Savills’ latest forecast, published this week, confirms what most sector operators already know: the market recovery has been pushed out to 2028, house prices are now forecast to fall 1.5% in 2027, and mortgage rates are not expected to drop below 5% until early 2028. Transactions are expected to peak at approximately 1.15 million in 2028, and first-time buyers are forecast to lead the recovery.
For the estate agents, letting agents, conveyancers and property firms serving that market, 2027 is going to be a year of operating hard against a slower transaction environment. Margins are tight. Transaction speed matters. And in the middle of that commercial pressure, the compliance and regulatory environment around the sector is tightening in ways that most firms have not yet planned for.
Property doesn’t get the FCA shake-up that accountancy and legal are now preparing for, but it doesn’t get a pass either.
That is the specific picture every property firm needs to understand heading into 2027.
Four shifts matter heading into 2027.
HMRC enforcement of estate agency AML obligations has intensified sharply over the last two years. In the first half of 2026 alone, HMRC published £835,842 in AML fines across 170 penalties, with estate agents the single largest group penalised across all HMRC-supervised sectors. Over the four years to 2024-25, HMRC AML fines rose 177%. 332 of the 369 penalties published in H1 2026 were for firms trading without AML registration, which is the most basic compliance obligation in the sector. The first criminal prosecution of an estate agent for trading without AML registration landed in 2024.
Running alongside that, the broader regulatory wave has landed. The AML Reform Package was approved by Parliament in 2026, bringing enhanced beneficial ownership requirements, source of funds expectations and digital identity integration into effect from mid-2026 onwards. The MLR 2026 Amendments, which took effect in parallel, tightened the risk-based approach obligations on regulated firms, including specific expectations on EDD for higher-risk transactions. For property firms, both affect everyday workflow on KYC, KYB, source of funds and beneficial ownership verification.
The policy ground around the property sector is also shifting. Transparency International’s October report, Concerning Developments, found that over a third of all suspect UK property purchases it has identified involve new-build homes or development sites. 708 properties worth £2.2 billion. The report highlights that around three in four developers are not registered with any AML supervisor, which has put the question of whether the AML perimeter should extend further into the property chain firmly on the policy agenda. The Government has not committed, but the direction of travel is clear.
Alongside all of this, Right to Rent penalties tripled in October 2026, rising to £10,000 for landlords and £20,000 for letting agents for a second breach within three years. Combined with ongoing Companies House ECCTA reforms (3.81 million personal codes obtained, 151,000 registered office addresses removed, 74 Authorised Corporate Service Providers suspended in the first phase) and the Register of Overseas Entities obligations continuing to apply to property transactions involving overseas entities, the operational compliance burden on property firms has been rising steadily.
Property stays under HMRC supervision for the foreseeable future. The Government’s single AML supervisor consolidation for professional services includes accountancy and legal, but not property.
That is a defensible decision on policy grounds. Property is a large, diverse sector, with estate agency, lettings, conveyancing, auctions and commercial property all operating under different models. HMRC’s experience supervising estate agents and letting agents, built over more than two decades, gives it continuity the sector values.
What the stay-under-HMRC decision does not mean is lighter enforcement. The HMRC AML enforcement pattern through 2025 and 2026 has been consistent: more penalties, more public visibility, and a tougher expectation that firms can demonstrate inspection-readiness on demand. The specific weaknesses flagged in HMRC enforcement decisions have been consistent. Trading without registration. CDD not extending into the beneficial ownership of corporate purchasers. Source of funds verification treated as a form rather than an evidence trail. Firm-wide risk assessments that have not kept pace with current threats. And, consistently, low SAR submission rates. Suspicious Activity Reports from the property sector to the National Crime Agency have been flagged by both the NCA and HMRC as disproportionately low per capita compared with other regulated sectors.
The enforcement signal from the Autumn Budget reinforced the direction. The Chancellor confirmed additional funding for HMRC compliance and stronger powers across the board. That signals the same posture across AML supervision: more capacity, more enforcement, more public visibility of poor controls.
For property firms, the HMRC decision is not a reprieve. It is a confirmation that the current supervisor is being given the resources to raise the enforcement standard inside the existing supervisory regime.
Our 2026 Compliance Reality Check, which surveyed 1,000 senior decision-makers across UK regulated sectors, surfaces a specific set of signals on how prepared the property sector is for the regulatory environment it is now operating in.
Only 20% of property leaders describe themselves as very confident in meeting their current NRA obligations. That is the lowest confidence score of any UK regulated sector we surveyed. 29% of property firms cite the pace of regulatory change as their biggest compliance pain point, which is higher than any other sector. And property has the lowest digital compliance adoption rate of the four sectors we surveyed, sitting below the 45% sector average.
Four specific operational gaps follow from this.
KYC and identity verification. 54% of UK regulated firms (including the property slice) are still conducting identity checks manually. For a sector managing over a million transactions a year, each involving at least two parties, often with corporate purchasers, nominee arrangements or overseas entities, manual KYC is a specific operational drag. The firms running triple-bureau triangulated verification achieve up to 97% first-time pass rates against the 60-65% industry benchmark on single-bureau checks. The difference is real money, real time and real transaction velocity.
KYB and beneficial ownership verification on complex transactions. 52% of UK regulated firms struggle to verify beneficial ownership in complex structures. For property firms, the complexity bites hardest on new-build purchases through corporate vehicles, commercial transactions, and residential purchases involving overseas entities. These are precisely the transactions Transparency International flagged in its October report as high-risk, and precisely the transactions HMRC AML enforcement decisions have been highlighting. Enhanced Due Diligence (EDD) obligations apply to higher-risk transactions, overseas purchasers, and PEP-linked parties, and are a specific area where the MLR 2026 Amendments have raised the bar.
Source of Funds and Source of Wealth verification. For property firms, Source of Funds is the single biggest contributor to delay in a residential transaction, with the industry average measured in days and the best-in-class, Open Banking-enabled firms completing it in hours. Source of Wealth is a separate obligation and one the sector has historically treated as the same thing, which the MLR 2026 Amendments and current HMRC enforcement decisions have been sharpening expectations on. In a 2027 where every transaction is commercially precious because overall market volume is down, the firms that can complete SoF and SoW together in hours will outcompete the firms taking days.
Fraud exposure on transactions, including Payment Diversion Fraud, seller impersonation and title fraud. Property fraud losses continue to be significant. HM Land Registry’s property fraud exposure runs in the hundreds of millions annually. Payment Diversion Fraud on conveyancing transactions, where fraudsters intercept legitimate payment instructions and divert funds to criminal accounts, remains one of the biggest commercial exposures in the sector. Seller impersonation fraud, where fraudsters use stolen or forged identity documents to sell a property they do not own, continues to be flagged by conveyancers as a rising concern. Layered PEP screening, sanctions screening and ongoing monitoring across the client base are now operational baseline requirements, not advanced features. SAR submission to the NCA on identified suspicions is part of the same picture.
The obligations are rising faster than the sector is ready for.
For property firms planning well for 2027, three specific moves distinguish firms getting ahead from firms waiting to be told.
Audit current AML controls against the standard HMRC has been setting through 2025 and 2026, not the standard that applied five years ago. The enforcement expectation has moved. Firm-wide risk assessments that were comfortable in 2022 are not comfortable now. CDD that worked for straightforward residential purchases does not work for the corporate structures and overseas entities the sector increasingly encounters. The risk-based approach now expects firms to scale their due diligence to the specific risk of the transaction, which means EDD on higher-risk cases needs to be visibly and defensibly different from standard CDD. The firms running a current internal audit against the current HMRC standard are the firms best positioned to absorb the next wave of enforcement activity.
Fix the specific operational gaps that have been showing up in HMRC enforcement decisions. Trading without registration is the single most common cause of penalty. KYC and KYB that don’t extend into beneficial ownership is the second. SoF treated as a form is the third. Low SAR submission rates is the fourth. Investing in integrated technology that automates identity verification, standardises CDD and EDD, holds beneficial ownership evidence trails in a single defensible system, connects to Open Banking for SoF and SoW, and layers PEP screening, sanctions screening and ongoing monitoring across the client base is the move that closes these gaps at operational scale. AML training for the MLRO and the operational team sits alongside this. Compliance is a technology and a people investment, not one without the other.
Build the inspection-readiness discipline into the everyday operation. Under HMRC’s current supervisory model, inspection can come at any time. The firms that embed the discipline of being able to demonstrate every compliance decision on demand will find enforcement a manageable experience. The firms that still think of inspection-readiness as something to prepare for before a monitoring visit will struggle.
The specific thing worth flagging about property in 2027 is that the compliance picture and the commercial picture are converging.
In a slower-growth 2027 housing market with transactions down, every transaction matters commercially. Transaction speed, pass rates on identity verification, time-to-complete on Source of Funds, protection against Payment Diversion Fraud and seller impersonation, and audit-trail quality on complex ownership structures are all commercial differentiators as well as compliance differentiators. The firms that complete a residential conveyance in six weeks will outcompete the firms that complete in twenty. The firms that onboard a letting applicant in ten minutes will outcompete the firms that take three days. The firms that verify SoF and SoW together in hours will outcompete the firms taking days. The firms with layered defences against Payment Diversion Fraud and title fraud will retain client trust that firms without them will lose.
For the firms preparing well for 2027, compliance investment is not a defensive move. It is a growth lever in a year when the market itself is not providing growth.
Credas’s DIATF-certified digital identity verification is already in the hands of 350,000+ monthly users across the UK property sector, with 250,000+ five-star reviews, and is involved in approximately 60% of UK housing transactions. The firms using the integrated SmartSearch platform for KYC, KYB, Sanctions and PEP screening, ongoing monitoring, Source of Funds and Source of Wealth verification, and triple-bureau identity verification are completing transactions faster and more defensibly than the firms still operating on manual processes and single-source checks.
Property doesn’t get the FCA shake-up, but it doesn’t get a pass either. The firms that treat 2027 as the year to lift their compliance infrastructure will be the firms best positioned when the market recovery lands in 2028. The firms that don’t will find themselves running slower transactions, under tighter margins, in a tighter enforcement environment, at exactly the point they can least afford to.
The sector has clear sight of what is coming. The time to move is now.
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