The Government has confirmed that by 1st April 2019, all property agents will be required to be part of an approved Client Money Protection Scheme.
The Government has published the regulations relating to Client Money Protection, including
- The Client Money Protection Schemes for Property Agents (Approval and Designation of Schemes) Regulations 2018
- The Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc.) Regulations 2018 available at:
Both sets of regulations will be subject to the affirmative procedure; that is that a formal vote will be required on them by MPs and Peers before they become law.
According to the draft impact assessment of the new regulation, it is estimated that at least 44% of letting agents are members of a CMP scheme.
The Government has announced that it then intends to bring the second regulation into force on 1st April 2019, which means that all property agents will need cover by this date. However, the Government will be encouraging agents to sign up as soon as scheme providers have been approved.
Big fines for non-compliance
Client money protection schemes protect the money of landlords and tenants if a letting or property agent goes into administration, as well as protecting against theft or misappropriation. The cash in question is usually tenants’ deposits or landlords’ rents – or money for repairs.
In the new regulations published by the Government last week, if a letting agent fails to join an approved client money protection scheme, there will be a maximum penalty of £30,000 for non-compliance.
When the Government announced last March that client money protection schemes were to be made compulsory, the RLA welcomed the news, with Chairman Alan Ward commenting:
“This is great news for landlords and tenants alike. Landlords should be concerned about agents having control over money due to them and formal schemes offer protection against any criminal activity that would deprive them of this cash.”