It’s been a tough old slog for letting agents of late – not just here in Herne Hill but up and down the country. We’ve got the Renters Rights Bill, Section 21 debates, confusion around pets in property, frequent news reports of a landlord exodus (which, as we’ve reported previously, is often overblown or even a red herring)… and not to mention an ever-growing admin mountain that comes with modern management of tenancies.
Now, as we recover from a truly busy first quarter and head into an as-usual buoyant spring market, two overlapping but distinct compliance regimes are causing many letting agents to scratch their heads. As if global uncertainty wasn’t enough already (thanks to Trump’s so-called ‘Liberation Day’ tariffs), new regulations landing at our doorstep are also really turning heads.
The industry has long-anticipated an expansion of Letting Agent obligations under existing Anti-Money Laundering Regulations.
There is a change coming in, in May 2025, and it does involve all lettings agents undertaking the sort of checks they have seen their colleagues in residential sales undertaking to comply with Anti Money Laundering legislation (often under the same roof).
However, the change coming in falls under legislation around financial sanctions reporting, which is now being extended to letting agents who are being added to the list of ‘relevant firms’ (already a requirement for sales agents) – but, this does not fall under Anti Money Laundering legislation.
The result? Confusion, overlapping guidance, and many concerned faces at lettings industry get-togethers, seminars, and conferences across the land.
So, let’s take a breath. In this week’s blog I separate fact from fuss, and break down what these changes actually mean… and what letting agents like ourselves in Herne Hill need to be doing right now.
The trouble isn’t that the new regulations themselves are unclear, per se. It is that they’ve arrived at a time when a proposed change to AML legislation is also a hot topic (and probably better known about). That proposed change is anticipated, generally favoured (for simplicity’s sake if nothing else), but is as yet unconfirmed.
Furthermore, it is legislation that in plenty of ways would target many (but not all) of the same bad actors, be undertaken by the same group of professionals, and would often cover the same responsibilities, such as:
Many letting agents remain unsure which regulation applies to whom, when, or how, and who should be informed about what, when, and why.
Worse still, either way, both regimes come with heavy penalties for getting it wrong, including accidental breaches… and hence the need to really know your onions.
So, let’s take a deeper look at what is changing… and what is not!
Currently, only letting agents handling rents above €10,000 per calendar month are required to register with HMRC for AML supervision.
Whilst not yet confirmed, there has been industry speculation that the threshold may reduce to £5,000 per month from May 2025, dramatically increasing the number of agents who must comply with full AML obligations. As it goes, many in the industry, and not least Propertymark, has argued that all lettings agents should have to comply with AML regulation in the same way as residential sales already has done for some years – not just as a means to help the government tackle it as an issue, but also to remove the element of doubt, and the risk of getting it wrong.
What AML Compliance Involves:
Agencies like ourselves at Petermans are already set up for compliance, should it come into place for ‘more’ or ‘all’ lettings properties, due to our associated sales operation, but of course many smaller lettings-only or property management firms are wondering what is involved and how, when and why they should comply.
And when you consider the cost of registration, training, and potentially new software or services for verification, it is understandable that concern is growing, particularly amongst smaller firms.
As it stands, Some agents are opting to apply full CDD universally across all lets to ensure consistency and avoid doubt – something that it feels Propertymark are implicitly if not explicitly recommending (see here).
Whilst AML regulations have a defined (although arguably largely arbitrary) threshold for supervision, the financial sanctions change is broader, more urgent, and more unforgiving.
From 14 May 2025, all letting agents will be required to report any suspected breaches of the UK’s financial sanctions regime.
This includes any landlord or tenant who:
The agent has a legal duty to report it to OFSI immediately.
Unlike AML breaches, where negligence must be shown, sanctions reporting follows a strict liability regime. Agents can be penalised even if they did not know someone were sanctioned – if it is deemed they should have known or failed to carry out checks.
This is a huge risk for agents unfamiliar with the sanctions list or unsure how to verify identities against it, and this is why AML is often, confusingly, referred to in the same breath – because the steps taken to verify identity under AML should flag if an individual is on a sanctions list.
The OFSI has already started to issue fines and to name, shame and fine offenders for breaches, and enforcement is only expected to rise in 2025.
Given the nature of Herne Hill and the type of properties here, our local market is of course susceptible to abuse by bad actors.
Letting agents in Herne Hill and across South London in general fall firmly within the compliance net (as indeed will agents the nation over – so my best advice is: get prepared!).
Most of my blogs are written with Sellers, Buyers, Landlords or Tenants in mind, but for a change I have written today’s piece with warm thoughts for my fellow agents front and centre, because I know this is something that has caused a fair dose of worry in the industry.
To that end, if you are an agent wondering what to do next, don’t panic. Here is a useful checklist that letting agents in Herne Hill or anywhere else can follow, to know what they should be working through right away:
For AML Compliance:
For Sanctions Compliance:
These are significant changes, and the stress felt by letting agents is real. It is also legitimately felt, especially when guidance from regulators has been pretty patchy, timelines are now tight, and the stakes are high.
But remember: this isn’t about “tripping agents up”. It is genuinely about protecting the integrity of the UK property market, which remains a target for illicit finance – and frankly, do we not want to support our government in tackling serious organised crime and interference from bad actors and unfriendly foreign regimes? Because that is what is at play.
By understanding the difference between AML compliance and financial sanctions rules, and by acting proactively, we lettings agents can position ourselves as reliable, professional, and compliant partners – something that landlords and tenants inevitably value.
Ultimately, we are the professionals. This is an opportunity to show our professionalism and our genuine care for the process.
Great agents will set themselves apart, and in doing so they will attract the right landlords and tenants to them.
Herne Hill is all at once a vibrant and affluent and cosmopolitan area of London, with a busy lettings market to match. Agents here who adapt now won’t just manage these changes successfully; we will build trust, win better business, and lead our local market by example.
We are required by law to conduct anti-money laundering checks on all those selling or buying a property. Whilst we retain responsibility for ensuring checks and any ongoing monitoring are carried out correctly, the initial checks are carried out on our behalf by Lifetime Legal who will contact you once you have agreed to instruct us in your sale or had an offer accepted on a property you wish to buy. The cost of these checks is £60 (incl. VAT), which covers the cost of obtaining relevant data and any manual checks and monitoring which might be required. This fee will need to be paid by you in advance of us publishing your property (in the case of a vendor) or issuing a memorandum of sale (in the case of a buyer), directly to Lifetime Legal, and is non-refundable. We will receive some of the fee taken by Lifetime Legal to compensate for its role in the provision of these checks.