New sanctions rules for lettings: What you need to know for May 2025

Starting from 14 May 2025, new regulations will require all UK letting agents to conduct financial sanctions checks on both landlords and tenants. This measure aims to prevent individuals or entities subject to financial sanctions from participating in the rental market, thereby enhancing the integrity of property transactions.

Understanding financial sanctions

Financial sanctions are legal restrictions imposed by governments to freeze the assets of designated individuals, companies, or organisations, by limiting their access to financial services. These sanctions are part of international efforts to combat money laundering and other illicit activities. In the UK, the Office of Financial Sanctions Implementation (OFSI), a division of HM Treasury, oversees the consolidated list of sanctioned entities.

New obligations for letting agents

Previously, estate agents were required to report any reasonable suspicions that a client was a designated person under financial sanctions. From 14 May 2025, this obligation extends to letting agents as well. The key requirements include:

For Landlords: Letting agents must screen landlords at the point of formal instruction. This means verifying the landlord's identity and checking them against the government's consolidated sanctions list before proceeding with any property-related activities.

For Tenants: Agents are required to conduct sanctions checks on prospective tenants once their rental offer has been accepted by the landlord. This ensures that no tenancy agreements are made with sanctioned individuals or entities.

Implications of non-compliance

Failure to comply with these new regulations can lead to significant penalties, including substantial fines and legal consequences. Engaging in transactions with sanctioned individuals is a serious offense that can also harm the reputation of landlords and agencies.

What about existing tenancies?  

This requirement applies to all parties involved in new tenancy agreements initiated after this date. For existing landlords with ongoing tenancies established prior to 14 May 2025, the regulations do not explicitly require retrospective checks.  

Choosing a compliant letting agency

For landlords and tenants, partnering with a well-prepared letting agency is crucial. Agencies that have implemented robust screening systems not only ensure compliance with the new regulations but also provide peace of mind by safeguarding all parties involved in property transactions. Working with us can help minimise the risk of inadvertently engaging with sanctioned individuals.

Speak to our teams today for more information.