Recent updates to the UK’s anti-money laundering (AML) regime are reshaping the way the rental property market operates. For the first time, landlords themselves are being brought within the scope of AML regulations, not just letting agents. These changes have major implications for how properties are let, who must be checked, and how compliance is documented.

Whether you’re a professional landlord with a portfolio of properties or a letting agent managing tenancies on behalf of others, understanding your new obligations is critical. Non-compliance isn’t just risky; it can lead to fines, reputational damage, or even criminal consequences.

Here's a detailed look at what the updated AML rules mean, and how you can ensure you stay compliant in this new regulatory landscape.

1. Landlords Are Now Within the Scope of AML Regulations

Historically, AML checks in the rental sector focused primarily on letting agents and sales transactions. However, new rules implemented in 2024–2025 now mean that landlords, and especially those managing tenancies privately, may also be directly responsible for compliance.

This shift reflects increased concern that rental payments are being used to disguise the proceeds of crime. It also brings the rental sector more in line with AML practices used in the sales market.

For landlords managing their properties without an agent, this means understanding and applying AML measures themselves — including sanctions checks and risk-based monitoring. Ignorance of these duties will not be accepted as an excuse by regulators.

2. Sanctions Checks Now Apply to Both Tenants and Landlords

Letting agents are now legally required to check both tenants and landlords against the UK government’s sanctions lists on an annual basis. These lists identify individuals and entities associated with terrorism, organised crime, or international offences — and doing business with sanctioned individuals can be a criminal offence.

These checks must be applied:

• At the start of every new tenancy, regardless of property type or value

• Annually for all ongoing tenancies, even if they predate the regulatory change

This means that existing tenancies are not exempt. Agents and landlords must conduct retrospective checks where tenancies remain active, and maintain records of when checks were conducted and what results were returned.

3. Let-Only Arrangements Remain a Grey Area

One aspect of the rules still lacking clarity is the role of let-only agreements, where the agent finds a tenant but is not involved in ongoing management or rent collection.

In these cases, who is ultimately responsible for AML compliance is not yet clearly defined by the legislation. Some interpret that landlords, as the ongoing point of contact, bear the responsibility once the agent steps away. Others believe agents who facilitated the tenant relationship may retain some obligations.

Until clear government guidance is issued, landlords in let-only scenarios are strongly encouraged to take a cautious approach — by conducting their own checks, keeping records, and referring to HMRC and Home Office updates regularly.

4. Where Agents Handle Rent, They Are Clearly Responsible

The situation is much clearer when a letting agent continues to manage a property and collect rent on behalf of a landlord. In these cases, the agent is fully responsible for:

• Conducting sanctions checks on tenants and landlords

• Performing identity verification (Know Your Customer – KYC)

• Keeping audit-ready records

• Reporting suspicious activity where appropriate

Landlords in these arrangements do not need to carry out checks themselves, but they should be informed when checks are carried out, and what the outcomes were. Transparency between landlords and agents is essential for maintaining trust and accountability.

5. Are There Any Associated Costs?

With these added responsibilities come additional costs. Many letting agents use third-party services or specialist software to conduct AML and sanctions checks — particularly when dealing with large numbers of properties or tenants.

Agents may choose to absorb these costs, but many are now passing them on to landlords as part of their service packages. These could be:

• Flat-rate AML compliance fees

• Per-check charges per tenancy

• Rolled into overall management fees

It’s important for landlords to review any new or updated fee structures and clarify what services are included. As AML requirements grow more complex, working with a competent, compliant agent may be worth the investment.

6. Listing Platforms May Begin Requiring Compliance Evidence

Another change on the horizon involves online property platforms like Rightmove, Zoopla, and OnTheMarket. These portals are exploring options to require evidence of AML compliance from agents and landlords before allowing listings to be published.

This trend mirrors practices already in place in the sales market and would significantly raise the bar for letting transparency. In future, landlords or agents who cannot demonstrate compliance may find it harder to advertise properties or reach quality tenants.

It’s wise to begin preparing documentation now, including proof of identity checks, sanctions screening, and AML policies, so you're not caught out by evolving industry standards.

7. Managing Properties Privately Carries New Risks

For landlords looking to reduce overheads by self-managing properties, the new AML regime introduces serious legal and financial risk. If you are letting a property privately, even to a friend or relative, you are still expected to comply with AML and sanctions rules.

Risks of non-compliance include:

• Civil penalties and fines

• Being barred from future letting activity

• Criminal prosecution in serious cases

Given these risks, many landlords may decide that partnering with a fully compliant letting agent is the safer, more practical option — especially when managing multiple properties or overseas tenants.

What happens next?

The tightening of AML regulations in the UK rental sector marks a significant shift in responsibility and risk. Landlords can no longer assume that compliance is just the letting agent’s problem. As of 2025, every landlord — especially those managing properties privately or under let-only agreements — must understand their role in preventing financial crime.

The best course of action is to:

• Stay informed through HMRC and property industry updates

• Clarify responsibilities in your agent contracts

• Keep up with sanctions checks and documentation

• Invest in compliant processes or work with professionals who do

In a landscape of increasing scrutiny, being proactive is the only safe option.

If it's time you protected your property management business from non-compliance risks of not being able to provide documents for an audit trail, set up a 20 minute demo of togetha today, and see how the togetha platform automatically logs and records all communications and transactions in the property management relationship between tenant and property manager, giving you an automatic audit trail, and peace of mind.