In the fast-paced world of property management, letting agents face a myriad of challenges, with client money management sitting high on the list of priorities. Ensuring the safety and transparency of client funds is not only a legal obligation; it’s good business practice.
Following a series of high-profile account closures, Propertymark has written to the Rt Hon Jeremy Hunt MP highlighting the ongoing issues and pushing for action from the UK Government to find solutions that reduce barriers for letting agents to operate.
The introduction of the Renter's (Reform) Bill resulted a lot of media coverage, with agents and landlords voicing valid concerns about the potential impact of future legislation on their businesses. However, it is important to note that the Bill has not yet become law and is still undergoing scrutiny and possible amendments.
Fines totalling £12,000 have been handed out to six letting agents in the London Borough of Haringey after a crackdown by Trading Standards.
Following the launch of Propertymark’s Calm About Compliance service in December 2022, designed to help property agents navigate the myriad of sector laws, regulations and guidance, we are partnering with PayProp to trial an extra service where agencies no longer incur costly annual accountant reports and health checks.
Letting agents can suffer from ‘choice overload’ when it comes to client accounting solutions, and with such a myriad of options available there has never been a better time to outsource. Choosing the right outsourcing provider is crucial to continued business success, so it is paramount that agents understand their options.
A landmark case of an agent being issued a five-figure fine for failing to follow CMP regulations has brought the legislation back into sharp focus.
On 10 January 2020, the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 came into force. This required letting agents who manage properties with monthly rental incomes of €10,000 or more (or equivalent amount in a Member State) to comply with anti-money laundering regulations.
Letting agents who manage properties which yield an income of 10,000 Euros or more a month (or equivalent amount in each Member State) have to comply with anti-money laundering regulations. Despite how the Regulations specifically only affect a small portion of properties, many banks refused to allow letting agents to open new pooled client accounts.
Valid client money protection (CMP) insurance is a legal requirement for any letting agency that handles client money in England, Scotland and Wales. Agencies that flout this rule could face warnings, fines, and in some cases bans.
Annually, Propertymark PPD (Principal, Partner or Director) members have to submit a Client Money Examination Report to be inspected as part of their membership, and for every company, they are legally responsible.
By keeping money ring-fenced from other business activities agents can use a client account for the sole purpose of handling and distributing deposits, rents, and fees and client accounts come in a few guises – designated or pooled/undesignated.
The RoPA Steering Group recently consulted on its draft Block Management Sector Code as part of its commitment to elevate standards within the sector.
As per the strict processes put in place by The Property Ombudsman (TPO), the agents were referred to the TPO’s independent Compliance Committee, which ruled they should be expelled with most failing to pay compensatory rewards.
Propertymark received a report that a letting agent in Kensington and Chelsea has been issued a fine of £20,000 for not belonging to a Client Money Protection scheme, despite applying to join one. The case underlines the importance of having Client Money Protection (CMP), with Trading standards taking action even when an application is in progress.
We welcome improved Joint Money Laundering Steering Group (JMLSG) guidance on Pooled Client Accounts (PCAs) following our response to their review and sustained engagement with HM Treasury and UK Finance to make it easier for letting agents to meet their legal obligations.