Letting agents unprepared for new mandatory sanctions checks

New mandatory sanctions checks for letting agents come into effect this month, aimed at cracking down on financial crime.

The government is making it mandatory for letting agents to carry out sanctions checks on all prospective landlords at the point of instruction, and on all tenants before a tenancy agreement is finalised.

However, research by Goodlord suggests the industry isn’t fully ready. Just one in five letting agents and landlords say they feel prepared for the new rules coming into force.

Check whether tenants or landlords appear on UK’s national financial sanctions list

The new rules mean letting agents will be required to check whether any prospective tenants or landlords appear on the UK’s national financial sanctions list.

Agents will need to check landlords as soon as they’re formally instructed, this means confirming their identity and making sure they’re not on the government’s sanctions list before moving ahead with anything.

For tenants, checks will need to be done once their offer has been accepted. This is to make sure no tenancy agreements are made with anyone who’s on the sanctions list.

Under the current system, checks are only required for agreements in which the rent exceeds £8,300 per month.

Only estate agents were previously required to complete sanctions checks and report to the OFSI, but this legal duty will now extend to all letting agents under the Sanctions and Anti-Money Laundering Act 2018.

Failure to comply with these checks could result in serious penalties for letting agents, including seven-figure fines and criminal prosecution.

Widespread uncertainty

According to Goodlord, during a live webinar, only 110 out of 558 industry stakeholders said they felt prepared for the new mandatory sanctions checks coming into effect on 14 May.

More than 26% said they were not prepared, and the majority (54%), said they were unsure.

Nishma Parekh, Goodlord’s director of referencing, said: “These results are confirmation, if it were needed, of the widespread uncertainty that we’re seeing across the PRS at the moment.

“Faced with a seemingly never-ending barrage of new regulation, it’s little wonder that so many landlords and agents feel concerned about their ability to comply.

“With just weeks to go until mandatory sanctions checks come into force, it’s clear from these figures that there is still a worrying amount of confusion and unanswered questions across the industry.

“But while the regulatory confusion is frustrating, it’s important that those working in the sector understand that they don’t have to deal with this on their own.”