Are you tempted to become a buy-to-let landlord? Many have been lured to do so by easy mortgages, cheap interest rates and expectation of income combined with strong capital growth. While the prospect of owning their own home recedes for the younger generation, the new pensions regime will no doubt spur many older people to cash in and have a go.
However, as the private rented sector has burgeoned, so local authorities have, quite rightly, become more proactive in enforcing planning and safety regulations. The local Magistrates Courts, and increasingly the Crown Courts, deal regularly with large numbers of landlords subject to prosecution for a wide range of offences.
The law makes no distinction between a professional and an amateur landlord. Every landlord is, by definition, running a business and is expected to adhere to the strict professional standards required of such. Fines are, therefore, generally imposed at the higher level typical of commercial prosecutions.
One development that reflects the importance attached to professionalising and regulating the industry is the requirement in certain boroughs that landlords hold a licence. In 2013, Newham became the first authority in London to introduce such a scheme and many others have followed suit. The maximum fine for not having a licence is £20,000. Fines of up to £10,000 for a first offence have been imposed locally. There is also power to claw back any rent received while unlicensed.
Another concern is regulation of houses in multiple occupation (HMOs). HMOs present a particular risk in terms of fire safety, hygiene and general condition. HMO regulations impose strict standards. It is not uncommon for magistrates to be presented with stomach-churning pictures of greasy ovens, filthy toilets and rubbish-strewn gardens. Prosecutions can also be brought where there are just a couple of loose tiles or a damaged work surface in the kitchen. Landlords cannot escape responsibility simply by blaming the condition on the tenants. Typically, the local authority will prosecute for multiple offences, and for each breach the fine is up to £5,000. HMOs also risk degrading an area, with increased noise, rubbish and anti-social behaviour. Consequently, local authorities will bring enforcement proceedings to ensure planning regulations are complied with. Landlords fail to comply with these at their peril. Breach of an Enforcement Notice carries a fine of up to £20,000 in the Magistrates Court, or an unlimited fine in the Crown Court.
Councils are also incentivised to apply for a Confiscation Order. Under agreements with the Home Office, they will typically be entitled to around a third of any amount ordered. Under this rapidly developing area of case law, courts can confiscate the entire rental received in breach of a notice, without making any allowance for the overheads involved in providing the accommodation. Last November, in a case prosecuted by Islington Council, Blackfriars Crown Court fined a landlord £190,000 for one offence of renting out flats in breach of an Enforcement Notice, and ordered confiscation of £76,000 in respect of the rent received.
This article was first published in the Wanstead Village Directory on behalf of Wiseman Lee.