Only a fifth of landlords and letting agents feel prepared for the new mandatory sanctions checks on all landlords and tenants.

From May 14, letting agents must make an official report to the HM Treasury Office of Financial Sanctions Implementation (OFSI) if they have evidence, or a reasonable suspicion, that a client has broken financial sanctions regulations, when a landlord instructs the agent, or a landlord accepts a tenant’s offer.

Under the current system, checks are only required for agreements in which the rent exceeds €10,000 (£8,300) per month. However, letting agents must soon make checks on all landlords and tenants, and if a guarantor is to pay rent directly or engage with the agent or landlord during the tenancy, they must also be checked.

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. This aims to prevent the spread of financial crime, terrorism, and other undesirable behaviour. Failure to comply could result in a seven-figure fine and, potentially, criminal prosecution.

Goodlord’s snap poll found that just one in five feel prepared for the changes. To help letting agents overcome these anxieties, it has introduced automated sanctions checks for users, as part of recent upgrades to its PRO referencing service.

New regulations

Nishma Parekh, Goodlord’s director of referencing, says the results are confirmation of the widespread uncertainty across the rental sector.

“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,” she added.

“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.”
Propertymark has advised agents to review due diligence procedures along with client screening procedures and to enhance record-keeping.

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