All letting agents in the private rented sector in England will have to sign up to a scheme protecting both renters’ and landlords’ money under new laws by 01 April this year.
The new regulations will protect tenants’ and landlords’ money from theft or misuse while being held by property agents, Housing Minister Heather Wheeler confirmed.
The new legislation has been brought forward and all agents will need to join a Government approved scheme by 01 April or face a fine of up to £30,000 with the measures set to protect an estimated £2.7 billion of client money held by agents.
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.
Wheeler explained that 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.
‘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,’ she said.
‘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,’ she added.
Membership of a client money protection scheme is currently voluntary with approximately 60% of agents signed up. Making membership mandatory is being brought in to make sure that every agent is offering the same level of security, giving tenants and landlords the financial protection they deserve.
So far, five 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 01 April.
Separately, 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.
Wheeler pointed out that this is all 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.