Posted: 19th March 2025
Financial Sanctions Reporting Obligations
Starting on 14th May 2025, new regulations will require letting agents to conduct financial sanctions checks on both landlords and tenants before finalising any rental agreements. This significant change could impact landlords’ ability to rent out their properties if they fail to comply. Here’s what landlords need to know to ensure they stay within the law.
What Are Financial Sanctions Checks?
Financial sanctions are restrictions imposed by the government to prevent certain individuals, companies, or organizations from accessing financial services or entering the property market. These sanctions are enforced by the Office of Financial Sanctions Implementation (OFSI), a part of HM Treasury.
From May 2025, letting agents will be legally obligated to verify that both landlords and tenants are not on the UK’s consolidated sanctions list before proceeding with any rental agreement.
What Does This Mean for Landlords?
Landlords who rent out properties through a letting agent will now be subject to mandatory screening before any new tenancy can be agreed upon. Here’s what this process will involve for landlords:
- Identity Verification: Letting agents will need to verify the landlord’s identity using official documents, such as a passport or driving license.
- Sanctions List Screening: The landlord’s information will be cross-checked against the UK government’s sanctions list to confirm they are not subject to financial restrictions.
- Record-Keeping: Letting agents are required to maintain detailed records of all checks, including the date they were completed and the results.
If an agent finds that either the landlord or a tenant appears on the sanctions list, they will not be able to proceed with the rental and may be obligated to report the issue to the authorities.
What Landlords Need to Do
To ensure a smooth letting process and avoid any potential delays or legal issues, landlords should take the following steps:
- Have Identification Ready: Landlords should ensure that their passport, driving license, or other official ID is up to date and easily accessible.
- Work with a Compliant Letting Agent: It’s essential for landlords to choose agents who are fully aware of the new sanctions screening requirements and comply with them.
- Understand the Consequences: Letting agents who fail to carry out these checks could face severe penalties, including unlimited fines or up to seven years in prison. Landlords should ensure their agent is following the rules correctly.
Final Thoughts
These new checks are part of the UK’s broader efforts to combat financial crime and ensure that properties in England are not rented to individuals subject to sanctions. Landlords must be prepared for this extra layer of compliance.
To avoid any issues, landlords should stay informed, keep their documents up to date, and work with a reliable letting agent who understands the new requirements.
If you are unsure about how these changes will impact you, please reach out to a member of the Milburys Letting Team on 01454 417336.
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