A significant proportion of letting agencies are failing to adhere to critical new compliance rules, exposing them to fines that could stretch into the tens of thousands, says Goodlord’s Director of Compliance, Kerry Aldridge (pictured).

According to the tenant onboarding platform’s State of the Lettings Industry Survey  – which comprises responses from over 1,700 letting agents and landlords – over a quarter (28%) of large agencies (those with 11 or more staff) aren’t currently failing to perform Politically Exposed Person (PEPs) and sanctions checks, despite new rules having come into force almost 6 months ago.

All agents must check list

Since May this year, all letting agents have been required to check whether prospective tenants appear on the UK’s national financial sanctions list, as well as report any matches or potential concerns to the Office of Financial Sanctions Implementation (OFSI). Previously, such a check was only required where monthly rents exceeded €10,000.

However, despite the new rules meaning every tenant must now be checked, 28% of large agencies are putting themselves at risk of a £10,000 fine for first offences and £20,000 for repeat offences by failing to adhere to the regulations.

Smaller agencies are faring better when it comes to compliance with the new rules, according to the survey, with 85% of agencies with only 1-5 staff members saying they are performing PEPs and sanctions checks on every tenant.

Shocking to see how many agencies, particularly those with larger operations, are playing such a risky game when it comes to PEPs and sanctions checks.”

Aldridge says: “This year has thrown a lot at the industry. From new compliance rules to the Renters’ Rights Bill, agents have had a huge amount to contend with and prepare for.

“But it’s still fairly shocking to see how many agencies, particularly those with larger operations, are playing such a risky game when it comes to PEPs and sanctions checks.

“With fines stretching into the thousands, over a quarter of agents are exposing themselves to a big financial threat at a time when many can least afford it. We recommend taking immediate action to upgrade processes and ensure your business isn’t vulnerable.”

You can read the full report here.