Six months on: How the new anti money laundering regulations are reshaping the lettings market
Six months have passed since the anti-money laundering (AML) rules came into effect, bringing mandatory financial sanctions checks into every area of the lettings market.
When the changes were first introduced, many landlords were surprised by the breadth and immediacy of the requirements. Half a year on, the sector is now seeing how the industry has adapted and where landlords should focus their attention to remain fully compliant.
As with any regulatory shift, initial challenges were inevitable and what has since become clear is that these rules are firmly embedded, enforcement activity is increasing, and the lettings market is moving towards a more standardised and robust level of due diligence.
Steven Bond, Managing Director of Residential Lettings, Beresfords Group, said: “The lettings sector has undergone a significant regulatory shift in a short time. While the early roll-out phase brought challenges, the industry has begun to adapt to the new requirements. The strengthened AML rules are intended to protect the integrity of the UK property market – and ensuring that landlords are protected is a key part of that objective.”
The lettings experts at the Beresfords Group have outlined the key developments since the regulations were enforced, alongside the actions that landlords should take now, in order to stay ahead.
1. Landlords’ AML responsibilities are no longer theoretical – enforcement has begun
In the early stages there was speculation from landlords as to when the new obligations would be actively enforced, six months on and local authorities and HMRC have been conducting checks, issuing warnings and requesting documented proof of compliance. For landlords – particularly those who self-manage, this confirms that AML requirements are mandatory, and that non-compliance carries serious repercussions.
2. Annual sanctions checks are already identifying issues
One of the most significant changes is the requirement to run sanctions checks on both tenants and landlords each year for every ongoing tenancy. While many agents expected this to be a straightforward administrative step, it has already highlighted expired or inconsistent documentation including tenants who have changed name or nationality since the original referencing, and historical data discrepancies where identity information was not previously verified to current standards. These kinds of findings reinforce the need for accurate, updated records throughout the lifetime of a tenancy.
3. Let-only arrangements remain problematic and riskier than expected
The ambiguity surrounding let-only tenancies has emerged as a pressure point, with no definitive regulatory guidance on where AML responsibility sits, many landlords have found themselves in uncertain territory. Some landlords may have assumed that their agent would continue checks, while agents may have assumed the responsibility rests solely with the landlord once the tenancy begins.
The safest approach is clear – in let-only arrangements, landlords should assume responsibility unless their agent explicitly confirms in writing that they are carrying out AML checks on their behalf.
4. The cost of compliance is becoming a visible part of the lettings landscape
Initially, many agents absorbed the cost of AML checks while assessing the scale of the new workload. As the longer-term administrative implications have become clearer, most agents, particularly those using specialist verification providers are formalising how these costs are allocated.
Some landlords are understandably questioning additional expenses. However, the industry’s emerging consensus is that AML checks have become an essential part of the process. Compliance is not an optional element, it is a fundamental requirement of operating within the sector.
5. Self-managing landlords are reconsidering their position
One of the most notable shifts has been among landlords who previously preferred to self-manage. Many have found the administrative burden of the annual sanctions checks, ongoing documentation requirements and risk of errors to be significant and costly. As enforcement activity increases, a growing proportion of self-managing landlords are returning to professional letting agents to ensure they remain fully compliant and to protect themselves. Working with a qualified, informed agent has become the safest and most reliable option for many.
6. What should landlords be doing now?
Landlords should confirm that AML and sanctions checks have been completed correctly for all current tenancies, clarify where responsibility lies particularly in self-managed or let-only arrangements, maintain organised and accessible compliance documentation, work only with agents who can demonstrate robust AML processes and most importantly – seek clarity on how agents are handling annual re-checks and remain abreast of any future portal requirements for safeguarding.
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