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17/12/25 3:30 pm
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Compliance checks are now a routine part of lettings and property sales, but for many landlords, they bring an uncomfortable question: are these charges paying for genuine legal obligations, or quietly offsetting agents’ own regulatory weaknesses?
Estate agents are fully within scope of the UK’s anti-money-laundering (AML) supervision and must register with HM Revenue & Customs (HMRC) for AML supervision, supported by written policies and procedures, staff training and robust record-keeping. Letting agents, by contrast, are only subject to AML supervision where they carry out letting agency work involving higher-rent tenancies defined as individual rents of €10,000 or more per month for a term of at least one month. HMRC has made clear that AML compliance must be active, ongoing and capable of being evidenced, with its regular publication of enforcement outcomes underscoring a tougher approach to non-compliance. Recent cases show that failures such as late registration, weak internal controls and poor documentation can result in significant financial penalties and lasting reputational damage.
This enforcement pressure inevitably feeds into operating costs. Many firms have introduced or increased “compliance fees” charged to landlords. Some of these costs are legitimate. This enforcement pressure inevitably feeds into operating costs. Many firms have introduced or increased “compliance fees” charged to landlords. Some of these costs are legitimate. Since May 2025, letting agents have had legal duties around financial sanctions, including screening relevant parties and reporting matches to the Office of Financial Sanctions Implementation. These checks require staff time, documentation review, and reporting processes, all of which incur real costs.
However, there is no regulation governing how compliance fees are set or presented. This lack of oversight has created wide variation across the market. Some landlords pay modest, transparent charges; others face opaque or escalating fees with little explanation of what work is actually being done. In some cases, compliance fees have become a convenient way for agents to offset inefficiencies, rather than a direct reflection of legal obligations.
High fees do not always equate to high standards. Agents with robust systems and automated compliance checks are often able to absorb the work efficiently, keeping landlord costs low. By contrast, firms that have fallen behind may rely on manual processes, repeated document requests, and reactive fixes - inefficiencies passed on to landlords under the guise of compliance. Over time, this can make transactions slower, create frustration for landlords, and increase the likelihood of errors or missed deadlines.
Landlords should not hesitate to ask clear, practical questions before paying compliance fees: what checks are being carried out, which are legally required, and are fees pass-through costs or internal mark-ups? A professional agent should be able to explain the process clearly, provide transparency on what costs are being charged, and demonstrate that checks are carried out consistently and correctly.
There is also a reputational dimension. With HMRC increasingly willing to name and fine firms for basic compliance failures, more agents are introducing or increasing compliance fees, making it reasonable for landlords to ask what checks are being carried out and what the charge actually covers. In a sector built on trust, that association can have real consequences, from delayed transactions to complications in future property dealings.
The rise of compliance fees, therefore, is not just a financial issue but rather a lens through which landlords can assess how professional and prepared their agents are. Transparent, justified fees indicate a well-run business that is proactive about AML and sanctions obligations. Opaque or inflated charges may signal inefficiency, weak systems, or reactive management.
Key takeaway
Compliance is mandatory - inflated or unclear fees are not. Landlords who demand transparency are not only protecting themselves legally but also ensuring smoother transactions and stronger partnerships with their agents. Asking the right questions today can save time, money, and reputational risk tomorrow.
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