New Financial Sanctions Rules for Letting Agents: What You Need to Know

On 14th May 2025, new Financial Sanctions Regulations will come into effect, introducing important compliance requirements for letting agents in the UK. These regulations aim to strengthen efforts to prevent financial crime and ensure that businesses are aligned with government measures. Letting agents will need to understand these changes and preparing for them accordingly is essential.

What Are Financial Sanctions?

Financial sanctions are legal restrictions imposed by the UK government on individuals, companies, or countries involved in activities that threaten national security or international peace. These sanctions may include freezing assets, restricting financial transactions, or prohibiting certain dealings with designated persons or entities.

Under the new rules, letting agents will be required to check whether their clients - both landlords and tenants - are listed as designated persons and report any suspicions of sanctions breaches to the Office of Financial Sanctions Implementation (OFSI).

What Will Change for Letting Agents?

From May 2025, letting agents must:

• Screen landlords and tenants against the government’s sanctions list to identify designated persons.

• Report suspicions promptly to OFSI if they know or reasonably suspect that a client is breaching financial sanctions.

• Maintain accurate records of all checks and reports for auditing purposes.

These obligations apply to all rental properties, regardless of the monthly rent amount. This is a significant change from existing Anti-Money Laundering (AML) rules, which only apply to properties with rents above €10,000 per month.

Why Compliance Matters

Compliance with financial sanctions regulations is not optional - it is a legal requirement. Failure to meet these obligations can result in:

• Fines for breaches of sanctions rules.

• Damage to your business’s reputation, which could affect client trust.

• In serious cases, criminal penalties, including prosecution.

These regulations are designed to prevent financial crime and protect the integrity of the lettings sector, making it crucial for agents to implement robust compliance measures.

Next Steps for Letting Agents

With the implementation date approaching, it’s important for letting agents to take proactive steps toward compliance. By staying informed and proactive, letting agents can safeguard their businesses. Propertymark and other industry bodies offer training and resources to help agents navigate these changes effectively.

As well as getting staff informed, implementing an effective property management and compliance platform into your operations can streamline and guide you through the compliance processes, save time, and avoid costly mistakes that could lead to penalties.

Please get in touch if you have any questions or would like some guidance getting your company ready for the upcoming compliance changes.