Category: law law
lawWith the Renters’ Rights Act being fully legalised on 1st May 2026, individuals and businesses are being faced with more legal pitfalls when managing property – and even the most diligent, well-meaning landlords could be tripped up.
These legal hurdles range from AML (Anti-Money Laundering) rules to the importance of accurate record-keeping. We have covered each of these below, to help you avoid costly compliance issues in 2026.
Money laundering crackdown
Organisations in the private rental sector (PRS) are being more harshly scrutinised by AML rules, as the government is determined to crack down on any signs of money laundering. This is having a trickle-down effect on landlords.
Businesses under fire
Several big estate agents were among a list of every British business that failed to comply with “Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017” between October 2024 and March 2025, which was published on the official HMRC (HM Revenue & Customs) website for all to see.
Legislation states that estate agents should be registered with HMRC for AML supervision. These companies are required to conduct risk assessments, practice Customer Due Diligence (CDD), and maintain compliant policies and procedures.
There are costs involved with compulsory staff training and policy updates, but these pale in comparison to the possible penalties and reputational damage when compliance failures are found.
Fines levied against firms on the list range from thousands to tens of thousands of pounds. Their misdemeanours included neglecting to register for AML supervision within a set timeframe, and failing to alert HMRC to material changes to their business operations.
While these laws have been in place for many years, HMRC released information about non-compliant businesses as a warning to those that have not taken the rules seriously enough.
It stands to reason that a large portion of the listed businesses had no intentions to wash money for devious purposes. However, HMRC makes little distinction between those that actually intended to commit fraud, and those that made a few policy mistakes.
Impact on landlords
Individual landlords also have to be careful to avoid breaking AML regulations, especially concerning CDD.
Landlords who do not thoroughly check the identity and income of a tenant can face staggering fines and the threat of imprisonment, depending on the severity of the oversight.
The real danger of being squeezed by HMRC for the slightest errors has prompted many estate agents to impose higher compliance fees onto their landlord clients.
Some fees are valid, in that they compensate agents for the time and effort of doing all their checks and documentation. Firms that fell behind on regulations may rely on manual processes, which can be more expensive and time-consuming.
As such, concerns have been raised about the lack of regulations surrounding how agents charge compliance fees. Some agents are less transparent than others when outlining what the fees are actually for.
Therefore, when dealing with agents, it is important that landlords seek clarity on any unclear fees, since they are well within their rights to ask questions.
Records
Many landlords protect themselves from claims and fines by keeping detailed records of their business dealings.
However, landlords are also being advised to explain why they are taking particular courses of action, on top of the plain documentation of what happened at a given time.
For example, if a landlord decides to evict a tenant, it will be vital for them to explain the legitimate reasons for doing so (i.e. the tenant’s recent instances of antisocial behaviour) when local authorities make requests for information.
Tessa Shepperson from Landlord Law explained the importance of this:
If you can’t prove something evidentially, it is the same as if it never happened.
If you’re contacted by the Information Commissioner’s Office because of a data information breach, if you can show them records of your work on setting up your procedures, they are unlikely to fine you, as they will see that you have done your best to be compliant.
While digital filing is increasingly normalised, keeping physical documentation is still perfectly valid. It is necessary to keep these records for many years after a tenancy ends.
In addition, it is critical that landlords oversee regular property inspections every three months – or even more frequently for HMOs (House of Multiple Occupancy), if possible.