ECSH55150 - Letting agent businesses - what you would expect to see during a compliance intervention
Source: gov.uk (2025-04-17)


Who you will be visiting?

The letting agency business (LAB) may deal with residential rents, commercial rents or both. Whilst the LAB threshold only covers the higher end of the residential renting market, a large proportion of commercial rents are likely to be above the threshold.

LABs can operate different models, depending on their market, size and geographical location. Some, especially the larger businesses, will operate on a franchise business model and they may also use independent agents.

The majority of LABs will have their own website, but almost all of them use online property portals, such as Rightmove and Zoopla.

During a compliance intervention, LABs should be expected to provide an explanation for any departure from published guidance.

Visit location

LABs may be located in a physical premises, which may be in high street location. They would normally also have an online presence, and some LABs will trade solely online. If they are solely online, they will still have a business address (this could be a home address) where the business is run from.

LABs are geographically spread across the UK reflecting their client base. Due to the 10,000-euro threshold, more LABs dealing in residential rents will be concentrated in London, due to the higher price of rent in the capital, whereas LABs dealing in commercial rents are more evenly spread over the UK.

Operating hours

LABs will normally operate office hours on weekdays, and sometimes at weekends. Operating hours on the weekend will be dependent on the business, location and customer footfall.

Record keeping

It is usual for a LAB to maintain a file for each of their properties they rent out, containing details of the property, rental price, contact details, viewing details and other relevant details.

Within this or stored separately will be details of the landlord and customer due diligence (CDD) checks that have been done on them. There will also be within this, or stored separately checks done on the tenant, such as right to rent and CDD checks.

Physical records may be stored onsite however, LABs may also use computerised records.

It is worth remembering that LABs will have a business relationship with their customers and therefore will have to have records of their ongoing monitoring – see ECSH55025 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh55025).

What types of systems and software do LABs use?

Most LABs will have some computerised records, but some records may be kept in a physical format. It will depend on the LAB what systems they use if they are computerised or physical documents.

Any business using computerised records will typically have a backup process, so that records can be retrieved in the event of a data loss. This may be cloud based or the LAB may have physical hard drives.

Some LABs will use third party identity providers as part of their CDD measures. This is common within the property sector. The type and extent of checks completed by identity providers varies depending on what service is provided. Some third-party providers only conduct basic CDD checks, while others do full sanctions screening and PEP checks.

Often with third party identity providers there will be a tiered pricing structure, with more complicated and intensive checks costing more money. Most will provide a report with the results.

LABs are at liberty to use a third party identity provider, however it is important for the LAB to understand that they are responsible for having the relevant CDD records and that their checks are sufficient: they cannot transfer this responsibility to the identity provider. Any report the LAB is provided with must be examined by the LAB, and then the LAB needs to decide what, if any, further action needs to be taken to ensure the LAB has the meet the CDD requirements under the regulations.

A LAB must retain and have access to copies of CDD checks done by an identity provider. It is imperative that the LAB maintains records outside of the third party’s systems, in case the LAB loses access to their systems, or in the event of the provider closing down.

LABs operating in multiple sectors

In many cases LABs will also be an Estate Agency Business (EAB), due to the similar nature of these sectors. However, some LABs specialise in lettings and do not offer EAB services. It is relatively rare for LABs to operate in another supervised sector outside of EABs, but not impossible.

For more information on LABs operating in multiple sectors see ECSH55200 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh55200).