Letting agents across the UK must now check every landlord and tenant against the government’s sanctions list, under new rules that came into effect today. The move brings the lettings industry in line with stricter anti-money laundering protocols previously reserved for estate agents and law firms.
Sanctions compliance becomes a legal obligation
The new requirement, announced by the Office of Financial Sanctions Implementation (OFSI), mandates that all letting agents screen landlords, tenants, and other clients against the official UK sanctions list. If a person or company is found or reasonably suspected to appear on the list, agents are legally bound to freeze their assets and report the matter to OFSI immediately.
Previously, sanctions checks formed part of Anti-Money Laundering (AML) due diligence. However, as of today, these checks stand alone as a distinct legal obligation. Agencies that fail to comply could face penalties of up to £1 million, even in cases of unintentional non-compliance.
Who and what is being checked?
The UK’s sanctions list targets individuals and organisations linked to criminal offences such as terrorist financing, political corruption, organised crime, and human rights violations. Letting agents must now verify whether landlords or tenants appear on this list and retain records of all screening activities and outcomes.
Nishma Parekh, director of referencing at Goodlord, stressed the importance of understanding the new requirements: “Every single landlord and tenant, no matter the rental value, must now go through sanctions checks. 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.”
She warned: “If they fail to comply – even if it’s a genuine mistake – they could be facing unfathomable fines of up to £1m.”
Where landlords go from here
While the requirement places another administrative step between landlords and tenants, it also presents an opportunity for agents and landlords to strengthen their compliance credentials. Propertymark, which issued guidance to help agents understand their obligations, describes the new rules as “a vital part of ensuring the property market remains secure and trustworthy.”
Landlords concerned about the implications should speak with their letting agents and ensure proper documentation is in place. Agents are now considered “relevant firms” under UK financial sanctions legislation, meaning they’re held to the same standard as banks and legal professionals.
The full sanctions list is maintained by the Foreign, Commonwealth and Development Office (FCDO), while OFSI publishes a consolidated list of financial sanctions targets. Landlords and agents are strongly encouraged to familiarise themselves with both.
What this means for investors
While some landlords may view this as another layer of red tape, compliance-minded investors could benefit in the long term. Increased transparency, consistent screening and closer alignment with financial regulations may help bolster the reputation of professional landlords and push out rogue operators.
The new rules reinforce the idea that letting property is no longer a passive income activity but a regulated business – and landlords who treat it as such are more likely to thrive. In a market under increasing political and financial scrutiny, staying compliant is not just wise – it’s essential.
For further information on this subject read the government’s General Guidance to UK Sanctions.
