New Sanctions Reporting Rules for Letting Agents

In an important update affecting letting agents specifically, the Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, has issued detailed guidance outlining new reporting obligations effective 14 May 2025. Landlords should note that these obligations apply exclusively to letting agents and not directly to landlords.

What Are Financial Sanctions?

Financial sanctions are measures implemented by the UK government designed to support national security and foreign policy objectives. They include asset freezes and restrictions on financial activities involving individuals or entities listed as designated persons (DPs). All UK individuals and entities are required to comply with these sanctions.

New Reporting Obligations for Letting Agents

As of 14 May 2025, letting agents become classified as "relevant firms" under financial sanctions regulations, subjecting them to specific reporting obligations. Extending these responsibilities aims to enhance compliance with sanctions, better inform OFSI of sanction implementation, and identify potential breaches and circumvention efforts.

Letting agents are defined as firms or sole practitioners carrying out "letting agency work," which involves matching prospective landlords with tenants or vice versa for leases of at least one month.

When Do Reporting Obligations Apply?

These obligations activate at distinct points in the letting process:

• Prospective Landlords: Reporting requirements apply immediately when a prospective landlord formally instructs the letting agent. If, at this point, the letting agent suspects or knows the landlord is a designated person or has breached sanctions, they must report this to OFSI promptly.
• Prospective Tenants: Letting agents have no reporting obligations for prospective tenants until a landlord has formally accepted a tenant's offer. Once both parties are in the stage of agreeing, the obligation to report arises if the agent suspects or knows the tenant is sanctioned or in breach of sanctions regulations.
• Prospective Tenants Instructing Agents: If a letting agent works directly for a prospective tenant seeking property, the obligation to report activates only once a landlord accepts the tenant's offer and the agreement process begins. Any suspicion or knowledge of sanctions breaches at this stage must be reported.

What Must be Reported?

Agents must report to OFSI:

• Information on which their suspicion or knowledge of sanctions breaches is based.
• Identifying details of the person or entity suspected or confirmed as a designated person.
• Details of any funds or economic resources the agent holds for a designated person.

Importantly, these obligations only arise from activities conducted during formal letting agency work and do not include personal knowledge or information gained outside this scope.

No Monetary Threshold

Unlike anti-money laundering regulations, no monetary threshold exists for reporting sanctions-related concerns. This means letting agents must report suspicions irrespective of the rental amount.

What is Not Considered Letting Agency Work?

Certain activities are expressly excluded from "letting agency work" under the sanctions regulations, including:

• Publishing advertisements or providing information to prospective landlords or tenants.
• Enabling direct communication between landlords and tenants without formally representing either party.
• Providing legal services protected by professional privilege.

For example, a newsagent displaying property listings does not perform letting agency work unless formally instructed to find tenants.

Ensuring Compliance

To comply, letting agents should:

• Regularly consult OFSI's Consolidated List of sanctioned persons.
• Maintain awareness of their reporting obligations and promptly report concerns.
• Consider additional training and consultation of OFSI's general and sector-specific guidance.

Further Information and Support

For additional support, agents can consult:

• OFSI's detailed financial sanctions guidance
• HMRC's guidance on Anti-Money Laundering Supervision
• OFSI's educational webinars and events
• Sign up for sanctions email alerts

This new requirement reinforces the critical role letting agents play in supporting national security and sanctions compliance. While landlords are not directly obligated under these regulations, staying informed ensures clarity and continued compliance across the property letting sector.