Online letting agents could find it very difficult to operate Right to Rent unless they increase their costs.

ARLA has warned that they may find themselves in breach of the law if their business models remain as now.

The law requires physical checks of documentation, and either physical or online checks of prospective tenants carried out at the same time.

However, most online letting agents never see the tenants, with the process being wholly handled online and landlords conducting their own viewings.

The new law suggests that in future online agents may have to arrange how they ‘look’ at tenants and also employ local agents to collect documents.

Although tenants could be “seen” face to face or via Skype, this will have to be done simultaneously alongside inspection of the documentation.

According to Section 5(1) the legal requirement is:

“Checks on prospective tenants may only be undertaken and recorded up to 28 days before the tenancy agreement comes into effect. There are four basic steps to conducting an initial right to rent check:

1. Establish the adults who will live in the property as their only or main home;
2. Obtain original versions of one or more of the acceptable documents for adult occupiers;
3. Check the documents in the presence of the holder of the documents⁶, and
4. Make copies of the documents and retain them with a record of the date on which the check is made”

In step 3, there is a small “6”. When you click on this in the guidance file it tells you that “ in the presence of” means “The person must be present in person or via a live video link”.

The law therefore makes clear that efforts must be made to “meet” the clients while, at the same time, the original documents are physically inspected, and copies taken and stored.

David Cox, managing director of ARLA, said: “The Act says that liability for Right to Rent lies with the landlord unless there is a written agreement with the agent, in which case the liability passes to the agent.

“Some online letting agents already offer referencing, and Right to Rent checks would be part of that referencing process.

“Because the law requires physical checks, I think online letting agents as they currently operate could find themselves in breach.”

Breaches could result in criminal penalties including fines or even prison.

James Davis, of online agent Upad, said he was awaiting further information.

Adam Day, of Hatched, said the new law would make no difference because his own firm has moved away from an online role into a hybrid agency.

He said he would either use local agents to physically check tenants, or if this is not possible, Skype. His firm will still physically check all documents, as it does now.

If landlords do the viewings, then the landlord may be asked to take a photo with a smart phone.

Day said: “We collect tenants’ details and their ID in all cases and these are then put through an independent referencing agency on behalf of our client.

“We already have a few properties in the West Midlands and have not encountered any problems. If we do suspect anyone of not having the right to rent, then this is flagged by one of our human beings, no less (!).

“We have had no issues thus far, and our staff that cover the rest of the country will be trained to look out for anything suspicious, as the scheme is rolled out.

“However, for purely online letting agents, where they effectively offer a DIY service by putting the tenant in touch with the landlord, then there could be some issues.

“I’m not quite sure how they will resolve these without incurring further costs with extra staffing to check documentation.

“For me though, this scheme, along with much other regulation coming in, will simply drive landlords away from the DIY and online-only letting agency sites, to more reputable agents.”

Joanna Dickens, of referencing firm Let Alliance, said online-only agents could either employ local representatives, or “utilise technology such as Skype if they will not be meeting an applicant in person prior to move in. The applicant can be seen on Skype and their ID then sent through to the agent, who can then validate it for legitimacy with us and as a true likeness via the Skype call”.