News & Insights

Illegal and immoral

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A warning to landlords on the use of privately rented properties

What are the risks to a landlord of illegal use?

Illegal activities carry with them, of course, criminal sanctions. If a property – whether residential or commercial – is used for the cultivation of drugs, its landlord can be prosecuted under s.8 of the Misuse of Drugs Act 1971 with fines and imprisonment a possibility; properties may also be used, for example, for the sale of drugs, for prostitution or for the production and/or sale of counterfeit goods.

And you don’t need to have allowed the activity to take place; if you turn a blind eye, you and your fellow directors, managers or other company officeholders may still be prosecuted.

Alongside the criminal risks are risks to the property itself, and how your insurance policies may be affected. If a fire occurs in a property as a result of equipment used to cultivate drugs, your insurance policy is likely to be invalid. The tenant may have made alterations to accommodate plants or machinery, and these may not just be structural but also to electrical or other installations. Again, where these are unauthorised and made for the purposes of illegal activity, insurance policies are likely to be void.

What can landlords do to protect themselves?

Right from the outset, landlords are advised to take care in choosing who they let premises to. It’s a tenant’s market, and we understand that empty properties cause a problem for landlords, but taking sensible precautions and undertaking proper checks early on could prevent more serious issues further down the line.

You may consider credit checks, previous landlord references and employer references as well as the usual review of utility statements and more basic information. Additional training for property managers may help them to identify possible issues earlier, and regular inspections are essential.

When and how can landlords inspect?

Under the Housing Act 1988, residential landlords are entitled to enter a property they own to inspect for one or more of the following purposes:

  1. A right of reasonable access to carry out repairs, on reasonable prior notice (or no notice where there is an emergency)
  2. A right to enter to inspect the state of repair of the property, on 24 hours’ prior notice
  3. A right to enter to provide cleaning services, where this is part of the contract between you

Point 2 above is the most relevant here, and landlords are advised to schedule inspection dates during a year.

Commercial landlords have more flexibility. In leases, it is recommended that landlords reserve a right to inspect which may not be on notice in the event of emergency.

Which steps should landlords take next?

Firstly, be sure you know who is occupying your properties and for what purpose. Undertake further checks if necessary, and observe the property externally for signs such as blacked out windows, an unusual number of visitors, unusually high utility bills, unusual smells which suggest drug cultivation and the addition of more security measures than may be necessary.

Next, inspect the state of the property internally, allowing for notice where required under the Housing Act or under the terms of a lease. Inspect fully, including cellars and roof voids if relevant.

Where illegal activity is found, or suspected, after notifying the police landlords may then be left with a vacant property. The lease should be terminated in accordance with its terms; possession can be claimed under breach of covenant for illegal or immoral use.

Unsure about your rights or suspect a problem? JB Leitch’s team is happy to discuss your next steps with you.

How much do you as a landlord know about what goes on inside your rented properties? How often can and should you inspect to ensure lease provisions are being observed?

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