On 7 March the Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc) Regulations 2018 were signed and come into force from 1 April 2019.
Under the new Regulations all private property letting agents will have to sign up to a government-backed scheme protecting tenants’ and landlords’ money or face a fine of up to £30,000. It is hoped that these Regulations will prevent tenants and landlords being left out of pocket when uninsured agents unexpectedly go out of business or disappear with money belonging to tenants or their clients.
To date there are 5 schemes approved by the government: CM Protect, UKALA, NALS, ARLA Propertymark and Money Shield. Membership of a client money protection scheme is mandatory from 1 April so agents should register with one of these schemes as soon as possible if they have not done so already. We understand that the government is considering other scheme applications, but we do not know whether they will be approved on or before 1 April.
In order to join a scheme, agents will need to have a client account and professional indemnity insurance which meets the requisite schemes requirements. Schemes will also expect agents to have strong client money handling procedures although how this is judged may vary amongst the different schemes. Agents will need to obtain a certificate confirming membership of a scheme and display it in their office(s) and on their website. A copy of the certificate will also need to be provided free of charge to any person who may reasonably require it. It is important to understand that each scheme’s requirements may vary, and it is important to ensure that agents are familiar with the requirements of the scheme they are a member of.
The Ministry of Housing, Communities & Local Government has now published guidance on Client Money Protection.