In recent years the idea of becoming a private landlord has been very appealing to many as a form of investment. This may become even more popular as the new ability to cash in pension funds could see an accelerated rise in individuals seeking to gain both income and a healthy capital gain from the potential increase in property prices. It has the potential to be a big win for investors looking for alternative sources of returns.
There are, however, serious implications and obligations when becoming a landlord. The burden has recently increased with significant legislation in regard to ‘right to rent’ and the obligation to ensure that criminal activity is not conducted from the rented property. There has also been negative press around ‘right to rent’ with some landlords being very vocal on their objections.
In practice the legislation means that a landlord needs to check that a tenant has British, EEA or Swiss nationality. If not, the landlord would need to inspect the relevant visa document or passport stamp to validate the right to rent. There is also an obligation to make sure the documents are genuine and to notify the home office if a tenant’s visa expires. This is a demanding task and needs to be managed carefully. The legislation is clear and we have already seen prosecutions in the West Midlands, where ‘right to rent’ is being trialled. It’s therefore even more essential that robust identity checking, including validation of the relevant documentation, is undertaken and evidenced.
‘Severe’ penalties
The additional expectations of landlords have been highlighted by Hampshire Police: ‘As a letting agent or a private landlord, you have a legal and ethical responsibility to help protect and preserve the communities in which we live. Don’t let your property be used to front criminal activity. The penalties are severe.’ The primary focus has so far been levelled at drug-related activities including cannabis farms and drug dealing: for example, more than 59,000 cannabis plants have been found and dismantled in the Metropolitan Police area. In future police may focus on activity like fraud, potentially harder for a landlord to identify.
Enforcement of penalties when landlords don’t meet their obligations is a deeply rooted government and policing priority and should not be taken lightly. Letting agents and tenant referencing businesses are frontline providers developing systems to capture, validate and manage this process. As we move forwards into the new ‘right to rent’ regime we will see more prosecutions, but also more innovation in technology to ensure robust identity verification and authentication compliance.
Technology and data is empowering the specialist providers in this sector to ensure landlord vigilance and help them to meet their legal responsibilities. Using technology to verify documents and check the reputation of devices used by applicants are just two examples. Evidencing these checks can provide a distinct defence against a landlord’s exposure to legal actions. Those who don’t take advantage of such technology are vulnerable and can create a huge administrative task for themselves.
