New Sanctions Regulations Influencing the UK Property Rental Market

The Office of Financial Sanctions Implementation (OFSI) has issued new guidance, confirming that letting agents, both commercial and residential, are subject to sanctions compliance requirements, regardless of the rental value. This clarification eliminates previous uncertainty about whether sanctions reporting applied in cases where anti-money laundering (AML) checks were not required.

For years, the sector has grappled with ambiguity, with many in the industry calling for clearer instructions. This lack of clarity posed significant risks, as the movement of funds between letting agents and landlords created potential vulnerabilities for money laundering through the obscuring of financial flows.

The updated guidance leaves no room for doubt. From 14 May 2025, letting agents will be added to the governments list of “relevant firms” that will be required to report any knowledge or suspicion of sanctions breaches involving both tenants and landlords. The new guidance highlights that there is no monetary threshold when enforcing sanctions compliance.

Since the onset of the conflict in Ukraine, the UK’s sanctions regime has expanded significantly, with almost half of the 2,000 listed individuals/entities coming from Russia. This broader scope aims to restrict the ability of sanctioned individuals or entities to live or conduct business within the UK.

“For a long time, letting agents have been uncertain as to whether the sanctions regime applies to them or not. This new guidance issued by the OFSI makes it clear that there is no monetary threshold when it comes to policing sanctions and that all lettings agents fall within the regulations remit.”

“While the updated guidance strengthens the UK’s sanctions framework, it also places additional burdens on an already overstretched sector. Commercial agents will now need to conduct more thorough due diligence to uncover the true identities of the companies they are engaging with and their ultimate beneficial owners. For many this maybe a new challenge but there are technological solutions available to help them.”

– Tim Barnett, CEO, Credas

For commercial landlords and letting agents, compliance with the new regulations may seem daunting. However, solutions like Credas’ KYB-2-KYC solution can offer support and reduce the operational burden on their businesses. These tools provide comprehensive reports to identify key individuals and ensure compliance, reducing the risk of falling foul of the sanctions regime.

This shift signifies a stronger push towards financial transparency and accountability. While it demands additional effort from the rental sector, it also reinforces the UK’s commitment to enforcing financial sanctions. For letting agents and landlords, adapting to these changes is not just a regulatory requirement but a step toward fostering trust and security in the market.

Full guidance from the OFSI here.