What you’ll learn in this article:
- What the new UK financial sanctions rules mean for landlords and letting agents
- When and how checks must be carried out on tenants and landlords
- With whom the legal responsibility lays
- Practical steps to stay compliant without overcomplicating your processes
As of 14 May 2025, a significant legal update has taken effect that affects every letting agent and landlord in the UK, but you probably didn’t know about it. The aim is to ensure all tenants and landlords are not part of the UK financial sanctions list. While this previously applied to purchases and higher value rental properties, it is now a requirement of all rental properties in the UK.
Here’s what that means for you and how to stay on the right side of the law.
What’s Changed?
Under the Sanctions and Anti-Money Laundering Act 2018, there’s a legal obligation to report any dealings with individuals or organisations that are on the UK financial sanctions list. From May 2025, letting agents are now responsible for ensuring they’re not doing business with anyone on that list. Both tenants and landlords will be subject to these checks at various points in the lettings process.
The aim is to prevent sanctioned individuals, often involved in serious criminal or political wrongdoing, from using the UK property market to handle or hide money.
Who Needs to Be Checked?
This isn’t about checking every landlord or tenant at all times. OFSI (the Office of Financial Sanctions Implementation) has provided some clear guidance on when to carry out checks:
- When a landlord sends a new instruction to a letting agent.
- When a tenancy agreement is being put in place: At this point the tenant is subject to the checks before signing any agreement.
- Regularly check both tenant and landlord on an ongoing basis
How Do We Carry Out a Sanctions Check?
The UK government maintains a publicly available list of all designated persons under sanctions. If you are interested, you can search this list online via the OFSI website.
What will be checked against the database:
- Full names
- Dates of birth (if known)
- Any other identifiers like addresses or company connections
If you’re using a professional property management company or referencing service, ask them whether sanctions checks are included. Any failure to complete the checks could cause you a headache in the long run.
What If We Find a Match?
If we suspect we’re dealing with a designated person, even if it’s just a suspicion, we are legally required to report it to OFSI immediately. This is not optional. Failing to do so is a criminal offence and could result in a fine, or up to three months in prison.
This report will go directly to the OFSI without notifications being sent to the person suspected of being on the sanctions list.
What Could Raise A Red Flag?
While it’s unlikely that most landlords or tenants will be under sanctions, certain scenarios can raise red flags:
- High-value properties: Especially in London, where investment from sanctioned countries has historically been higher.
- Use of third parties: If someone else is managing or paying on behalf of a tenant or landlord, we’ll need to confirm who the ultimate “beneficial owner” is.
- Complex company structures: If a landlord operates through a company or trust and it’s not clear who’s really behind it, we may need to find out.
If we are unable to satisfactorily get the information we require, then contact with the OFSI may be made to ensure we are legally covered.
What Landlords Should Do Now
This might all sound a bit daunting, but the key is to put a few sensible processes in place:
- Work with your letting agent to make sure they’re doing checks as part of tenant onboarding.
- Ask your agent or referencing provider whether they include sanctions checks.
- Keep records of when checks were carried out and who was checked.
- Stay alert to anything unusual and report this to your letting agent.
This new legislation adds another compliance layer to being a landlord, but it’s ultimately about safeguarding the UK property market. For most landlords, using a reputable lettings agency will be enough to make sure you stay on the right side of a the law.
At Grace Miller & Co., we’ve updated our internal systems to ensure that all tenants and landlords are screened at the correct stage. If you’re unsure about your own obligations – or want help making sure your property portfolio is compliant – we’re here to help. Speak to us today.
