JLL Residential

Sales and lettings legislation update

London, 14 September 2017

Money Launder Regulations 2017
'Money laundering' is the process by which the true source and ownership of the proceeds of crime is changed so that they appear to come from a legitimate source. Real estate is a potential vehicle for laundered money due to the nature of the transactions involved. For example, a criminal might use money gained illegally to purchase a property that is then quickly sold on. The proceeds from the sale of a property are a legitimate type of income, so the true source of the criminal’s funds is disguised by the transaction. JLL always complies with anti-money laundering laws and all other pieces of legislation that can give our clients peace of mind when it comes to preventing criminal activity. So we were well prepared when the 4th Money Laundering Directive was signed into law on 26 June 2017.

Under the new regulations, completing anti-money laundering (AML) checks on buyers or sellers has become an integral part of any property transaction. Prospective individual buyers or sellers have to provide proof of identity in the form of a passport or driving licence, as well as proof of address dated within the last three months. When the buyers or sellers are corporate entities or trusts, the ultimate beneficiaries must also be identified and verified. In addition, buyers have to disclose the source of their deposits.

AML checks must be completed by the time a business relationship is entered into and so the earlier they take place, the better. The identification details of our individual vendors and purchasers are checked using a product called Smartsearch, an anti-money laundering verification platform. In addition, company documents and identification documents for the beneficial owners of company vendors and purchasers are also reviewed and verified. Although it was widely expected, the regulations do not include checks on landlords and tenants. However, JLL considers it best business practice to make inquiries of any potential client, to avoid committing a money laundering offence, and to protect the reputation of our business.

JLL also verifies the immigration status of all tenants and occupiers of rented property by carrying out Right to Rent checks, as required by the Immigration Act 2014.

We see the new Money Laundering Directive as a positive step toward limiting laundering opportunities for criminals.

Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015
From 1 April 2018, it will be unlawful to rent out a residential property with an F or G rated Energy Performance Certificate (EPC) in England and Wales. This requirement will apply to all new or renewed tenancies, however the regulations will not apply to existing tenancies until 1 April 2020.

The regulations prevent a landlord from letting a substandard property until energy efficiency improvements recommended in its EPC have been carried out. JLL’s property management team can help coordinate any required maintenance works, which we recommend carrying out in between current tenancies. Local authorities will be responsible for administering the regulations and they can impose a financial penalty of up to £5,000 on any landlord found in breach.