COMPLIANCE TRAPS: PERILS & PITFALLS EVERY LANDLORD NEEDS TO AVOID

You don't need to be a novice landlord to fall into one of the many compliance traps - many highly experienced investors also slip up, and they often have no idea at the time.

Compliance law has evolved from poor practices in the past, and today’s rules are designed to ensure safe housing, clear business terms, and equal treatment for all tenants.

However, there’s no escaping that compliance can be complex and time-consuming, which has proved the catalyst for many landlords to pass the responsibility to a managing agent.

To help you decide what’s best for you, we’ve simplified the main areas into the following five sections:

• Trading standards

• Prescribed information

• Discrimination and screening

• Licensing regulations

• Deposit dos and don'ts 

Mastering these fundamentals will help you sidestep headaches and fines, so let’s explore how you can stay on the right side of the law to keep your rental business profitable and painless.

TRADING STANDARDS

While the description of your rental property should be enthusiastic and highlight all its best features, you also need to consider the updated Trading Standards of November 2023.

These raised the bar for what landlords and agents must include in property listings, with rules governing the disclosure of material information that could affect a tenant’s decision to rent a property.

• Provide clear information on the rent and required deposit, council tax bands and costs, connected utilities, and the type and quality of broadband at the property.

• Be transparent about any known building safety issues, flood risks, parking restrictions, existing issues like damp, and any planned construction works nearby.

• Omitting or providing misleading crucial details is automatically an unfair commercial practice, so ensure all listings and adverts for your property are accurate and complete.

If you’re unsure what counts as material information at your rental property, call us on 03338 802 602 or email us at enquire@three2six.co.uk for a chat with our team and expert guidance.

PRESCRIBED INFORMATION

Alongside the tenancy agreement, there's lots of paperwork you need to supply to your tenant BEFORE their tenancy begins, although in some cases, not too long before. Here's a breakdown:

• Supply the Government’s How to Rent guide in England, the Tenant Information Pack in Scotland, and the guide to A Home in the Private Rented Sector in Wales.

• Provide copies of the Energy Performance Certificate, Electrical Safety Certificate and, where applicable, Gas Safety Certificate.

• Test any smoke alarms and CO2 detectors on the day the tenancy starts, regardless of how recently they were tested (even if it was the previous day).

Given the different timelines, we highly recommend scheduling dates in your diary for every deadline, no matter how close or far off it may be - a little bit of planning that you’ll never regret. 

DISCRIMINATION & SCREENING

Although you’re allowed to choose who you let your property to, it’s critical to comply with the Equality Act 2010 and the recently updated sanctions checks rules. So be mindful of the following:

• It’s against the law to exclude tenants based on protected characteristics like ethnicity, gender, sexual orientation, disability, religion, pregnancy, and marriage.

• Blanket bans on tenants receiving benefits - whether publicly or covertly - are also illegal,  but this doesn’t prevent you from taking affordability into account.

• In Scotland and Wales, you cannot exclude all tenants with children or pets without reasonable grounds for refusal, and this is set to become law in England with the Renters’ Rights Bill.

• As of May 2025, all new tenants must be screened to see if they appear on the UK sanctions list. If they do, they must be reported to the Office of Financial Sanctions Implementation (OFSI).

In short, keep your focus on someone’s eligibility to rent and their ability to pay - an experienced letting agent can help you target your ideal tenant while remaining legally compliant.

LICENSING REGULATIONS

The rules around licensing for rental homes differ across the UK and from one local authority to another, and councils are enlisting residents to help identify unlicensed properties.

• All HMOs (Houses in Multiple Occupation) across the UK require a license, which means any property occupied by five or more people who form two or more households.

• In Scotland and Wales, all rental homes must be licensed. While that’s not currently the case in England, some English local authorities have implemented this rule, so be sure to check.

• Councils also have their own additional and selective licensing schemes that apply to individual streets and types of property, which may have changed since you bought your property.

Fines of up to £30,000, revoked licenses, and being barred from being a landlord are among the penalties, escalating to prison sentences for the most serious and repeat offences.

You can find out more in our Landlord Licensing blog, or call us on 03338 802 602 to talk about licenses for rental homes in Birmingham and how they affect you.

DEPOSIT DOS AND DON'TS 

While a security deposit is absolutely essential to protect you in the event of any damages caused by your tenant, there are specific legal requirements around the way you handle deposits.

• Don’t exceed the legal limit for a deposit: Two months' rent in Scotland, five weeks’ rent in England for annual rents below £50,000, and six weeks’ rent above that. Wales has no limit.

• Do protect the deposit within 30 days of the tenancy starting, then inform your tenant of the scheme being used, the provider’s contact details, and the procedure for releasing the deposit.

• Don’t attempt to make improper deductions, such as claiming for wear and tear, inflating figures beyond the actual cost, and taking money without sufficient evidence to prove damage.

From fines and rent repayment orders to being unable to serve notice to regain possession of your property, breaking the rules around deposits is simply not worth the trouble.

Do you have questions about compliance traps?

If you own a rental home in Birmingham, we’re here to provide you with all the answers and assistance you need, so call us on 03338 802 602 or email us at enquire@three2six.co.uk.

Let’s start with a compliance health check on your property to see whether you already have everything in place, or if anything needs correcting to avoid later problems and give you total peace of mind.