New anti-money laundering rules now in effect: what landlords need to know
New anti-money laundering (AML) rules came into effect this month, marking a significant change for landlords and the lettings industry as a whole. The new rules mean financial sanctions checks are now required for all lettings, regardless of how much rent is charged.
Here, Steve Bond, managing director of residential lettings for Beresfords, explains what landlords need to know and how to stay compliant under the new regime.
Until now these rules primarily applied to agents dealing with high-value properties (those let for over £8,300 per month) but after identifying how criminals have been using the property market to move or conceal stolen or illegal money, the government has introduced tighter regulations. These changes are intended to close gaps in the system, bring stronger AML compliance into the UK lettings market, and broaden the scope of responsibility – impacting both landlords as well as agents.
Here’s what landlords need to be aware of following the changes:
1. Landlords are now within the scope of AML regulations
The updated rules mean landlords – not just letting agents – may now have obligations under AML legislation.
2. Sanctions checks now apply to both tenants and landlords
Letting agents are now required to check tenants and landlords against government sanctions lists on an annual basis. This applies to every new tenancy agreed and more longstanding tenancies which were in place before the new rules took effect. Although initial checks are to be carried out as outlined above, they also need to be re-applied on both landlords and tenants annually for every tenancy which remains active at that point.
3. Let-only arrangements remain a grey area
One of the areas still lacking clarity is let-only tenancies. If an agent helped find the tenant but is no longer involved in managing the property, it’s unclear where responsibility lies. Landlords with let-only arrangements are encouraged to revert to related Government guidelines.
4. Where agents handle rent, they are clearly responsible
If an agent is collecting rent on your behalf, they are responsible for ensuring AML compliance, including sanctions checks. In these cases, Landlords don’t need to take further action themselves but should still be informed, as and when such checks are to be undertaken.
5. Are there any associated costs
Where agents are undertaking the relevant checks, they will incur related charges by bespoke suppliers who are suitably equipped to carry out what is required. Every agent will decide whether they will pass on any charges to their landlords, and if so, how this will be applied.
6. Listing platforms may start asking for compliance evidence
Online property platforms such as Rightmove and Zoopla may begin requiring agents and landlords to provide evidence of AML compliance before publishing listings. This could become an industry standard over time.
7. Managing properties privately could carry new risks
While some landlords may consider self-managing to avoid potential costs, it’s important to understand that non-compliance could result in serious consequences. Working with an informed, compliant letting agent is without doubt the best way to protect yourself.
Steve concludes: “The new AML rules are a turning point for the lettings industry and will affect landlords in ways many hadn’t anticipated. While the finer details are still being worked through at an industry level, landlords need to be aware of their responsibilities and ensure they’re working with reputable agents who are up to speed.”
Beresfords will be contacting their landlords directly to explain in more detail how the changes will affect them and outline what they are doing to support them through this transition.
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