The Renters' Rights Act 2025: how does it change AML compliance for letting agents?

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The Renters' Rights Act 2025 (RRA-2025) is the largest reform of the English private rented sector in 35 years. It received Royal Assent in late 2025 and is being phased in through 2026 and 2027. The four headline changes letting agents need to know are: (1) Section 21 'no-fault' evictions are abolished; (2) all assured shorthold tenancies convert to periodic tenancies as the default; (3) the Decent Homes Standard is extended to the private rented sector; (4) rent-in-advance is limited to one month plus a maximum 5-week deposit. Plus a new private-renter database and an expansion of grounds for possession.

Critically for letting-agent compliance: **RRA-2025 does not change MLR-2017 anti-money-laundering duties on letting agents**. The Money Laundering Regulations 2017 still apply with the same supervisor (HMRC), the same 7-duty framework, and the same penalty scheme. What changes is the **workflow shape** of letting in a post-RRA world, and the trigger points where MLR-2017 obligations attach.

## What RRA-2025 actually changes

The substantive changes letting agents will feel in day-to-day operations:

**Section 21 abolition.** No-fault evictions end. To recover possession a landlord must use one of the expanded Section 8 grounds (rent arrears, anti-social behaviour, landlord moving in or selling, repeated breach, etc.). The First-tier Tribunal will hear contested possession claims.

**Periodic tenancies as default.** Fixed-term assured shorthold tenancies (ASTs) no longer exist for new lets. Every tenancy starts and continues on a rolling periodic basis. Tenants give 2 months' notice; landlords must use Section 8 grounds. Existing fixed-term ASTs convert to periodic on a published transition date.

**Decent Homes Standard for PRS.** The standard previously applied only to social housing. RRA-2025 extends it to the private rented sector with phased compliance. Properties must meet specified standards on hazards, repairs, modern facilities, and reasonable thermal comfort. Local authorities enforce.

**Rent-in-advance limited to one month.** Maximum advance rent at tenancy start is 1 month. Combined with the 5-week deposit cap from the Tenant Fees Act 2019, the total upfront capture from a tenant is roughly 9 weeks of rent equivalent.

**Private-renter database.** A government-maintained register of private landlords and properties. Landlords letting must be registered. Letting agents will need to verify registration at instruction.

**Awaab's Law extension.** The duty to act on damp + mould hazards within fixed time limits (from social housing) extends to PRS. Letting agents handling property management carry this exposure.

## Why the MLR-2017 trigger points shift

MLR-2017 reg 27-28 (Customer Due Diligence) attaches when a 'business relationship' is established with a customer. Under the pre-RRA model, the business relationship was clearly bounded: it started at tenancy commencement, lasted the fixed term (typically 6 or 12 months), and ended at the agreed termination. The CDD evidence captured at start and any reg 33 enhanced re-check at renewal mapped cleanly to that lifecycle.

Under periodic tenancies as default, the lifecycle changes:

1. **No defined end-point**. A tenancy can roll for years. The CDD evidence captured at start needs supplementing by reg 28(11) ongoing monitoring through the relationship.

2. **No renewal trigger**. Pre-RRA, the renewal-of-fixed-term moment was a natural re-check point. Without it, the firm needs to define its own re-check cadence (annual is the working norm).

3. **Material-change capture is more important**. If a tenant becomes a politically-exposed person mid-tenancy, or a director on a corporate landlord becomes Warning-Listed, the firm must capture and act on that. The reg 28(11) ongoing-monitoring duty becomes the load-bearing AML control.

4. **Possession-claim AML implications**. Section 8 possession proceedings require the landlord to evidence rent arrears or grounds. A rent-arrears claim implicitly raises the question of whether the firm has been monitoring the tenant's circumstances; an AML failure that should have been caught earlier surfaces uncomfortably at tribunal.

The practical effect: the AML evidence trail per tenancy gets longer and more time-distributed. A single per-tenancy cert at start is no longer enough; you need a durable cert plus a documented ongoing-monitoring cadence.

## The 2026-onwards letting workflow with both regimes

A letting agency operating fully under MLR-2017 + RRA-2025 has a workflow that looks something like this:

**At instruction (landlord):**
- Verify landlord identity (reg 28 CDD).
- Verify private-renter database registration (RRA-2025).
- Capture corporate-landlord PSC tree where applicable (reg 28(2)(a) UBO walk).
- Pull EPC + MEES verdict; flag below-floor properties before marketing.
- Pull NTSELAT material-info disclosure pack (flood, contaminated land, etc).

**At marketing-stage (property listing):**
- Surface EPC band + MEES status (current rule + 2030-prospective).
- Surface NTSELAT Part B+C material info in the listing.
- Confirm Decent Homes Standard compliance on hazards / modern-facilities / thermal comfort.
- No claims about 'fixed-term' tenancies; everything is periodic.

**At tenant onboarding:**
- Run full MLR-2017 reg 28 CDD on the tenant (sanctions + PEP + adverse media + FCA Warning List).
- Capture identity verification evidence per the firm's risk-based-approach policy.
- Limit rent-in-advance to 1 month (RRA-2025).
- Issue periodic tenancy agreement (no fixed term).
- Record CDD cert + tenancy-start date in the firm file.

**Through the tenancy (ongoing):**
- Reg 28(11) ongoing-monitoring runs (annual baseline; tighter for higher-risk tenancies).
- Damp / mould / hazard reports actioned within Awaab's Law time limits.
- Capture material changes to tenant circumstances; update CDD cert as needed.
- Re-run sanctions / PEP screen at the annual review point.

**At possession or end (if needed):**
- Section 8 grounds evidence pack (RRA-2025).
- AML record-keeping evidence for the 5-year-post-relationship-end retention (MLR-2017 reg 40).

## Where Certaby fits in the new workflow

The £4.95 S1 letting-agent suite covers the MLR-2017 + NTSELAT + MEES portions of the workflow above. Specifically:

1. **One cert at start** captures the full reg 27-28 CDD evidence (per-party sanctions + PEP + adverse media + FCA Warning, PSC walk on corporate landlords, property pack with EPC + MEES + flood + contaminated-land).

2. **Hash-bound 7-year verify URL** survives the longer periodic-tenancy lifecycle. The cert remains regulator-verifiable for the full MLR-2017 reg 40 retention window even when the tenancy rolls for years.

3. **Ongoing-monitoring subscription** runs the daily delta on the watch-list (Basic / Growth / Pro tiers per pricing.yml). Sends weekly digest plus immediate alerts on new sanctions designations matching tenants in the firm's portfolio. Designed to fill the reg 28(11) ongoing-monitoring duty that becomes load-bearing under periodic tenancies.

4. **Annual re-check workflow**: rerun the suite at the annual review point to refresh the cert for the next 12 months. £4.95 per re-check; for a 100-tenancy portfolio that is £495 a year on annual re-checks alone, compared to £8,400 a year on a SmartSearch contract.

What Certaby does NOT cover under RRA-2025: the private-renter database verification (it's a manual lookup on the government portal); the Decent Homes Standard hazard inspection (that needs a physical surveyor); Awaab's Law mould-and-damp response time tracking (workflow tool, not compliance check). Pair with a property-management platform for those operational pieces.

## The bottom line

RRA-2025 doesn't dial back MLR-2017; it reshapes the workflow where MLR-2017 sits. The firms that adapt fastest are those who treat the cert plus ongoing-monitoring combination as their durable compliance trail across the new periodic-tenancy shape. The cert plus 7-year verify URL plus reg 28(11) ongoing-monitoring digest covers the load-bearing AML controls; the rest of the firm's MLR-2017 evidence (firm-wide risk assessment, MLRO appointment, training log) lives in the firm file regardless.

The Renters' Rights Act 2025: how does it change AML compliance for letting agents?

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