UK property industry disappointed that letting agents not included in money directive
The UK property industry believes that a decision by the Government not to include letting agents in its proposals for legislation to meet the requirements of the fourth Money Laundering Directive is wrong.
There are several elements of the consultation on the directive that are likely to have an impact on the property sector and while estate agents will be expected to carry out customer due diligence (CDD), lettings agents will not.
It means that while buyers and sellers of properties will be checked by estate agents tenants and landlords will not.
‘We’re disappointed the Government has chosen not to include letting activity within the money laundering regulations 2017,’ said David Cox, ARLA Propertymark chief executive.
‘The risk with this is that money laundering activity will transfer from the sales sector due to the increased powers within the new regulation, into the lettings sector which remains unregulated,’ he pointed out.
‘However, within the context of the recently increased legislative burden on letting agents, coupled with the shock announcement to ban letting agent fees in the Autumn Statement, we understand why the Government has chosen not to impose these requirements at this critical juncture,’ he added.
According to Mark Hayward, NAEA Propertymark chief executive, it is good news that the consultation on money laundering has finally appeared and he said that when the legislation comes into force, it’s vital the property sector acts to implement the changes.
‘The Government has announced that purchasers are now included in the application of customer due diligence, so additional checks will need to be made by sales agents and auctioneers, which will be complicated by the fact that buyers are sometimes at arm’s length and there’s not necessarily a face to face relationship,’ he explained.
‘However, further clarity will be required as to at what point the purchaser becomes a purchaser, and this is an issue we will be seeking guidance on,’ he added.
The Royal Institute of Chartered Surveyors (RICS), said it will seek views from the industry before providing a response to the Government consultation. ‘We would welcome views on any elements of the Government’s proposals,’ said RICS associate director Jon Bowey.
There has been concerns that potentially corrupt overseas buyers have been using the London property market in particular to launder money. Recently the Homes Affairs Select Committee said in a report that current rules are inadequate.
‘Investment in London properties is a major route which tarnishes the image of the capital. Supervision of the property market is totally inadequate, and poor enforcement has laid out a welcome mat for launderers and organised criminals,’ said committee chairman Keith Vaz.