Common landlord fines and how to avoid them

The rental market is heavily regulated, which is what both landlords and tenants need. This way, housing standards are protected, too. Because of all the regulations, landlords can easily slip up with unintentional breaches, leading to unavoidable landlord fines. It’s within your best interest as a landlord to make sure that you are proactive, focusing on the three most scrutinised areas: safety certificates, security deposits and licensing. 

What is the financial risk of landlord fines?

Ignoring your legal obligations as a landlord is one of the most expensive mistakes you can make. Let’s take a look at the penalties you can face due to non-compliance. 

Safety certificates

Safety certificates are probably the most crucial part of ensuring your tenants are kept safe in your rental property. 

Failure to provide Gas Safety Certificates or to ensure that your smoke and carbon monoxide alarms are working canresult in costly landlord fines and even potential imprisonment. As such, your landlord insurance will also be invalid, and you’ll lose the ability to issue a section 21 notice. 

Security deposits

If you fail to protect your tenant’s security deposit in an approved scheme, you’ll face the possibility of receiving landlord fines up to 3 times the deposit amount. You’ll also have to return the full deposit back to your tenants, as well as cover your legal costs. 

Licensing

Operating and running a House in Multiple Occupation (HMO) without the necessary license or without registering as a landlord canresult in unlimited landlord fines, rent repayment orders and the inability to legally evict your tenants. 

Right to rent

As a landlord, you need to conduct right-to-rent checks. These checks ensure that your tenants are legally allowed to rent property in the UK. Failing to conduct right-to-rent checks can lead to fines for landlords up to £3,000 per tenant. 

Critical areas of non-compliance and prevention

Now that we know what the financial risks are when it comes to fines for landlords, let’s take a deeper look at the three critical areas for non-compliance. 

Safety certifications 

It’s no surprise that safety breaches are the most serious violations and that they can often carry with them criminal penalties if they lead to harm. For example: 

• Gas safety: You need to obtain an annual Gas Safety Certificate (CP12) from a registered engineer. Try to schedule your gas safety inspection 4-6 weeks before your current certificate expires, as you will need to provide your tenant with this before they move in, or within 28 days of the check.

• Electrical safety: All rental properties must have a current EICR certificate, which is required every 5 years. You’ll need to ensure that you use a qualified electrician for this check and that you provide the tenant with the copy within 28 days. 

• Fire safety: Fire safety includes working smoke alarms, which need to be accessible on each floor of the rental property. This also includes carbon monoxide alarms, which need to be near any fuel-burning equipment. Make sure that these alarms are always tested during routine inspections and keep dated records of all checks. 

• Fitness for Human Habitation (Housing Health and Safety Rating System – HHSRS): You need to make sure that the property is free from serious hazards and that you respond to all maintenance calls immediately, as well as conduct thorough inspections. 

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Security deposit compliance

The next area that can be one of the most common reasons for landlord fines is security deposit compliance, because the rules and regulations around this area are super strict. As a landlord, you need to protect your tenant’s deposit within 30  days of receiving it by using one of the government-approved Tenancy Deposit Schemes. 

It is best practice to use an automated process to register the deposit immediately, and you give the tenant the information detailing where the money is being kept within the 30-day period. 

Licensing and documentation

You need to ensure that you don’t ignore any administrative requirements as this can render your tenancy illegal. For example, if you rent to three or more people that form two or more households, you’ll need an HMO license and failing to have one can easily become a serious offence. 

So, make sure that you research your local council’s specific HMO requirements and that you apply for one before the tenancy begins. This way, you’ll make sure that you meet all mandatory conditions.

Essentially, it is crucial that you check your local council’s website to keep on top of any specific landlord registration requirements and renewal deadlines. 

Preventing landlord fines

To be in the best position as a landlord and to stay compliant, there are a few things that you can incorporate as part of your landlord duties and your annual business cycle. For example: 

• Safety scheduling: Set yourself a calendar or schedule that will remind you of when you need to plan in all mandatory safety checks. It is advised to schedule these 6 weeks before the current certificate expires. 
• Digital filing: create a centralised digital folder for every property you rent out that contains the current lease agreement, deposit protection certificate and all of your safety certificates. 
• Deposit discipline: Don’t ever mix the deposit money with operational money. This will prevent any confusion in the long run. 
• Local authority check: Ensure that you are aware of any new licensing schemes available to you that may have been introduced in your area. You can check this on your local council’s website. 

By adopting a proactive approach and prioritising these three critical areas, you’ll ensure that you don’t miss any important legal requirements that could result in landlord fines. This way, you’re also protecting your rental property from losing money. 

For more information on landlord insurance and managing your rental property efficiently, feel free to visit our advice centre. Otherwise, make sure to get in touch with our friendly team of specialists at CIA Landlord Insurance on 01788 818 670.