New Lettings Legislation
What Estate Agents Need to Know Before May 14th
The lettings industry is set to undergo a significant regulatory shift with the introduction of new financial sanctions legislation taking effect on 14 May 2025. Letting professionals must be fully aware of these changes, their obligations, and the consequences of non-compliance.
What is the New Legislation?
From 14th May 2025, letting agents will be added to the list of ‘relevant firms’ under financial sanctions regulations. This means that agents must now carry out financial sanctions checks and report any designated individuals or entities engaging in letting transactions.
What Are Your Responsibilities?
Under the new regulations, letting agents must:
- Check whether prospective landlords or tenants appear on the UK’s financial sanctions list before proceeding with any rental agreements
- Report to the Office of Financial Sanctions Implementation (OFSI) if they have knowledge or reasonable cause to suspect that a person is a designated individual
- Identify and report financial assets or economic resources held for designated persons
- Ensure compliance without a monetary threshold, meaning these obligations apply regardless of the rental value
The regulations apply from the moment a letting agent is formally instructed by a prospective landlord. If a letting agent is instructed by a tenant, obligations apply once an offer is accepted, and the agreement is in progress.
Why Do You Need to Conduct Financial Sanctions Checks?
The purpose of these checks is to prevent designated persons (those subject to UK financial sanctions) from engaging in financial transactions through rental agreements. Compliance with these regulations helps to:
- Prevent the flow of funds to individuals or entities associated with criminal activities, terrorism, or sanctioned regimes
- Reduce the risk of inadvertent involvement in financial crimes
- Ensure compliance with legal requirements and avoid reputational damage
What Are the Penalties for Non-Compliance?
Failure to comply with financial sanctions regulations can result in severe consequences, including:
- Monetary fines imposed by the OFSI: The maximum fine is the greater of £1 million or 50% of the estimated value of the breach
- Criminal prosecution: Up to 7 years in prison
- Reputational damage: Non-compliance may impact business operations and client trust
- Publication of breaches: OFSI may publicly disclose breaches, even if no monetary penalty is imposed
- Separate penalties for officers of a business: If a breach occurs with the consent or neglect of an officer (e.g., a director or manager), they can also be personally fined
How to Stay Compliant
To ensure compliance with the new regulations, letting agents should:
- Implement a robust screening process: Use government resources such as the OFSI consolidated list of designated persons to verify landlords and tenants
- Train staff: Ensure all employees understand their reporting obligations and the importance of compliance
- Develop internal policies and procedures: Set clear guidelines for identifying and handling potential financial sanctions breaches
- Report suspicious activity promptly: If there is knowledge or reasonable suspicion of a designated person attempting to rent or let property, notify OFSI immediately
- Stay updated on regulatory changes: Regularly check OFSI’s updates and guidance to ensure continued compliance
Conclusion
The introduction of financial sanctions legislation for letting agents is an important development in the fight against financial crime. Estate agents must be proactive in adopting these requirements to avoid penalties and ensure they remain compliant.
To find out how you can safeguard your agency from risk ahead of the legislation taking effect on 14th May 2025 book a meeting.

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