All private rented property agents must now sign up to a scheme protecting renters’ and landlords’ money.
Under the new regulations that took effect on 1 April, all agents in the private rented sector are 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.
The 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.”
Before the new regulations came into force, membership of a client money protection scheme was voluntary with approximately 60% of agents signed up. The government says that making membership mandatory will ensure every agent is offering the same level of security, giving tenants and landlords the financial protection they deserve.
So far, 5 schemes have been approved.
In separate moves, a working group is also considering a new regulatory framework – including a Code of Practice and a proposed independent regulator – and the introduction of mandatory professional qualifications for all property agents.
It’s part of ongoing government action to crack down on the minority of rogue agents and drive up standards across the property agent sector, so tenants, homebuyers and sellers can be confident they are being charged fairly and getting the professional service they deserve.