On 14th November 2024 the UK government introduced some changes to the Financial sanction regulations. This included adding more types of businesses to the list of firms that must report activity, as well as what must be reported.
Coming into effect on 14th May 2025, letting agents are among the types of businesses being added to the list. It’s important for agents to be well-informed to avoid breaching regulations.
We’re here to simplify the changes, telling you exactly what you need to know.
The legislation has changed
The Sanctions (EU Exit) (Miscellaneous Amendments) (No. 2) Regulations 2024 was laid in Parliament in November. From here, a number of changes in legislation were introduced. These changes aim to improve the Office of Financial Sanctions Implementation’s (OFSI) ability to ensure financial compliance – OFSI is responsible for improving the understanding, implementation and enforcement of financial sanctions in the UK.
With this in mind, we have detailed the changes and how they impact letting agents.
Reporting obligations
The overview
Financial sanction regulations dictate which types of business must adhere to reporting obligations. These types of business are indicated on a list of “relevant firms” within these sanctions. From 14th May 2025, letting agents will be added to this list and therefore will be subject to these reporting obligations.
How is letting agency work being defined?
“letting agency work” means work—
(a). consisting of things done in response to instructions received from –
(i) a person (a “prospective landlord”) seeking to find another person to whom to let land for a term of a month or more, or
(ii)a person (a “prospective tenant”) seeking to find land to rent for a term of a month or more, and
(b) done –
(i) in relation to a prospective landlord, from the point that the prospective landlord instructs P [i.e the letting agent], or
(ii) otherwise in the course of concluding an agreement for the letting of land for a term of a month or more.
What do letting agents need to do?
The reporting obligations dictate that letting agents are required to make a report of OFSI if they know, or have reasonable cause to suspect, that a person has committed a breach of financial sanctions regulations. This report must be done as soon as is practicable.
The report should include:
- The information or any other materials regarding the knowledge or suspicion
- Any further information that can be used to identify the person who has or is suspected of breaching the regulations
In the instance where the person is a customer, letting agents must also report the nature and amount or quantity of any funds or economic resources held by the agency for the customers at the time when the agency first had any knowledge or suspicion.
Good to know: This report is only required if the information that led to the suspicion or knowledge of the misconduct came to the agent during a business capacity. In this case, it is defined by when letting agency work is being carried out.
The value of the rental agreement is irrelevant
It’s important to note that unlike some other legislation, the reporting obligations do not have a monetary threshold. To put it simply, this relates to all lettings regardless of the value.
When you become obligated to report when working with landlords and tenants
The new legislation also goes into detail around when you are obligated to report when working with prospective landlords and tenants.
If you’re working for a prospective landlord:
- You are obligated to report to OFSI if you know or suspect the landlord is breaching financial sanctions, from the moment you have done work under their instruction
If you’re working for a landlord and dealing with potential tenants:
- You don’t have to report anything about a tenants until the point that they have their offer accepted by the landlord
- Once the offer is accepted and they are starting the rental agreement, you must report if you suspect that tenant is breaching sanctions
If you’re working for a prospective tenant:
- Again, you only have to report if the tenant’s offer is accepted and they’re in the process of finalising a rental agreement.
- At that point, you must report if you suspect either the tenant or the landlord is breaching any sanctions
Information on how to report to OFSI can be found in section 5 of OFSI’s general guidance.
For a full breakdown of the financial sanctions guidance for letting agents you can visit the UK government website.
How can Alto help?
As you prepare for their new reporting obligations, having the right CRM platform to streamline this new process is essential. Alto already provides some helpful tools and features to make compliance easier, with more to come!
ID check
Agents can manually mark ID checks as complete on a contact record and add notes (e.g., check date, how the check was done).
Document uploads
Agents can upload supporting documents to a contact that records any useful evidence and creates a paper trail.
SmartSearch Integration
Alto supports integrated referencing checks using SmartSearch, streamlining identity verification.
