Letting agents warned of fines under new sanctions rules

New rules coming into force today will affect all letting agents across England.

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.

Failure to comply with the rules, even by mistake, could result in a £1 million fine.

New rules around sanctions checks represent a major shift for the industry

Under the new rules, letting agents are required to check both tenants and landlords against the UK’s financial sanctions list. If any individual or entity is found on this list, agents must freeze any assets or property held on their behalf.

Propertymark says for agents already registered for Anti-Money Laundering (AML) supervision, sanctions checks may already be included in the customer onboarding process. However, the updated rules apply to all letting agents, not just those exceeding the AML income threshold.

This means that sanctions screening must now form part of the standard Know Your Customer (KYC) process for every landlord and tenant, regardless of rent levels or registration status.

Nishma Parekh, Goodlord’s director of referencing, said: “New rules around sanctions checks represent a major shift for the industry and it would be very easy for letting agents to unwittingly fall foul of them. Every single landlord and tenant, no matter the rental value, must now go through sanctions checks.”

Ms Parekh warns that failure to comply could result in a hefty fine.

She adds: “With four in five landlords feeling unprepared for the changes, it’s vital that they get their ducks in a row immediately if they want to stay on the right side of the law. If they fail to comply – even if it’s a genuine mistake – they could be facing unfathomable fines of up to £1m.”

Crucial all agents are aware of the announcement

Propertymark, chief executive, Nathan Emerson said: “It is essential that all agents are aware of this crucial announcement and how it fundamentally affects their business and operations.

“While it’s right to consider there will always be progression within the sector, there has been much time invested in ensuring compliance across the industry regarding material information, for it to become superseded by new legislation in less than two years and with limited sector guidance for both consumers and practitioners to rely on, this could cause considerable confusion.”