Common Reasons Landlords Get Fined and Strategies to Avoid Penalties

Barely a day passes without a story in the news about a landlord receiving a hefty fine for breaching the law. Nowadays, landlords must navigate a huge number of laws and standards designed to create a fairer and safer private rental sector for tenants.

While most landlords work tirelessly to ensure that they provide their tenants with a high standard of living, these laws are essential for deterring less scrupulous landlords.

The rules governing the private rental sector are constantly evolving, which can make them hard to keep up with. Nonetheless, landlords are obligated to stay informed of the latest developments and proactively adapt their practices to uphold a high standard of living and remain in full compliance with the law.

Failing to keep up with these responsibilities can result not only in substantial fines but also damaged relationships with tenants, tarnished reputations, and even legal action.

In this article, we’ll explore some of the most common reasons that landlords receive penalties and provide useful tips and advice on how to stay compliant and avoid fines.

What are the most common reasons landlords receive fines?

Unfortunately, even well-intentioned landlords can find themselves facing significant fines and legal issues if they don’t fully understand their legal responsibilities. This section explores the most common reasons landlords incur fines, from managing houses in multiple occupation (HMOs) without a licence to failing basic safety checks. We’ve highlighted the most common pitfalls so that you can steer clear of them.

Operating an unlicensed HMO

If you search Google News for ‘landlord fines’, then this one comes up time and time again. HMOs are subject to more rules and regulations than your traditional buy-to-let as they pose greater health and safety risks. They must comply with rigorous health and safety standards, especially concerning fire safety. They are also subject to strict rules surrounding minimum room sizes and access to amenities to ensure adequate living conditions for all occupants. Because of these stricter rules, landlords must obtain an HMO licence to manage such properties legally.

If a landlord is found managing an HMO without a licence, they will face serious consequences. Renting out an HMO without a licence is a criminal offence that could even result in a criminal conviction. Fines for operating an unlicensed HMO are unlimited, often running into the tens of thousands, sometimes even higher. On top of this, tenants can claim rent repayment for up to 12 months if they are living in an unlicensed HMO.

HMO fire safety violations

All residential landlords are responsible for fitting and regularly testing smoke alarms and carbon monoxide detectors and ensuring all fittings and furnishings supplied are fire-safe and meet fire resistance standards. However, HMOs are deemed at greater risk of fire because of the large number of tenants living within them, so HMO landlords have more complex fire safety obligations.

HMO landlords must also:

Provide adequate fire safety equipment, including fire alarms and extinguishers.
Maintain accessible evacuation routes.
Carry out fire risk assessments for communal areas.
Install internal self-closing fire doors.

Failing to comply with HMO fire safety regulations is a serious breach of the law as it endangers tenants’ lives, and the penalties for non-compliance reflect this. Landlords breaching HMO fire safety laws could face unlimited fines and even prosecution in more serious cases.

Not meeting ‘fitness for human habitation’ standards

The fitness for habitation standards ensure that private rented accommodation is safe, healthy, and free from hazards. Breaching these standards is irresponsible and could endanger tenant health and wellbeing. Therefore, penalties for non-compliance can be severe. Landlords may find themselves in breach if the property they rent out is damp or mouldy, in disrepair or poorly maintained, excessively cold, or having problems with the supply of hot or cold water. You can see a full list of reasons on the .gov website here.

If your rental property does not meet these standards, the court can order you to carry out repairs to put things right. It may also order the landlord to compensate tenants. If the landlord does not resolve the issue, they could face fines or prosecution.

Gas and electrical safety breaches

Non-compliance with gas and electrical safety laws can also put the tenant’s safety at risk, and so carries serious consequences. According to the Gas Safety (Installation and Use) Regulations 1998, landlords must arrange for a Gas Safe registered engineer to perform an annual gas safety check on all gas appliances, fittings, and flues. Landlords must also provide tenants with a copy of the gas safety certificate within 28 days of the inspection or before they move in. Electrical Safety Standards in the Private Rented Sector Regulations 2020 require landlords to arrange for every electrical installation in their rental properties to be inspected and tested by a qualified person at least once every five years.

Breaching gas safety laws is a criminal offence, meaning landlords could face unlimited fines and up to six months in prison for non-compliance. Breaching electrical safety standards is also a serious offence that carries fines of up to £30,000.

Unlawful evictions

The Protection from Eviction Act 1977 makes it illegal for landlords to evict a tenant without a court order. To lawfully evict a tenant, landlords must serve either a valid Section 21 or Section 8 notice.

Landlords found guilty of evicting a tenant unlawfully could face criminal charges, an unlimited fine, or even imprisonment. In addition to these penalties, landlords may be required to compensate tenants for any losses incurred and cover legal costs associated with the case.

Not protecting tenant deposits

Since 2004, landlords have been required by law to place tenant deposits in one of three government-approved Tenancy Deposit Protection (TDP) Schemes. These schemes are designed to safeguard tenant deposits, prevent unlawful retention of deposits by landlords, and help resolve deposit disputes efficiently and fairly. Once the landlord has put the money in the TDP scheme, they must provide the tenant with information about which scheme they’ve used and how to get the deposit back.

If a landlord fails to use a TDP scheme or provide tenants with the required information, then the tenant could take them to court. The court could then order the landlord to pay the deposit back to the tenant, plus compensation of up to three times the deposit amount.

Breaching the Tenant Fees Act

Since the Tenant Fees Act took effect in 2019, landlords have been banned from charging tenants certain fees. Before this law was instated, it was commonplace for landlords to charge tenants for things like references, credit checks, and tenancy agreements. Now, it is against the law for landlords to charge tenants any unnecessary fees. Landlords must familiarise themselves with which fees are allowed and which are not.

Any landlord found in breach of the Tenant Fees Act could receive a financial penalty of up to £5,000 for their first breach and £30,000 for any further breaches.

Failing to carry out a Right to Rent check

Before renting a property to a prospective tenant, the law requires landlords to carry out a Right to Rent check to make sure that the person has the legal right to live and rent in the UK. Landlords must follow a set process to check whether the prospective tenant has the Right to Rent – this includes checking original documents like passports and visas, checking the validity of these documents, and taking copies of the documents and storing them securely. The .gov website features a useful Guide to Right to Rent checks.

Earlier this year, the UK government increased the penalties for breaching Right to Rent rules. Landlords can now be fined up to £10,000 per occupier for a first breach and up to £20,000 per occupier for repeated breaches.

Late self-assessment submissions

Finally, landlords are required to submit an annual self-assessment tax return to declare their rental income to HM Revenue and Customs (HMRC). All self-assessment tax returns must be submitted by 31 January, following the end of the tax year.

Landlords who fail to submit their tax return by this date will receive an automatic penalty of £100 from HMRC. If you’ve still not submitted your tax return three months after the deadline, then you will begin to accrue additional charges and interest.

Top tips for maintaining compliance and avoiding fines

Maintaining compliance with all relevant laws and best practices is the cornerstone of running a successful rental business. These laws are in place to ensure a high standard of living within the private rental market and to protect both tenants and landlords. Receiving a hefty fine is never nice, but it could end up being the least of your worries if you also find yourself facing criminal prosecution.

The key to maintaining compliance is staying informed and being organised. We’ve put together some practical tips to help you effectively manage your responsibilities and maintain a compliant and successful rental business.

Join Industry Organisations: Becoming a member of landlord associations or property management organisations can provide valuable resources, legal updates, and support. The National Residential Landlords Association (NRLA) and the Association of Residential Letting Agents (ARLA Propertymark) are the two big ones in the UK. These organisations often offer training sessions, seminars, and access to useful legal advice and resources for landlords.
Sign Up for Email Newsletters and Notifications: Many property management websites and government agencies offer newsletters that deliver the latest news on legislation changes and best practices directly to your inbox. Subscribing to these can help you to stay in the loop about the latest changes.
Use RSS Feeds: Set up RSS feeds for relevant property management blogs, legal updates, and news sites. RSS feeds can help you receive real-time updates whenever new content is published, ensuring you never miss out on important information.
Connect with Industry Leaders on Social Media: Following industry leaders and influencers on platforms like LinkedIn, Twitter, or Facebook can provide insights into the property market and alert you to changes and developments. Often, these professionals share actionable advice and updates on how to stay compliant.
Keep Detailed Records: Maintain accurate records of all transactions, communications, inspections, and maintenance activities related to your properties. Good record-keeping can be invaluable, especially if you need to defend yourself in a dispute or demonstrate compliance with the law.
Regular Property Inspections: Schedule regular inspections of your property to ensure it meets safety standards and that maintenance issues are addressed promptly. This not only helps maintain the property within legal requirements but also builds a good relationship with tenants.
Use Specialist Landlord Software: Invest in dedicated landlord software like Landlord Vision to help manage your properties efficiently. Landlord Vision can help you track rent payments, manage tenant details, and, most importantly, remind you of upcoming expiries for certificates and licenses like gas safety checks, EPCs, or electrical inspections. Automated reminders like these are useful for helping prevent lapses that might otherwise lead to hefty fines.