THE Government is bringing forward new rules that require all private rented property agents to sign up to approved schemes to protect renters’ and landlords’ money.
Under the regulations, which take effect from 1 April, agents could face fines of up to £30,000 if they fail to sign up to one of the government-approved schemes.
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 is intended to 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 CMP schemes that have so far received government approval are: CM Protect, UKALA, NALS, ARLA Propertymark and Money Shield.
“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,” said Heather Wheeler MP, the minister for housing and homelessness.
“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, according to the Ministry of Housing, Communities & Local Government (MHCLG). By making membership mandatory the idea is it will ensure every agent is offering the same level of security.
Meanwhile, MHCLG said that in a separate measure, 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.
The new measures only apply in England, the Government said.