Right to Rent: Tenants are footing the bill in fees
7 Dec 2016
Last week the government tightened its Right to Rent rules, making it a criminal offence for a landlord to let to anyone they know, or have reasonable cause to believe, is an illegal immigrant.
Under the policy, landlords must check that their tenants can legally rent a property. Tenants must produce a document, such as a passport or a certificate of naturalisation, to prove their Right to Rent.
Until last week, a landlord that contravened this law would face a civil penalty. From last Thursday, such a breach is a criminal offence and landlords risk a prison sentence.
The tighter rules also mean landlords could receive a government notice to end tenancies for people who are disqualified from renting. In these circumstances, renters may be able to be evicted without a court order.
We have blogged before on how this policy will present further barriers for many people looking for somewhere to call home. Nearly half (44%) of landlords we surveyed said the policy would make them less likely to rent to people who appear to be immigrants, with similar numbers saying the same about people without a British passport.
But we can now see how Right to Rent is presenting another barrier to all renters searching for a home: increased costs.
A number of letting agents operating Right to Rent checks across the UK are passing the cost on to tenants.
We found one agent, which rents to people needing support from housing benefit, charging £40 to conduct a Right to Rent check, on top of a £298 agency fee.
These checks consist of asking a tenant for a document proving they can live in the UK and making a photocopy for their records.
The variation in costs is broad and unclear: some are charging smaller amounts such as £12 and all are non-refundable. The fact that these fees vary wildly shows that the sector hasn’t quite worked yet what costs are incurred for them.
This isn’t unexpected. A government review of the scheme last year found that some landlords were charging a fee for carrying out the check, which ranged from £10 to £120.
However, in the same review, the majority of landlords who responded said it took them less than 20 minutes to do a Right to Rent check. Just four out of 26 landlords found the checks difficult to complete. A government impact assessment estimates most checks will take around five minutes to complete.
Even so, the cost of the government’s Right to Rent policy is now being passed on to all tenants. By law, landlords must check every tenant has the Right to Rent, even if they have a British passport and have never lived abroad.
We know that many tenants struggle to afford the upfront costs of renting, which can involve administration fees, credit check fees and rent in advance.
Adding to these upfront costs by charging even more for Right to Rent checks will present a further barrier to struggling renters looking for a home to settle down in.
Philip Hammond announced the very welcome news in the Autumn Statement that ministers will act to ban letting agency fees. This is an overdue reform for renters who face mounting bills to secure a tenancy, and shows the government’s intention to be on the side of hard-pressed families.
We hope that the government looks holistically at all of the fees charged by lettings agents when it legislates for the ban and stops tenants paying for Right to Rent checks too. Families should not be footing the bill for the Right to Rent policy.
There is also a question about what happens in the meantime before the letting agency fee ban is imposed. The government should urge landlords to stop passing on the cost of this policy to renters who already face large upfront costs.
The government has announced a number of very welcome measures over the past few weeks, including more investment in housing and enabling housing associations to build for low-cost rent, in addition to the fee ban. These will make it easier for low-income families to find a home to settle in. Ministers should ensure that this immigration policy does not go the other way and instead create a further barrier for renters.