Penalties for renting without a licence
Renting a property without the required licence is a serious offence under the Housing Act 2004. The consequences range from substantial financial penalties to criminal prosecution and the loss of key landlord rights. This guide explains what can happen if you rent without a licence.
Civil penalties of up to £30,000
Councils can issue a civil penalty notice of up to £30,000 per unlicensed property. Civil penalties are an alternative to criminal prosecution and are increasingly used by councils as they are quicker to issue and do not require a court hearing. The amount is set by the council and takes into account factors such as the severity of the breach, the landlord's history, and the financial benefit gained from not having a licence.
Criminal prosecution
Councils can also choose to prosecute landlords in a magistrates' court. Criminal conviction carries an unlimited fine. Some councils have successfully prosecuted landlords for tens of thousands of pounds. A criminal conviction can also affect a landlord's ability to obtain a licence in future, as licence holders must be fit and proper persons.
Rent repayment orders
Tenants and local authorities can apply to the First-tier Tribunal (Property Chamber) for a Rent Repayment Order (RRO). An RRO can require a landlord to repay up to 12 months of rent received while the property was unlicensed. RROs are increasingly common and can be applied for up to 12 months after the offence ends.
Loss of Section 21 rights
An unlicensed landlord cannot serve a valid Section 21 notice to regain possession of their property. This means that if you need to evict a tenant using the no-fault eviction route, you must first obtain the required licence. Any Section 21 notice served while the property is unlicensed is invalid and cannot be relied upon in court.
Banning orders
In serious cases, councils can apply to the First-tier Tribunal for a banning order that prohibits a landlord from renting out properties for a minimum of one year. Banning orders are listed on a national database accessible to other councils, making it harder for banned landlords to operate elsewhere.
Frequently asked questions
Can I be penalised if I did not know a licence was required?
Ignorance of the law is not a defence. Councils are not required to notify individual landlords that a licensing scheme has been introduced, though most do publicise new schemes. It is the landlord's responsibility to check whether a licence is required for their property.
What is the difference between a civil penalty and a fine?
A civil penalty is issued by the council without a court hearing. A fine is imposed by a court following criminal prosecution. Both can be substantial, but a criminal conviction carries additional consequences including a criminal record and potential impact on future licence applications.
Can tenants apply for a rent repayment order without the council's involvement?
Yes. Tenants can apply directly to the First-tier Tribunal for a Rent Repayment Order without any involvement from the council. They do not need the council to have taken enforcement action first.