Top five legal considerations for landlords in 2025

Article provided by LandlordsDefence.co.uk:

Buy-to-lets are an attractive investment option, but there are multiple pitfalls that many landlords are unaware of. Dealing with the complex regulations governing rental properties requires expert knowledge and advice – failing to understand the gravity of the situation can quickly result in six figure fines and even a criminal conviction.

Buy-to-let properties are a popular investment, offering a regular income and high long-term capital growth prospects. Analysis from the consumer comparison website Finder suggests that a buy-to-let landlord can expect to make an average gross profit of around £424 a month, or £5,087 a year.

But, as with any investment, it's crucial to understand the potential risks as well as the rewards. Becoming a landlord is about much more than acquiring an asset: it brings with it a raft of responsibilities and potential penalties that can wipe out any profit and leave investors in the red – or even with a criminal record.

Phil Turtle, certified Housing Health and Safety Rating System (HHSRS) practitioner, certified fire risk assessor and landlord law expert, outlines the top five legal areas all landlords should be aware of to stay on the right side of the law.

1. Understand the legislation: how the HHSRS applies to landlords

Housing legislation and the rules and regulations governing rental properties have undergone some significant changes over the last two decades. In 2004, part one of The Housing Act introduced a new system for assessing housing conditions and enforcing housing standards: The Housing Health and Safety Rating System, or HHSRS.

HHSRS is a hazard rating system that applies to all residential properties, including caravans and boats. But although the rules can be enforced against homeowners, they're almost exclusively applied to rental properties. For landlords, it's essential to understand the significance of HHSRS and the impact of a breach.

All offences under the Housing Act 2004, including those covered by HHSRS, can result in criminal prosecution, a hefty fine and even a prison sentence.

2. Know the hazards

HHSRS lists 29 hazards that can occur in residential properties, ranging from the presence of damp and mould through fire safety to the rather vaguer ‘collision and entrapment'.

Local authorities are responsible for inspecting properties, and hazards are assessed at the enforcement officer's discretion. If hazards are found, the enforcement officer will also decide on the appropriate action according to law.

Hazards are grouped into categories: a category one hazard is considered the highest risk, and landlords can expect enforcement action if even a single category one hazard is identified. They're also scored according to significance – again, at the enforcement officer's discretion – and local authorities have a legal obligation to take enforcement action when the score reaches a certain threshold.

3. Be aware of enforcement options (and costs)

There are several enforcement options available to local authorities, and in every case the landlord will be expected to meet all costs – prevention is always better than cure.

For minor hazards, an awareness or improvement notice will usually be issued with a deadline for repairs. For more serious hazards, prohibition orders prevent all or part of the property from being used.

If the hazard is deemed an imminent threat to health and safety, an interim management order will be issued, giving the local authority powers to carry out emergency repairs. In rare cases, demolition or clearance orders will be issued if the hazards are deemed too severe to be rectified.

4. Avoid unwittingly operating HMOs

Owners of Houses of Multiple Occupation (HMOs) have very serious responsibilities that cannot be ignored. The Houses in Multiple Occupation (England) Regulations 2006 apply to every HMO and breaches are strict liability offences: this means that ignorance is not a defence. The presence of any breach, regardless of whether the landlord is aware of it, will result in automatic prosecution and an instant fine of up to £30,000 per breach.

What's worse, you could be operating an HMO without even knowing it.

Properties with just three people (or more) who aren't related by blood or sexual union have been classed as HMOs since 2004 and may require a licence, depending on the rules of the local authority. Any property with five people or more automatically requires an HMO licence. So, if a landlord rents to a couple who decide to sub-let their spare room to a friend, they could have unwittingly created an HMO.

A breach of HMO regulations could be as simple as failing to display the name, address and contact number of the property manager in a prominent place – and the required fire precautions are much stricter than for buy-to-let so you're almost certain to be in breach and looking at a fine of up to £30,000 plus a further fine of up to £30,000 if your council has an ‘Additional HMO' scheme requiring three and four person HMOs to be licensed.

5. Beware the pitfalls of selective licensing

Part 3 of the Housing Act 2004 allows local authorities to designate areas as subject to selective licensing. This means that every rental property within the designated area will require a licence from the local housing authority. As with the HMO regulations, breaches are strict liability criminal offences and can incur penalties of up to £30,000 each.

Unfortunately, acquiring a licence isn't straightforward. First, selective licensing can be introduced to any area at any time. The local authority has an obligation to publish the announcement on its website, in at least two local newspapers, and in notices in the designated area – all of which can easily fall under the radar of the landlord especially if they live out of the area. As always in law however, ignorance is no defence.

And, regardless of whether the local authority takes action against the landlord, tenants in unlicensed properties can claim back twelve months' rent they've paid by applying for a rent repayment order – no conviction is necessary for the order to be granted, just the lack of a necessary licence.

Second, the licences themselves can be full of pitfalls. They run to multiple pages, with conditions that require the landlord to be responsible for anything from the width of the gaps around fire doors to antisocial behaviour in the neighbourhood – not just on the property.

If a draft licence is received, it's essential to seek expert advice urgently. Landlords have only 14 days (including weekends) from the date the licence was posted to respond. As soon as the deadline passes, they'll becomes criminally liable for every condition.

Renting out a property can provide many benefits for owners, whether it's part of a retirement plan or an inherited home used to supplement a family income. But whatever the circumstances, it's essential to understand the impact of the multiple, sometimes conflicting, regulations surrounding buy-to-lets and the dangers of accidental' HMOs. Failing to do so could have serious consequences.

ABOUT THE AUTHOR:

Landlords Defence Ltd offer comprehensive services to help landlords and agents avoid fines and remain compliant. They offer a free phone consultation to help analyse your case and advise on the best way forward. Then, whether you decide to use their firm or not, you are at least better placed to make a more informed decision.

Landlords Defence Ltd
Phone: 0208 088 0788
Website: www.landlordsdefence.co.uk

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