Property licensing penalties: fines, Rent Repayment Orders and how to avoid them
Renting out a property that needs a licence but doesn’t have one is a civil offence, and can be a criminal one. Councils can issue penalties of up to £40,000 per offence for offences committed on or after 1 May 2026 under the Renters’ Rights Act. Tenants and councils can reclaim up to 24 months’ rent through a Rent Repayment Order, and repeat offenders risk banning orders and prosecution. The way to avoid all of this is to know which of your properties need a licence, and to keep checking as councils change their schemes.
Civil penalties of up to £40,000
Local authorities can impose a civil penalty of up to £40,000 per offence for offences committed on or after 1 May 2026 under the Renters’ Rights Act, up from £30,000. It works as an alternative to prosecution, and can be applied per property and per breach, so an unlicensed portfolio can build up substantial liability quickly.
Rent Repayment Orders (up to 24 months’ rent)
Where a property should be licensed but isn’t, tenants, or the council on their behalf, can apply for a Rent Repayment Order to reclaim up to 24 months’ rent. According to Justice for Tenants, the large majority of these claims succeed, so the exposure is a genuine risk rather than a remote one.
Banning orders and prosecution
Serious or repeat offences can lead to prosecution with an unlimited fine, and a banning order that stops a landlord or agent from letting or managing property. Offenders can also be entered on the national database of rogue landlords and agents.
Is the letting agent or the landlord liable?
Both can be. Where a letting agent manages the tenancy, the agent can be held responsible for an unlicensed property. For agents, that makes licensing checks a form of self-protection as much as a service for landlords.
How letting agents avoid these penalties
The practical defence is knowing, for every managed property, whether it needs a licence, and staying current as councils introduce and change schemes. Kamma’s free property licence checker checks any address against every current scheme, and the Kamma platform monitors a whole portfolio and alerts you when a new scheme affects a property you manage.
Frequently asked questions
What is the £40,000 penalty for renting out an unlicensed property?
It’s a civil penalty that local authorities can impose for renting out a property that requires a licence without one. It can reach £40,000 per offence for offences committed on or after 1 May 2026 under the Renters’ Rights Act, up from £30,000, and it can be issued instead of prosecution and applied per property.
How can a letting agent avoid a Rent Repayment Order?
Make sure every managed property that needs a licence actually has one. Check each address against current selective, additional and mandatory HMO schemes, and check again as designations change. An unlicensed but licensable property is what exposes both the landlord and the agent to a Rent Repayment Order of up to 24 months’ rent.
Is the letting agent or the landlord liable for an unlicensed property?
Both can be. The landlord is responsible for holding the licence, but a letting agent who manages the property can also face civil penalties and Rent Repayment Orders. Licensing compliance protects the agent as well as the landlord.
