. You get a guarantor for student properties, you need to serve the tenancy deposit protection certificate on the guarantor, but you don’t need to do the right to rent check unless they’re going to be living in the property.

Jason: Okay. So these will be the last two now, so I need to be picky on what we haven’t already covered. “So what if the document request is refused or delayed for a tenant in situ?”

David: the follow-up checks for people that have a time-limited right to remain. Now you have to do this within 28 days of either the visa expiring or the 12 months, whichever is longer. If you hit that 12 months of the expiry date of the visa and you haven’t done it, you are liable for the penalty. If somebody refuses to give you the document or they’re delaying and delaying, your liability for the penalty will hit on that date.

So I would suggest certainly at the moment, best practice is, if they won’t give you document and they’re prevaricating, now you’ve got a date. You’ve got to get it to the Home Office, either yes or no by effectively. Therefore, if they’re not giving you the information, I think it’s best to make a check to the Home Office and say, “I don’t think this person or this person may not have the right to remain in the UK any longer. They won’t give me the documents.”

Use them, establish your defence against the penalty, and it’s up to the Home Office to decide how they take it forward. So once again you type on Google or gov.uk right to rent and there’s a section there about notifying the Home Office about people that don’t have the right to live in the UK.

Jason: Perfect. Okay. And this last question really is going to provide a bit of clarification just on responsibility and it will be the last question, if that’s okay. “If you’re using a letting agent, is the landlord still required to perform the check or is it the letting agent?” I believe we’ve touched on this quite a few times, so I just want to make sure that this is the one thing that’s definitely clear before the end of this session.

David: I will try and make it as clear as possible, but it’s actually slightly ambiguous.

Jason: Okay, good.

David: What the law says is if there’s a written agreement between the landlord and the agent, then the liability passes to the agent. Now we have taken that to mean, and we’ve confirmed this with the Home Office, that if it says in the agent’s terms of business with their landlords that the agent will undertake any sort of referencing…so ID checking, credit referencing, employer, etc. referencing…then that is sufficient to pass liability to the agent. Therefore, letting agents in the room, you should assume that liability will pass to you and therefore you do the right to rent checks.

Landlords, it’s probably a good idea to make sure your letting agent has in their terms of business a clause that says, “We will take liability for right to rent checks.” If you don’t have a clause like that, make sure you get one inserted into the terms of business, confirm with your agent that they will take liability. Once that is confirmed, landlords, you’re safe. Liability passes to the letting agent.

Jason: Excellent. Perfect. So there’s a real underlying term that if you’ve got a letting agent, have a conversation with them. Just be sure, if you’re self-managing, maybe speak to one of those experts if you’re unsure about anything else that we haven’t covered.

So David, I really want to thank you very much for taking some time out of your evening and helping us get a better understanding of this new legislation. I also want to thank everyone that’s joined us today and delayed dinners to take part and sending questions. So I hope you’ve all enjoyed the session and David, thank you very much for all of your valuable knowledge.

David: Brilliant. Thank you very much.

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