Penalties for Renting Without a Licence: Fines, RROs and Banning Orders

Renting a property without the required licence is one of the most serious offences a landlord can commit under UK housing law. Enforcement has intensified significantly in recent years, with councils issuing millions of pounds in civil penalties and tenants successfully applying for rent repayment orders. This guide explains every financial and legal consequence of non-compliance.

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Criminal Prosecution and Unlimited Fines

Operating an unlicensed HMO is a criminal offence under section 72 of the Housing Act 2004. Renting an unlicensed property in a selective licensing area is a criminal offence under section 95 of the Housing Act 2004. Both offences carry an unlimited fine on conviction in the magistrates' court.

Criminal prosecutions are relatively rare but do occur, particularly for repeat offenders or cases involving serious property conditions. Councils such as Newham, Hackney, and Nottingham have active enforcement teams and a track record of prosecution.

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Civil Financial Penalties: Up to £30,000 (Rising to £40,000)

Under section 249A of the Housing Act 2004, inserted by the Housing and Planning Act 2016, councils can issue a civil penalty of up to £30,000 per unlicensed property without needing to go to court. The Renters' Rights Act 2025 increases this ceiling to £40,000.

Civil penalties are increasingly the enforcement tool of choice for councils because they are faster and cheaper than criminal prosecution. The penalty is issued by the council and can be appealed to the First-tier Tribunal (Property Chamber). If not appealed or paid, it can be registered as a local land charge.

Enforcement examples:

• Birmingham City Council has issued over £450,000 in civil penalties since its scheme launched in June 2023.
• Salford City Council has issued hundreds of civil penalties under its borough-wide selective licensing scheme.
• Hackney Council regularly issues civil penalties for unlicensed properties in its selective and additional licensing areas.

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Rent Repayment Orders

A rent repayment order (RRO) is a tribunal order requiring a landlord to repay up to 12 months of rent to the tenant or the local authority. RROs are available under Part 2 of the Housing and Planning Act 2016 where a landlord has committed a relevant offence, including operating an unlicensed property.

Key points about RROs:

• Tenants can apply for an RRO even after the tenancy has ended, provided the application is made within 12 months of the offence.
• Local authorities can also apply for RROs on behalf of tenants.
• The Renters' Rights Act 2025 extends the circumstances in which RROs are available and increases the maximum repayment period.
• RROs are decided by the First-tier Tribunal (Property Chamber), which has a track record of awarding the maximum 12 months' repayment in serious cases.

Enforcement examples:

• Salford City Council has recovered over £2.2 million through RROs since its scheme launched.
• Newham Council has one of the highest rates of RRO applications in England.
• Waltham Forest has pursued RROs aggressively as part of its licensing enforcement strategy.

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Invalid Section 21 Notices

An unlicensed landlord cannot serve a valid Section 21 no-fault eviction notice. Under section 98 of the Housing Act 2004, a landlord cannot serve a Section 21 notice while the property is unlicensed. Any notice served during this period is void, meaning the landlord cannot regain possession through this route until the licence is obtained and a new notice is served.

Under the Renters' Rights Act 2025, Section 21 is abolished entirely. However, the principle that licensing non-compliance blocks possession proceedings is preserved under the new regime.

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Banning Orders

Under Part 2 of the Housing and Planning Act 2016, a council can apply to the First-tier Tribunal for a banning order against a landlord who has committed a banning order offence. Operating an unlicensed HMO or unlicensed property in a selective licensing area is a banning order offence.

A banning order prevents the landlord from:

• letting a property in England;
• engaging in letting agency work in England;
• engaging in property management work in England.

The minimum duration of a banning order is 12 months. Breaching a banning order is a criminal offence. Banning orders are recorded on the Database of Rogue Landlords and Property Agents, which is maintained by MHCLG.

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How to Avoid Penalties

The simplest way to avoid penalties is to check whether your property requires a licence before letting it out. Use the Tuxa property licence checker to check any UK address against all active licensing schemes across all 361 councils.

If your property is in a licensing area, apply for the licence before the scheme comes into force. Most councils allow landlords to apply in advance of a scheme's start date. Operating under a pending application does not constitute an offence, provided the application was made before the scheme came into force.

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Related Guides

• Selective Licensing Explained
• What is Additional Licensing for HMOs?
• Mandatory HMO Licensing: The National Standard
• Renters' Rights Act 2025: Impact on Licensing

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Sources

1. Housing Act 2004, section 72 - Offences in relation to licensing of HMOs (legislation.gov.uk)
2. Housing Act 2004, section 95 - Offences in relation to selective licensing (legislation.gov.uk)
3. Housing Act 2004, section 249A - Financial penalties as alternative to prosecution (legislation.gov.uk)
4. Housing Act 2004, section 98 - Restriction on termination of tenancy (legislation.gov.uk)
5. Housing and Planning Act 2016, Part 2 - Rogue landlords and letting agents (legislation.gov.uk)
6. Renters' Rights Act 2025 (legislation.gov.uk)
7. MHCLG: Database of Rogue Landlords and Property Agents (GOV.UK)

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Last reviewed March 2026 by Ben Yarrow, founder of Tuxa. Data sourced from tribunal decisions and council enforcement reports.