Few people familiar with the UK property market would dispute the fact that the Right to Rent scheme has been deeply controversial and highly unpopular from its very inception. It was implemented in England in the face of harsh criticism from both landlords and housing charities, who both pointed out a fact which seemed to be obvious to everyone except the government, namely that private landlords had neither the expertise nor the resources to undertake the Home Office’s work for it. Now a combination of Brexit and the High Court may be about to make life even more difficult for landlords.
The Right to Rent, the story so far
The Right to Rent came into force in England on 1st February 2016. In principle, the act of Parliament under which it was introduced (the Immigration Act 2014) allows for the checks to be introduced in the other parts of the UK, however, pushback from the local governments has stopped it from being introduced outside of England.
Although the government promised that there would be support for landlords conducting residency checks and that draconian penalties which were permitted under the scheme (including prison sentences) would only be used in the most severe of cases, as predicted by numerous housing charities and other relevant bodies, landlords decided that they would rather err on the side of caution and only accept tenants who could show a “mainstream” form of identification such as a passport or UK driving licence. This had the effect of discriminating against people who were unable to provide such identification (even though they were legally entitled to be in the UK) and prompted a legal challenge.
The High Court challenge and what it means
In March, the High Court ruled that the Right to Rent Scheme is leading to discrimination, is incompatible with the European Convention on Human Rights and that the pilot the Government ran to evaluate the Scheme was insufficient. The government, however, has been granted leave to appeal this decision and has made it clear that it intends to do so and that while it does, the scheme remains in force as is.
In fact, the only immediate impact of the ruling is that it puts up another block to implementing the scheme in Wales, Scotland and NI, but given the political climate, this is arguably something of a moot point. Landlords in England still have to abide by the scheme and since the wheels of justice are notorious for rolling slowly it is highly likely that it will still be in force when Brexit happens (assuming that it happens to its delayed schedule of 31st October 2019).
The Brexit situation
At this point in time, it is very difficult to give guidance on what landlords should do in this situation because in one sense nothing changes (landlords must continue to undertake the Right to Rent checks in a non-discriminatory manner), in another sense, everything may change, in that EU citizens may switch, literally, overnight from having the right to rent to not having the right to rent, but then again they may not, since those who have lived in the UK for at least 5 years should have the right to legal UK residency regardless of what form Brexit ultimately takes.
At this point in time, therefore, the best advice which can be given is for landlords to be aware of the situation and to stay alert to the government guidance which will hopefully be given nearer the time.
Mark Burns is the managing director of property investment firm Hopwood House.