Relevant Lettings Agency Legislation Civil Penalty Policy
Tenant Fees Act 2019 Consumer Rights Act 2015
The Redress Schemes for Lettings Agency Work and Property Management Work (Requirement to Belong to a Scheme etc) (England) Order 2014, made under the Enterprise and Regulatory Reform Act 2013
The Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc.) Regulations 2019, made under the Housing and Planning Act 2016
Reading Borough Council has adopted this policy on deciding financial penalties and the appropriateness of prosecution as an alternative to imposing financial penalties under the relevant letting agency legislation.
For clarity, “relevant letting agency legislation” means as amended:-
- The Tenant Fees Act 2019,
- Chapter 3 of Part 3 of the Consumer Rights Act 2015 as it applies in relation to dwelling houses in England
- An order under Section 83(1) or 84(1) of the Enterprise and Regulatory Reform Act 2013; and
- Regulations under Sections 133 – 135 of the Housing and Planning Act 2016.
The Tenant Fees Act 2019 provides that enforcement authorities may impose financial penalties of up to £30,000 depending on the breach as follows:
- In respect of a breach of s1 or s2, or a breach of Schedule 2 of the Tenant Fees Act 2019, a financial penalty not exceeding £5,000 for a first breach and not exceeding £30,000 for a second or subsequent breach of S.1 or S.2 within 5 years of the previous breach provides for a financial penalty not exceeding £30,000.00
- In respect of a failure of Letting Agents to publicise their fees as required by s83(3) of the Consumer Rights Act 2015 a financial penalty not exceeding £5,000.
- In respect of a failure by any person engaged in Letting Agency or Property Management work who fails to hold membership of a Redress Scheme as required by Article 3 Redress Schemes for Lettings Agency Work and Property Management Work (requirement to belong to a Scheme etc.) England) Order 2014 (in respect of Lettings Agency work) or Article 5 (in respect of property management work) to a financial penalty not exceeding £5,000.
(Note that it is not sufficient to simply register for redress – the correct category of membership must be obtained depending on the work carried out.) - In respect of Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc.) Regulations 2019:
a) a failure by a property agent who holds client money to belong to an approved or designated Client Money Protection (“CMP”) Scheme as required by Regulation 3, a financial penalty not exceeding £30,000 or
b) a failure to display a certificate of membership; or publish a copy of that certificate on the relevant website (where one exists); or produce a copy of the certificate free of charge to any person reasonably requiring it as required; or notify any client in writing within 14 days of a change in the details of a underwriter to the CMP scheme or that the membership of the CMP scheme has been revoked, as required by Regulation 4, a financial penalty not exceeding £5,000.
The Council will determine what is the most appropriate and effective sanction and whether it is appropriate to impose a financial penalty or prosecute having due regard to the Enforcement Policy.
The Ministry of Housing, Communities & Local Government (“MHCLG”) has published guidance for enforcement authorities in respect of the Tenant Fees Act 2019 – “Tenant Fees Act 2019: Statutory Guidance for enforcement authorities” and in respect of Client Money Protection Requirements – “Mandatory Client money protection for property agents – enforcement guidance for local authorities” This is statutory guidance to which enforcement authorities must have regard to when considering to impose a financial penalty. This statutory guidance recommends certain factors that an enforcement authority should take into account when deciding on the level of financial penalty to impose and further recommends that enforcement authorities develop and document their own Policy on determining the appropriate level of financial penalty in a particular case.
In accordance with the provisions of the Tenant Fees Act & Client Money Protection statutory guidance, the following factors should be considered by an enforcement authority when determining the level of penalty to impose for a breach of relevant letting agency legislation:
a. Severity of the breach
b. Punishment of the landlord or agent
c. Aggravating and mitigating factors
d. Fairness and proportionality
Each of these factors are explained in more detail in the statutory guidance which you should refer to for each penalty you consider. For ease, the same considerations will be applied in cases of redress membership and breaches of S.83 Consumer Rights Act 2015.
Although the Council has a wide discretion in determining the appropriate level of financial penalty in any particular case, regard has been given to the statutory guidance when making this policy.
All stages subsequent to the issue of a Notice of Intent are subject to statutory time limits and the suspension of the process should an appeal be made to the First Tier Tribunal.
The Council’s process for determining the level of penalty to set
Determining the category
The Council will determine the breach category using the culpability and category of harm factors below. Where a breach does not fall squarely into a category, individual factors may require a degree of weighting to make an overall assessment. Other discretionary factors may also be applied in order to reflect consistency and may consider decisions in other UK jurisdictions where they contain some relevant and persuasive content.
Culpability
Very high: Where the Landlord or Agent intentionally breached, or flagrantly disregarded, the law or has/had a high public profile and knew their actions were unlawful
High: Actual foresight of, or wilful blindness to, risk of a breach but risk nevertheless taken Medium: Breach committed through act or omission which a person exercising reasonable care would not commit
Low: Breach committed with little fault, for example, because:
- significant efforts were made to address the risk although they were inadequate on the relevant occasion
- there was no warning/circumstance indicating a risk
- failings were minor and occurred as an isolated incident
Harm
The following factors relate to both actual harm and risk of harm. Dealing with a risk of harm involves consideration of both the likelihood of harm occurring and the extent of it if it does.
Category 1 – High Likelihood of Harm
- Serious adverse effect(s) on individual(s) and/or having a widespread impact due to the nature and/or scale of the Landlord’s or Agent’s business
- High risk of an adverse effect on individual(s) – including where persons are vulnerable. A wide definition of vulnerability will be used
Category 2 – Medium Likelihood of Harm
- Adverse effect on individual(s) (not amounting to Category 1)
- Medium risk of an adverse effect on individual(s) or low risk of serious adverse effect.
- Tenants and/or legitimate landlords or agents substantially undermined by the conduct.
- The Council’s work as a regulator is inhibited
- Tenant or prospective tenant misled
Category 3- Low Likelihood of Harm
- Low risk of an adverse effect on actual or prospective tenants.
- Public misled but little or no risk of actual adverse effect on individual(s)
We will define harm widely and victims may suffer financial loss, damage to health or psychological distress (especially vulnerable cases). There are gradations of harm within all of these categories.
The nature of harm will depend on personal characteristics and circumstances of the victim and the assessment of harm will be an effective and important way of taking into consideration the impact of a particular breach on the victim.
In some cases no actual harm may have resulted and the enforcement authority will be concerned with assessing the severity of the misconduct; it will consider the likelihood of harm occurring and the gravity of the harm that could have resulted. Some breaches cause harm to the community at large (instead of or as well as to an individual victim) and may include economic loss, harm to public health, or interference with the administration of justice.
Starting point and category range
Having determined the category that the breach falls into, the Council will refer to the following starting points to reach an appropriate level of civil penalty within the category range. The Council will then consider further adjustment within the category range for aggravating and mitigating features.
The tables below give the starting points, minimum and maximum financial penalties for each harm category and level of culpability for each type of breach
Below is a list of some, but not all factual elements that provide the context of the breach and factors relating to the Landlord or Agent. The Council will identify whether any combination of
these, or other relevant factors, should result in an upward or downward adjustment from the starting point. In particular, relevant recent convictions are likely to result in a substantial upward adjustment. In some cases, having considered these factors, it may be appropriate to move outside the identified category range which will not exceed the statutory maximum permitted in any case.
Factors increasing seriousness
Aggravating factors:
- Previous breaches of the TFA 2019 or relevant letting agency legislation
- Previous convictions, having regard to: the nature of the offence to which the conviction relates and its relevance to the current breach; and, the time that has elapsed since the conviction. This may include (but is note restricted to) breaches Housing law or landlord and tenant related Offences , Offences involving fraud, Offences in which the victim has been deprived of money, property or other benefit by misrepresentation/deception on the part of the offender, Offences involving violence Offences involving sexual offences , Unlawful discrimination , Modern Slavery / Human Trafficking Offences involving the recruitment, transportation, transfer, harbouring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control of another person, for the purpose of exploitation.
- Motivated by financial gain
- Deliberate concealment of illegal nature of activity
- Established evidence of wider / community impact
- Obstruction of the investigation
- Record of poor compliance
- Refusal of advice or training or to become a member of an accreditation scheme or trade body
Factors reducing seriousness or reflecting personal mitigation
- No previous or no relevant/recent breaches
- No previous convictions or no relevant/recent convictions
- Steps voluntarily taken to remedy problem
- High level of co-operation with the investigation, beyond that which will always be expected
- Good record of relationship with tenants
- Self-reporting, co-operation and acceptance of responsibility
- Good character and/or exemplary conduct
- Mental disorder or learning disability, where linked to the commission of the breach
- Serious medical conditions requiring urgent, intensive or long-term treatment and supported by medical evidence
General principles to consider in setting a penalty
The Council will finalise the appropriate level of penalty so that it reflects the seriousness of the offence and the Council must take into account the financial circumstances of the Landlord or Agent if representations are made by the Landlord or Agent following the issue of a Notice of Intent. The level of financial penalty should reflect the extent to which the conduct fell below the required standard. The financial penalty should meet, in a fair and proportionate way, the objectives of punishment, deterrence and the removal of gain derived through the commission of the breach; it should not be cheaper to breach than to take the appropriate precautions and a fundamental principle involved is that there should be no financial gain to the perpetrator from the commission of the breaches. If issuing a financial penalty for more than one breach, or where the offender has already been issued with a financial penalty, The Council will consider whether the total penalties are just and proportionate to the offending behaviour and will have regard to the factors in totality principles below.
Any quantifiable economic benefit(s) derived from the breach, including through avoided costs or operating savings, should normally be added to the total financial penalty arrived at in step two, providing it doesn’t increase the penalty over the prescribed maximum. Where this is not readily available, the Council may draw on information available from enforcing authorities and others about the general costs of operating within the law. Whether the penalty will have the effect of putting the offender out of business will be relevant but in some serious cases this might be an acceptable outcome.
Reductions
The Council will consider any factors which indicate that a reduction in the penalty is appropriate and in so doing will have regard to the following factors relating to the wider impacts of the financial penalty on innocent third parties; such as (but not limited to):
- The impact of the financial penalty on the Landlord or Agent’s ability to comply with the law or make restitution where appropriate
- The impact of the financial penalty on employment of staff, service users, customers and the local economy.
The following factors will be considered in setting the level of reduction. When deciding on any reduction in a financial penalty, consideration will be given to:
- The stage in the investigation or thereafter when the offender accepted liability
- The circumstances in which they admitted liability
- The degree of co-operation with the investigation
The maximum level of reduction in a penalty for an admission of liability will be one-third. In some circumstances there will be a reduced or no level of discount. This may occur for example where the evidence of the breach is overwhelming or there is a pattern of breaching conduct. Any reduction should not result in a penalty which is less than the amount of gain from the commission of the breach itself.
The Council will issue a Notice of Intent where required by the legislation, this will contain the amount of the proposed penalty, the reason for imposing the penalty and information about the right to make representations concerning the penalty.
The Council should review the penalty and, if necessary adjust the initial amount reached at, and represented in the Notice of Intent, to ensure that it fulfils the general principles set out in this policy.
Obtaining financial information
Financial circumstances will ordinarily be considered after any written representations have been received and as part of the determination of any final notice.
Where a landlord seeks to rely on a strained or limited financial position as a basis for reducing the level of a civil penalty, that position must be supported by appropriate and verifiable evidence sufficient to enable the Council to assess the landlord’s financial position consistently, objectively, and transparently. Unsupported assertions, partial disclosure, or selective provision of information will not be given weight.
At a minimum, and where such information exists, the following should be provided as part of any written representations:
- The last three full tax years full self-assessment tax returns filed with HMRC, including all additional and supplemental pages;
- The last three full tax years’ SA302 documents & tax year overviews;
- The last three months’ payslips;
- The last three years P60 certificates;
- The last twelve months’ Universal Credit payment statements;
- A list of all property assets owned or jointly owned (not limited to rental properties), together with corresponding Land Registry title documents;
- A list of all property assets owned, or held on a long lease, by any corporate entity in which the landlord has a beneficial interest, together with corresponding Land Registry documentation;
- The most recent annual mortgage statement for each property, or the last twelve months’ mortgage statements where the mortgage has been in place for less than twelve months;
- Valuation statements for all ISAs held;
- Statements from any cryptoasset exchange accounts showing balances and valuations;
- A list of all shareholdings;
- Recent bank statements for any account holding a balance in excess of £5,000;
- Recent statements for all secured and unsecured loans;
- Bankruptcy orders and official notifications of bankruptcy.
Where the Council is not satisfied that it has been provided with sufficiently reliable, complete, and accurate information to assess the landlord’s financial position, the Council may draw the inference that the landlord is able to pay the civil penalty as imposed.
A claimed inability to pay will not, of itself, outweigh the need to ensure effective deterrence or to remove any financial benefit obtained as a result of the breach or offence.
The statutory guidance advises that local authorities can use their powers to, as far as possible, make an assessment of a Landlord or Agent’s assets and any income (not just rental or fee income) they receive when determining an appropriate penalty. The Council will use such lawful means as are at its disposal to identify where assets might be found. In setting a financial penalty, the Council may conclude that the Landlord or Agent is able to pay any financial penalty imposed unless the Council has obtained, or the Landlord or Agent has supplied, any financial information to the contrary. The subject of a Final Notice, or a Notice of Intent where the subject does not challenge it, will be expected to disclose to the Council such data relevant to his/her financial position to facilitate an assessment of what that person can reasonably afford to pay. Where the Council is not satisfied that it has been given sufficient reliable information, the Council will be entitled to draw reasonable inferences as to the person’s means from evidence it has received, or obtained through its own enquiries, and from all the circumstances of the case which may include the inference that the person can pay any financial penalty.
Totality of breaching conduct
Where more than one financial penalty has been considered, the Council should consider the following guidance from the Sentencing Council’s definitive guideline on ‘Offences Taken into Consideration and Totality’ which appears to the Council to be an appropriate reference and guide. As
the total financial penalty is inevitably cumulative the Council should determine the financial penalty for each individual breach based on the seriousness of the breach and taking into account the circumstances of the case including the financial circumstances of the Landlord or Agent so far as they are known, or appear, to the Council. The Council should add up the financial penalties for each offence and consider if they are just and proportionate. If the aggregate total is not just and proportionate the Council should consider how to reach a just and proportionate total financial penalty. There are a number of ways in which this can be achieved.
Where separate financial penalties are imposed, the Council must take care to ensure that there is no double-counting.
Financial Penalty in the case of a first breach in respect of Prohibited Payments. The table below gives the starting points, minimum and maximum financial penalties for each harm category and level of culpability. Where exceptional circumstances apply the Council may reduce the minimum penalties further but may not increase them above the maximum permitted of £5000.
| Culpability | Harm likelihood | Starting point (£) | Min (£) | Max (£) |
|---|---|---|---|---|
| Low | Low | 1250 | 250 | 2250 |
| Low | Medium | 1500 | 500 | 2500 |
| Low | High | 1750 | 750 | 2750 |
| Medium | Low | 2000 | 1000 | 3000 |
| Medium | Medium | 2250 | 1250 | 3250 |
| Medium | High | 2500 | 1500 | 3500 |
| High | Low | 2750 | 1750 | 3750 |
| High | Medium | 3000 | 2000 | 4000 |
| High | High | 3250 | 2250 | 4250 |
| Very high | Low | 3500 | 2500 | 4500 |
| Very high | Medium | 3750 | 2750 | 4750 |
| Very high | High | 4000 | 3000 | 5000 |
Financial Penalty in the case of a second or subsequent breach in respect of Prohibited Payments within 5 years of a previous breach. The table below gives the starting points, minimum and maximum financial penalties for each harm category and level of culpability.
Where exceptional circumstances apply the Council may reduce the minimum penalties further but may not increase them above the maximum permitted of £30000.
| Culpability | Harm category | Starting point (£) | Min (£) | Max (£) |
|---|---|---|---|---|
| Low | Low | 3500 | 2000 | 8000 |
| Low | Medium | 6500 | 4000 | 10000 |
| Low | High | 8500 | 4500 | 15000 |
| Medium | Low | 6500 | 4750 | 17000 |
| Medium | Medium | 10500 | 5000 | 20000 |
| Medium | High | 12500 | 5500 | 22000 |
| High | Low | 10500 | 5500 | 20000 |
| High | Medium | 15000 | 6250 | 24000 |
| High | High | 18000 | 7000 | 26000 |
| Very high | Low | 15000 | 7000 | 24000 |
| Very high | Medium | 17500 | 7250 | 28000 |
| Very high | High | 20000 | 7500 | 30000 |
Financial Penalty in the case of a breach in respect of Publication of Fees. The table below gives the starting points, minimum and maximum financial penalties for each harm category and level of culpability. Where exceptional circumstances apply the Council may reduce the minimum penalties further but may not increase them above the maximum permitted of £5000.
| Culpability | Harm category | Starting point (£) | Min (£) | Max (£) |
|---|---|---|---|---|
| Low | Low | 1250 | 250 | 2250 |
| Low | Medium | 1500 | 500 | 2500 |
| Low | High | 1750 | 750 | 2750 |
| Medium | Low | 2000 | 1000 | 3000 |
| Medium | Medium | 2250 | 1250 | 3250 |
| Medium | High | 2500 | 1500 | 3500 |
| High | Low | 2750 | 1750 | 3750 |
| High | Medium | 3000 | 2000 | 4000 |
| High | High | 3250 | 2250 | 4250 |
| Very high | Low | 3500 | 2500 | 4500 |
| Very high | Medium | 3750 | 2750 | 4750 |
| Very high | High | 4000 | 3000 | 5000 |
Financial Penalty in the case of a breach in respect of Membership of a Redress Scheme. The table below gives the starting points, minimum and maximum financial penalties for each harm category and level of culpability. Where exceptional circumstances apply the Council may reduce the minimum penalties further but may not increase them above the maximum permitted of £5000.
| Culpability | Harm category | Starting point (£) | Min (£) | Max (£) |
|---|---|---|---|---|
| Low | Low | 1250 | 250 | 2250 |
| Low | Medium | 1500 | 500 | 2500 |
| Low | High | 1750 | 750 | 2750 |
| Medium | Low | 2000 | 1000 | 3000 |
| Medium | Medium | 2250 | 1250 | 3250 |
| Medium | High | 2500 | 1500 | 3500 |
| High | Low | 2750 | 1750 | 3750 |
| High | Medium | 3000 | 2000 | 4000 |
| High | High | 3250 | 2250 | 4250 |
| Very high | Low | 3500 | 2500 | 4500 |
| Very high | Medium | 3750 | 2750 | 4750 |
| Very high | High | 4000 | 3000 | 5000 |
Financial Penalty in the case of a breach in respect of a failure to obtain membership of a Client Money Protection Scheme The table below gives the starting points, minimum and maximum financial penalties for each harm category and level of culpability. Where exceptional circumstances apply the Council may reduce the minimum penalties further but may not increase them above the maximum permitted of £30000.
| Culpability | Harm category | Starting point (£) | Min (£) | Max (£) |
|---|---|---|---|---|
| Low | Low | 3500 | 2000 | 8000 |
| Low | Medium | 6500 | 4000 | 10000 |
| Low | High | 8500 | 4500 | 15000 |
| Medium | Low | 6500 | 4750 | 17000 |
| Medium | Medium | 10500 | 5000 | 20000 |
| Medium | High | 12500 | 5500 | 22000 |
| High | Low | 10500 | 5500 | 20000 |
| High | Medium | 15000 | 6250 | 24000 |
| High | High | 18000 | 7000 | 26000 |
| Very high | Low | 15000 | 7000 | 24000 |
| Very high | Medium | 17500 | 7250 | 28000 |
| Very high | High | 20000 | 7500 | 30000 |
Financial Penalty in respect of a breach of transparency requirements of membership of a Client Money Protection Scheme (Regulation 4) The table below gives the starting points, minimum and maximum financial penalties for each harm category and level of culpability.
Where exceptional circumstances apply the Council may reduce the minimum penalties further but may not increase them above the maximum permitted of £5000.
| Culpability | Harm category | Starting point (£) | Min (£) | Max (£) |
|---|---|---|---|---|
| Low | Low | 1250 | 250 | 2250 |
| Low | Medium | 1500 | 500 | 2500 |
| Low | High | 1750 | 750 | 2750 |
| Medium | Low | 2000 | 1000 | 3000 |
| Medium | Medium | 2250 | 1250 | 3250 |
| Medium | High | 2500 | 1500 | 3500 |
| High | Low | 2750 | 1750 | 3750 |
| High | Medium | 3000 | 2000 | 4000 |
| High | High | 3250 | 2250 | 4250 |
| Very high | Low | 3500 | 2500 | 4500 |
| Very high | Medium | 3750 | 2750 | 4750 |
| Very high | High | 4000 | 3000 | 5000 |
Last updated on 01/05/2026
Relevant Lettings Agency Legislation Civil Penalty Policy