Just a fifth of landlords ready for new sanctions checks

Just 20% of landlords and letting agents are ready for the upcoming compulsory financial sanctions checks.

From 14 May, letting agents will be required to submit a formal report to HM Treasury’s Office of Financial Sanctions Implementation (OFSI) if they have evidence, or even a reasonable suspicion, that a client has breached financial sanctions regulations, either when a landlord instructs an agent or when a landlord accepts an offer from a tenant.

At present, such checks are only mandated for agreements where monthly rent exceeds £8,300. However, the new rules will oblige letting agents to conduct checks on all landlords and tenants, regardless of rent value. Guarantors who will either pay rent directly or engage with the agent or landlord during the tenancy must also undergo these checks.

Previously, only estate agents had a legal obligation to carry out sanctions checks and report to the OFSI. This responsibility is now being extended to all letting agents under the Sanctions and Anti-Money Laundering Act 2018, part of a broader effort to combat financial crime, terrorism, and other illicit activity. Non-compliance could lead to fines in the millions and potentially criminal charges.

A quick poll by Goodlord revealed that just one in five agents feel prepared for the forthcoming changes. In response, Goodlord has rolled out automated sanctions checks as part of recent enhancements to its PRO referencing system, aiming to support agents in adapting to the new requirements.

Nishma Parekh, Director of Referencing at Goodlord, noted the findings reflect the widespread unease across the private rental sector.

“With the sector continually facing new layers of regulation, it’s not surprising that so many landlords and agents are concerned about their ability to stay compliant,” she said.

“With only weeks remaining before these mandatory checks take effect, it’s evident that there’s still significant confusion and a lack of clarity within the industry.”

Trade body Propertymark has urged agents to review their due diligence and client screening processes and to ensure robust record-keeping is in place.

Source: LandlordZONE