29th March 2019
From 1st April 2019, it has become mandatory that all property agents hold a registered membership with a certified money protection scheme. This is by way of insurance for landlords and tenants, to prevent rogue agents from keeping back money from deposits and rents if something goes wrong. Let’s look at what this means for landlords, and what you should be looking out for when you employ an agent to manage your properties.
Imagine your horror if you learned that the agent you’d trusted with your deposit money had shut up shop and had got on a plane using your money. What would you do, as a landlord? In the past, if your agent wasn’t a member of a money protection scheme, you’d be the one who was out of pocket, and as such you would be liable for reimbursing that money to your tenants.
Scary thought – and although rare, some landlords sadly faced this scenario. Imagine if you had a portfolio of 10 properties, and you lost the deposits for all of them. Assuming you worked on one month, at, say £500 as the average monthly rent upfront, that would put you at a massive £5,000 loss. That’s a lot of money to recoup.
That’s why it’s absolutely vital that you ensure that the agent you have employed, and have entrusted to take care of your money, is registered with a money protection scheme.
And as of April 2019, it has become law that all property agents are insured under a money protection scheme, and that they let you know which one. They are required to have the information displayed on their premises, and should also state the company they use on their paperwork when you employ them. If they don’t you need to ask for it.
Where can I find out if my agent is insured?
Now that agents have a legal obligation to be insured by a money protection scheme, they should have the name of the company they use, as well as the certificate of membership displayed on their premises, and on their website. Most agents will have the logo displayed on their home page (sometimes you’ll find it at the bottom of the page, along with other memberships and governing bodies they are part of). If you don’t see it, drop them an email, or call them to ask them to provide you with a copy of their certificate of membership.
Government approved CMP schemes are as follows:
If you see any of the above logos on the agency website, you can be assured that they are covered, and therefore so are you.
I’m an agent – what if I’m not a member of the Client Money Protection Scheme?
As of the 1st April 2019, it is a legal requirement that you are a member of one of the approved schemes as detailed above. Your local authority can and will fine you if you are found to be in breach of the regulations.
The penalty for not being a member of a money protection scheme can be up to £30,000. There is also a fine for not displaying membership, and not informing clients of change of membership, which can be up to £5,000.
What are the joining fees?
The fees for agents are set up depending on your total property values. Following prices are as a guide, and may differ depending on which suppliers you use:
Up to £500K – from £360 + VAT
£500K to £1M – from £575 + VAT
£1M to £3M – from £1,020 + VAT
Concentric Compliance Director Dawn Bennett discusses the Client Money Protection Scheme at our recent landlord seminar event: