On 6 April 2018, the Government introduced banning orders on rogue landlords and letting agents, barring those who commit certain housing offences from working in the lettings industry whilst placing their details on a database of rogue landlords.
The Housing and Planning Act 2016 (Banning Order Offences) Regulations 2018 result in landlords and agents who are convicted of a banning order offence being prohibited from letting houses in England, engaging in English letting agency work, engaging in English property management work or doing two or more of the things tings listed as letting or management work. The breach of a banning order is a criminal offence.
What qualifies as a banning order offence?
The following are a list of the offences that can qualify for a ban under Schedule 1 of The Housing and Planning Act 2016 (Banning Order Offences) Regulations 2017:
- Unlawful eviction and harassment of occupier
- Violence for securing entry
- failing to comply with an improvement notice
- failing to comply with a prohibition order
- offences in relation to licensing of Houses in Multiple Occupation
- offences in relation to selective licensing under Part 3 of the Housing Act 2004 (section 95)
- contravention of an overcrowding notice
- failure to comply with the management regulations in respect of Houses in Multiple Occupation
- providing false or misleading information
- offences related to drugs
- fire safety offences
- gas safety offences
The effect of the order could be disastrous as a landlord would effectively lose their business. A landlord or agent would be forbidden from renting or managing rented property although the order may permit them to do such work whilst they are closing the business down.
How long does a banning order last?
A banning order is for at least 12 months but there is a possibility that it could be for a longer period, right up to a ban for life.
The length of a banning order is determined by the First-tier Tribunal. The local authority must serve a notice of intent of its proposal to apply for a banning order within six months of the landlord being convicted of the offence.
Banned landlords will also be forbidden from transferring their property to a business where they have an interest or a close colleague has an interest. Banning orders cannot be applied retrospectively, an offence must have been committed on or after 6 April 2018 in order for a local housing authority to consider applying for a banning order.
A local housing authority should take into account the following factors when deciding whether to seek a banning order:
- The seriousness of the offence – when considering whether to apply for a banning order the local authority will consider the sentence imposed by the Court. The more severe the sentence, the more appropriate it will be for a banning order to be made.
- Previous convictions/rogue landlord database – a longer banning order may be more appropriate in the event that the offending landlord has a history of failing to comply with their obligations.
The local authority should also consider the likely effect of the banning order:
- The harm caused to the tenant – the greater the harm or potential for harm, the longer the ban should be.
- Punishment of the offender – the length of the ban needs to be proportionate and reflect the severity of the offence and whether there is a pattern of previous offending. The application of a banning order needs to ensure that it has a real economic impact on the offender and demonstrates the consequences of not complying with their responsibilities.
- Deter the offender from repeating the offence – by issuing a banning order the ultimate goal is to prevent further offending and to help ensure the landlord fully complies with their legal responsibilities going forward.
- Deter others from committing similar offences – this is through education that the local authority has the power to issue a banning order and that the banning order can have detrimental effects on the landlord’s property business.
Who can a banning order apply to?
A banning order can apply to an individual, a body corporate or an officer of a body corporate.
In the event that the local authority believes a banning order offence has been committed by a body corporate with the knowledge or consent of an officer of that body corporate, a separate banning order for both parties should be sought.
In the event that a landlord is subject to a banning order, he is unable to hold a licence for a House in Multiple Occupation (HMO) and their property may also be subject to a management order.
Can a landlord, subject to a banning order, transfer his property to someone else?
A landlord is prevented from transferring the property to certain persons whilst the banning order is in force. A prohibited person is:
- a business partner of the landlord;
- a person associated with the business partner of the landlord;
- a business partner of a person associated with the landlord;
- a person associated with the landlord (including family members, spouses and civil partners);
- a body corporate of which the landlord or a person mentioned above is an officer;
- a body corporate in which the landlord has shareholding or other financial interest; or
- where the landlord is a body corporate, any body corporate that has an officer in common with the landlord.
Should a landlord dispose of the property to a prohibited person without gaining consent from the First-tier Tribunal the transaction is regarded as void.
What happens to a tenancy following a banning order?
Should a landlord be subject to a banning order this will not invalidate any tenancy agreement held by the tenants in the property, regardless of whether the agreement commenced before or after the banning order was made. This is to ensure that the tenant does not lose their rights under the terms and conditions of their tenancy agreement.
In some circumstances where a banning order is made, the management of the property is taken over by the local housing authority, this is known as a Management Order.
In this situation the tenant would pay the rent directly to the local housing authority. The management order enables a local authority to take over the management of a privately rented property in place of the landlord with the aim to ensure the health and safety of the occupiers of the property. A management order does not place a duty on the local authority to pay mortgage instalments. It remains the responsibility of the owner of the property to make any payments on any mortgages secured on the property. A banning order does not prevent the mortgage company from exercising any of its rights in respect of the property, this includes re-possession.
A spent conviction under the provisions of the Rehabilitation of Offenders Act 1974 is not regarded as a live conviction after a specified period of time. A spent conviction is not taken into account when determining whether to apply for and/or make a banning order.
The Housing and Planning Act 2016 provides powers that permit local authorities to impose a civil penalty of up to £30,000 as an alternative to prosecution under the Housing Act 2004 and where a landlord or agent is in breach of a banning order.
What is the database of rogue landlords?
Once a banning order has been issued the details of the banned landlord or property agent is entered onto the database of rogue landlords and property agents. The database is for the use of local authorities in England and aids in keeping track of known rogues. The database helps the local authority when rogue landlords or agents are operating across council boundaries.
Prevention is better than the cure
The Private Rented Sector is complex with legislation continuously being updated. Private landlords find themselves under pressure from government and industry bodies to comply with ever increasing property regulations and legal obligation.
For first time landlords, navigating these complexities can seem daunting and too often we see mistakes being made unknowingly which could have a negative impact on your rental business.
We offer first time or ‘accidental landlords’ a service which protects you with guaranteed rent through to ensuring that you comply with the latest legal requirements. If you are considering letting a property, please call us to discuss how we can help and support you with your letting requirements on 0333 577 8888.