All private sector agents are required to join a government-approved Client Money Protection Scheme by 1st April – or face up to a £30,000 fine.
Measures will protect an estimated £2.7 billion of client money held by agents
Under the new regulations taking effect from 1st April, all property agents in the private rented sector will be required to join a government-approved scheme to protect their clients’ money while it is in their possession – with fines of up to £30,000 if they fail to do so.
In 2017, an estimated £2.7 billion in client funds, such as tenants’ deposits and landlords’ rental payments, was being held by letting agents. Yet currently, people may not always be able to recover their money if their agent fails to repay it, for example, due to misuse by the agent or bankruptcy.
The new requirement on agents to join an approved client money protection (CMP) scheme will stop tenants and landlords being left out of pocket when uninsured agents unexpectedly go bust or abscond with their money, giving people reassurance that their money is safe while it is with their agent.
Minister for Housing and Homelessness, Heather Wheeler MP, said:
"It is not acceptable that some tenants and landlords are being put at risk of losing out financially, simply because their agent had not signed up to a scheme to protect their money.
Whilst the vast majority of agents act responsibly, this new law will prevent people from losing their hard-earned cash through no fault of their own. This will give tenants and landlords confidence and peace of mind that their money is in safe hands whilst with their agent."
Membership of a client money protection scheme is currently voluntary with approximately 60% of agents signed up. Making membership mandatory will ensure every agent is offering the same level of security, giving tenants and landlords the financial protection they deserve.
It will also be a legal requirement to display on agents websites which CMP scheme they are registered with so don't forget to let us know yours so we can add it for you.
So far, 5 schemes have been approved. All private sector property agents who hold clients’ money are required to register with one of these schemes ahead of the regulations coming into force on 1 April.
Need some great advice on CMP? We can recommend you contact Mike Day at Integra Property Services and talk to us about "Compliance in a Box".
For the full legislation regarding CMP click HERE.