Landlord Ombudsman Penalty for Not Joining: Fines Up to £40,000 in England

The Two-Tier Penalty System

Sections 66 and 67 of the Renters' Rights Act 2025 provide penalties for breaches of membership regulations once those regulations take effect. The Act does not itself impose a live membership duty.

Breach (Section 66): A local housing authority may impose a civil penalty of up to £7,000 for a breach of regulations made under section 64.

Specified continuing or repeat offence (Section 67): The section covers three cases: the same conduct continues for more than 28 days after a relevant penalty (with the period running after any appeal); a different breach of section 64 regulations occurs within five years of a penalty for an earlier breach; or a section 64 breach recurs within five years of a penalty or conviction for a section 67 offence. A penalty is "relevant" only after the appeal period ends without an appeal, an appeal is withdrawn or abandoned, or the notice is confirmed or varied on appeal. The local authority can prosecute or impose a civil penalty of up to £40,000.

These penalties are enforced by local housing authorities — your district or unitary council — not by the ombudsman scheme itself.

Penalties Beyond the Fine

The financial penalties are only part of the picture. Non-membership triggers several additional consequences that can cost far more than the fine itself.

Separate PRS Database possession restriction: Section 90 of the Act restricts a court from making a possession order while the landlord (or any joint landlord) lacks an active database entry for the landlord and dwelling, except where possession is sought on Ground 7A or Ground 14. This restriction concerns the PRS Database, not ombudsman membership.

Rent Repayment Orders: The Renters' Rights Act 2025 doubled the maximum rent recoverable through a Rent Repayment Order from 12 to 24 months. The continuing-breach offence under section 67(1) is a qualifying offence; an initial failure to join by itself is not. A tenant or local authority can apply to the First-tier Tribunal (Property Chamber) for an order requiring repayment of up to two years' rent, subject to the statutory conditions.

On an average English rental of £1,100 per month, a 24-month RRO amounts to £26,400 — on top of whatever civil penalty the council imposed.

Expulsion consequences: If you join the scheme but then fail to comply with a Redress Order (compensation, repairs, or corrective action), the scheme may expel you under its rules. It may publish specified information about expelled members. Expulsion does not itself remove the right to let, but a landlord required to be a member may face enforcement if they continue letting or marketing without membership.

How Enforcement Works in Practice

Local housing authorities issue penalties through a formal notice procedure:

1. The authority issues a Notice of Intent stating the breach and the proposed penalty amount
2. You have 28 days to submit written representations
3. The authority reviews your representations and issues (or withdraws) a Final Notice
4. You can appeal the Final Notice to the First-tier Tribunal (Property Chamber) within 28 days
5. Lodging an appeal stays the penalty until the Tribunal decides

The Tribunal can confirm, vary, or cancel the penalty. But if the breach is straightforward — you were letting without membership, and the authority can prove it — the outcome is usually confirmation with a possible reduction for mitigating factors.

What Counts as "Letting or Marketing"

Section 64 allows future regulations to require membership before marketing, when a relevant tenancy exists, or for a specified period after a tenancy ends. Those rules have not yet set the exact trigger or treatment of void periods. The Act's redress scope covers landlords under assured or regulated tenancies. The scheme membership rules will set the specific duty. In the meantime, the statutory framework makes no live membership requirement.

When the membership rules take effect, the duty may cover both active lettings and marketing activity. This means:

• A property under an assured periodic or regulated tenancy may be covered by the membership requirement
• Regulations may require membership before a dwelling is marketed for rent
• The Act allows regulations to require a landlord to remain a member for a period after a tenancy ends

The exact membership trigger and any treatment of void periods depend on regulations that have not yet been made.

The Cost of Compliance vs Non-Compliance

The exact annual ombudsman fee has not been announced. Under paragraph 7 of the Schedule to SI 2026/1033, compulsory fees must not exceed the specified scheme costs, must be fair and proportionate, and any increase must be approved by the Secretary of State. The Housing Ombudsman's voluntary scheme fee is £9.64 per unit in 2026–27 — a separate scheme and not a forecast of the mandatory fee.

Compare that to the exposure: up to £7,000 for a breach, up to £40,000 as a civil penalty for a specified section 67 offence (or prosecution, which can result in an unlimited fine), and a possible qualifying RRO exceeding £26,000. The maths is not close.

Our PRS Landlord Ombudsman guide breaks down every penalty trigger, the appeal routes, and the compliance steps that prevent enforcement action from starting in the first place.

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