Hong Kong-based landlords of British property must ensure their tenants have the right to live in Britain under new government plans announced this month. Landlords who do not comply with the proposed legislation will be fined.
In an attempt to crack down on rogue property investors and illegal immigrants, the British government wants all landlords, including those living abroad in places like Hong Kong, to check tenants' passports to ensure they have permission to live, work, or study in Britain. Tenants from non-European Union countries must have their visas verified.
Eric Pickles, minister for communities and local government, said: "We are taking action to stop rogue landlords who cash in from housing illegal immigrants. These tough measures will send a strong signal and help reduce unsustainable immigration."
Details on how landlords can check the validity of passports and visas, and on the extent of fines, have yet to emerge. Under similar existing legislation affecting employers, companies can pay fines of up to £10,000 (HK$118,000) for each illegal immigrant they employ.
A landlord remains liable for verifying a tenant's immigration status correctly even if a letting agent does it on their behalf.
Richard Lambert, chief executive officer of the National Landlords Association, warned that landlords should be aware that the responsibility for housing an illegal immigrant would ultimately lie with them "regardless of whether they enlist the services of a letting agent to manage the property".
Many tenants in Britain are immigrants. Three-quarters of tenants looking for accommodation through London-based lettings agency, Benham & Reeves Residential Lettings, come from overseas. A director, Marc von Grundherr, said reputable agents and landlords already asked tenants for passports when they carried out identity checks, so only dodgy landlords who paid no attention to the law would be caught out by these changes.
However, he feared some landlords may discriminate against non-British tenants because they may see this as the safest way to avoid letting to illegal immigrants. However, this would break anti-race discrimination laws.
Concerns about the government's proposals may deter some Hong Kong investors from making purchases in the short term, said Grundherr. "It's another little negative factor, but when the dust settles and it becomes the norm, no one will think about it."
Property investment in Britain is becoming increasingly complex and costly. Landlords have been liable to pay a council tax - a local government charge - on their empty properties since last month.
Guy Meacock, director of buying agents Prime Purchase, said many Chinese investors were ill-informed about laws and taxes affecting landlords in Britain. He warned that Hong Kong-based landlords of British property may break the government's proposed law on immigration checks through ignorance.
"A lot of people come over ill-advised, without doing due diligence," Meacock said.
He said one Chinese client with a budget in excess of £10 million had sought no advice from lawyers, bankers or tax consultants before arriving in Britain to look at properties.