From June 24, the fourth EU Money Laundering Directive comes in to force, implementing stricter anti-money laundering checks across several industries – which will potentially affect both tenants, landlords and the property industry.
Industry commentators are warning that the admin involved in carrying out the additional checks and effecting the new legislation will drive up costs – which could be passed on to landlords in the form of higher lettings agency fees and, by default, to tenants with an increase in rents.
The Daily Mail reported that the checks – on both the identities of renters and their landlords as well as where they get their cash from – are being brought in under European legislation in a bid to clamp down on illegal money laundering through property.
Up to 11,000 letting agents across the UK, however, still have no idea what checks they’ll have to carry out, despite the Government promising detailed proposals to businesses back in January.
At the time of writing, it remains unclear whether landlords will have to undergo retrospective anti-money laundering checks on all their properties and existing tenants.
Speaking to the Daily Mail, Michael Day, of Integra Property Services, said: “This could affect millions of renters who are legitimately looking to secure a home. It may be particularly problematic for those in professions that are largely paid cash-in-hand.
“Students with weekend jobs to top up their rent, cab drivers, builders – they are all likely to have to show evidence of their income and where it’s come from under the new regime. This looks like it’s just as much about a tax avoidance crackdown as stopping money laundering.”