- February 6, 2025
- Posted by: FCS Compliance
- Category: News, Property Market
As we move further into 2025, the compliance landscape for lettings and estate agents continues to evolve. With increased regulatory scrutiny, particularly in relation to financial sanctions, money laundering risks, and HMRC inspections, agents must stay informed and prepared. Below, we highlight the key developments that could impact the industry in the coming months.
OFSI Sanctions Compliance – Mandatory
From 14 May 2025, all lettings agents—regardless of rental value—will be required to conduct ongoing monitoring of the parties involved in a rental agreement. This measure aims to identify any changes in their sanctions status and report relevant activity. The importance of compliance is underscored by a recent case where a letting agent was fined £15,000 for breaching sanctions legislation. Notably, this breach related to a letting agreement that commenced as far back as 2016. This serves as a stark warning for agents to ensure they have robust monitoring procedures in place. You can learn more in an upcoming Rightmove members webinar, hosted by Malcolm Driscoll, Lead AML Consultant at FCS (10am, Tues 4 March). Register here: https://hub.rightmove.co.uk/webinar/aml-update/
Potential Changes to Lettings AML Thresholds
The current threshold of €10,000, which triggers obligations under the Money Laundering Regulations (MLR), may be revised. Additionally, there is growing discussion around introducing a cap on the maximum amount that can be paid in advance for rental periods. These potential changes could significantly impact letting agents’ obligations and procedures, making it essential to stay updated on regulatory announcements.
UK National Risk Assessment – A Reassessment on the Horizon?
The overdue UK National Risk Assessment continues to raise concerns, with real estate currently identified as a high risk for money laundering, while estate agents are classified as a medium risk. Given the intelligence and information available on the volume of property transactions linked to criminal funds, there is speculation that these risk levels could be upgraded. If this occurs, estate agents may face even greater scrutiny and stricter compliance expectations.
Anticipated Updates to HMRC Guidance
HMRC is expected to release further guidance aimed at helping agents navigate AML compliance in a more practical, day-to-day manner. This could provide much-needed clarity on best practices and regulatory expectations, making it crucial for agents to stay engaged with updates from the regulator.
Increased HMRC Inspections and Financial Penalties
At FCS Compliance, we have observed a surge in requests for support from agents facing HMRC inspections. With the property sector labelled as ‘the least compliant’ industry, the likelihood of an inspection is growing. Furthermore, we anticipate the imminent publication of financial penalties imposed on non-compliant agents, including ‘naming and shaming’ those found to be in breach of the regulations. This reinforces the need for proactive compliance measures to mitigate risk.
Final Thoughts
With potential regulatory changes and enhanced monitoring requirements, as well as increased enforcement action on the horizon, estate agency businesses must take compliance seriously. Now more than ever, staying ahead of evolving obligations is crucial to avoiding penalties and maintaining a robust compliance framework.
For further guidance and support, FCS Compliance is here to help navigate these complex requirements.
