New Sanctions Rules for Lettings

What Landlords and Property Investors Need to Know

From 14 May 2025, new financial sanctions regulations have come into force that directly affect how letting agents operate—and landlords and property investors need to be aware of the implications.

Under these updated rules, all UK letting agents will be classified as “relevant firms” by the Office of Financial Sanctions Implementation (OFSI). This means agents now have a legal obligation to screen both prospective tenants and landlords (including corporate directors where relevant) against the UK sanctions list—and to report any confirmed or suspected matches.

The purpose of these checks is to ensure that no property transactions inadvertently involve individuals or organisations subject to financial sanctions, which are designed to protect national security and prevent financial crime. Sanctions breaches can result in serious penalties—including fines of up to £1 million or 50% of the transaction value, whichever is higher.

What does this mean for landlords?

If you are instructing any letting agent, including Pace, you can expect to undergo a sanctions screening as part of the onboarding process. This is in addition to any anti-money laundering (AML) or Right to Rent checks that may already be in place. While these new requirements may seem like additional red tape, they are now a legal obligation for agents—and designed to protect all parties involved in the lettings process.

For landlords with properties owned through limited companies, the screening will extend to the named directors. Joint landlords and guarantors may also be subject to checks, depending on the structure of the tenancy.

Existing tenancies remain unaffected, but any new or renewing agreements will fall under the scope of the new regulations. OFSI also recommends agents consider retrospective checks on existing landlords and tenants to ensure full compliance.

Fortunately, we use a platform that will have these checks built into its referencing processes, with additional features such as daily monitoring and automated alerts for changes in an individual’s sanctions status.

In summary:

There’s no direct action required from landlords at this stage—but it is important to be aware of these changes and cooperate with our compliance procedures. These measures are designed to enhance transparency and reduce risk across the property sector.