Client Money Protection – property agents told to sign up or risk being fined
Regulations have now been passed requiring property agents in England to sign up to government-backed Client Money Protection (CMP) schemes by 1 April 2019. Failure to do so risks a fine of up to £30,000.
CMP schemes safeguards landlords and tenants because it prevents their money from being stolen or misused by unscrupulous agents and ensures that both parties can regain their funds if an agent goes into administration.
There are currently five government-backed schemes which have been approved: CM Protect, UKALA, NALS, ARLA Propertymark and Money Shield, and the Government has confirmed that it will continue considering schemes until 1 April 2019 deadline.
Based on figures from 2017, it is estimated that agents hold £2.7 billion of clients’ money - both tenants’ deposits and landlords’ rental payment.
In order to be eligible for a scheme, property agents will need to have a client account and appropriate indemnity insurance, as well as good client money handling procedures in place.
Given that there are approximately 60% of property agents who have voluntarily signed up to CMP, Housing Minister, Heather Wheeler cautioned that, “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.”
What you can do:
Landlords should undertake their due diligence and ensure that their property agent is compliant with regulations and signed up to one of the schemes.
NLA members can contact our Advice Line on 020 7840 8939 for support with managing their relationship with agents./membership-benefits