Landlords Corner - Sanctions checking – What you must know
On the 14th of May of this year, it became a requirement to report any prospective tenants or landlords found to be listed on the UK Sanctions List. Whilst this may seem like more checks and policing, primarily for agents to carry out, landlords should expect more checks on them by their agent.
These new requirements fall out of the Sanctions and Anti-Money Laundering Act 2018 and were brought in by The Sanctions (EU Exit) (Miscellaneous Amendments) (No. 2) Regulations 2024. The Act imposed reporting obligations on ‘relevant firms’. These more recent regulations made letting agents, in England and Wales ‘relevant firms’ meaning that we as letting agents now have sanctions list reporting obligations.
So what’s it all about? The reason for imposing sanctions is to help the UK meet its foreign policy and national security aims as well as to protect the integrity of its financial system.
Compliance comes in 2 parts. The first is to establish that a person is not what is known as a ‘designated person’ on the UK sanctions list. To show due diligence in this regard is to carry out checks on individuals and entities. Secondly, if someone is found on the list or that if there is reasonable cause to believe that a breach has occurred then a report must be made to OFSI (The Office for Sanctions
Implementation).
Someone may be on the UK Sanctions List, for example, because of criminal or terrorist activity either in the UK or overseas. A person or ‘an entity’ e.g. a company, a trust, a charity or indeed a ship may be placed on the list by, for
example, the UK Government or the United Nations. There are, for instance, many people or entities on the register from Russia partly in response to the invasion of Ukraine. The sanctions imposed may be in the form of a travel ban, or an asset freeze or a ban on being a company director. The list tends to grow not shrink, at
least for now, and there are currently over 5,000 entries on the list. Most countries will have a sanctions list, we though are specifically concerned about those found on the UK Sanctions List.
The majority of designated persons or entities will be from overseas, this does not mean that a UK person or entity cannot be on the list.
What should landlords expect
From the 14 May 2025 agents must sanctions check new landlords when instructed. Agents have to do these checks when taking on new landlords and at other time specified in the legislation.
Checks will need to be made upon each joint landlord, meaning that evidence of ownership, such as a copy of the deeds or land registry check will be necessary. Where a landlord is not the owner of the property, for example, under a rent to rent agreement, then the right to let out a property must be validated. This might be the evidence that they are permitted to sublet a property under a tenancy agreement.
Where the landlord is a company or other entity (a company, trust or charity), then the entity and any beneficial owners, directors or trustees of the entity with control or influence must be checked. This links back closely to anti-money laundering requirements to register beneficial ownership information with the Land Registry.
In order to ensure that searches of the sanctions list searches are effective, agents will require the full names of each landlord or trustee. Agents may require further identifying information, should a potential match be found.
Tenant checks
Prospective tenants must also be checked when they are ‘in the process of concluding an agreement’. For new tenants, this is likely to mean they have had an offer accepted by a landlord. Many of the referencing companies used by letting agents to check prospective tenants, now offer a sanctions check as part of the process. However, it is perfectly lawful for agents to check the consolidated sanctions list themselves. Checks may also be required on other associated persons such as guarantors and permitted occupiers in case they may be funding the tenancy.
Reporting effects
When a report is made that someone on the sanctions list is identified or a suspected breach is identified then it will be up to OFSI to decide both what the agent may or may not do. They may require the agent to desist from any further dealings with the person or entity.
Staying ahead in the Leytonstone rental market
If you are looking for guidance on the Leytonstone rental market, or you just want a helping hand in complying with rental market regulations, we are always here to assist you.
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