New Rules for Letting Agents: Landlord & Tenant Sanction Checks
We recently learned that as of May 14th, 2025, letting agents are required to conduct stringent checks on landlords and tenants to avoid potential fines. A rather scary-sounding headline, so what was the story behind it?
Well, as part of an initiative to crack down on individuals and groups suspected of engaging in serious criminal activities, letting agents will be required to conduct a sanctions check.
This may lead to the freezing of the agent’s properties or assets, and will necessitate a report to the Office of Financial Sanctions Implementation (OFSI).
Statistics indicate that many landlords may be unprepared for these changes, but there are ways to avoid fines and stay informed.
If you’re concerned about these new changes and want to learn more, read on as we clarify this new legislation.
What’s changed?
If a relationship between renters and sanctions sounds familiar, you are correct to think so.
Sanctions are already a part of the government’s Anti-Money Laundering (AML) regulations.
Up until now, however, they have typically applied to entities such as estate agents, law firms, and financial institutions.
However, under new legislation, letting agents are now classified as ‘relevant firms’ and will be responsible for carrying out these checks.
Some letting agents may have experience running checks on tenants who rent above a certain threshold or with politically exposed individuals (PEP), which may overlap with sanctionable activity.
However, it is important to note that this new legislation is wholly separate.
What are the new rules?
To put it as plainly as possible, the new rules stipulate that each letting agent must carry out sanction checks to determine whether their landlord and/or tenant has been involved in criminal activity worthy of being placed on the sanction list.
While this does not apply to all criminal activity, such as petty crime, it specifically refers to those involved in or associated with activities that oppose the UK’s values and interests.
If a check indicates a match or suspected match, OFSI must be informed, and all assets related to the individual(s) or businesses must be frozen immediately.
What happens if I don’t comply?
If a match or potential match is discovered after completing a check, the letting agent must report this development to OFSI as soon as possible.
Failure to comply – deliberately or through negligence – will reportedly result in fines of up to a million pounds.
Who does the sanctions list affect?
As mentioned above, the sanctions list pertains explicitly to criminal activity deemed to oppose the United Kingdom’s values and interests.
Publicly viewable, access to this list is freely given to make compliance with these rules as straightforward as possible for relevant individuals and firms.
Broadly speaking, this pertains to individuals, businesses and groups that partake in the following activities:
- Money laundering
- Terrorism and, by extension, the funding of terrorism
- Human rights violations
- Organised crime
- Anti-democratic political corruption
While the primary focus of this legislation is asset freezing, various sanctions can be imposed, including financial sanctions, travel bans, and trade restrictions.
Next steps for tenants, landlords & letting agents
While it should perhaps be obvious what we’re getting at here, letting agents’ number one priority is to conduct compliance checks and report any persons or entities that are, or are suspected to be, matches.
While there are several ways to do this, the easiest search method is via the UK Sanctions List. When searching the register, the search terms used are as accurate as possible.
Once reported to OFSI, any assets related to these individuals or entities must be frozen. Additionally, records of checks and other actions must be kept in case they are required for reference in any subsequent legal proceedings.
This should include search timestamps, records of checks and any subsequent courses of action taken following confirmed or potential discoveries.
If you’re asking staff to carry out these checks on your behalf, be sure they have a strong understanding of the sanctions, how to conduct checks, and how to report them.
If you require more information, or wish to learn more about sanctions in general and how they can affect tenants and landlords, consult the UK sanctions guide.
Alternatively, you can get in touch with our team, who will be happy to answer any further queries you may have.
