Understanding the CMP Regulations is important as a landlord since although you won’t be holding client money directly yourself, your agent will on your behalf. It’s therefore important for your reputation and your business to know that it’s being protected as it should.
The client money protection regulations require that letting agents belong to one of a number of approved schemes, providing insurance to you or your tenants should funds - such as rent, deposits or other client funds - be misappropriated.
What the CMP regulations encompass
The Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc) Regulations 2019, help to protect client money in the rental space. Since the beginning of April 2019, the government has made it a requirement that property agents in the private rented sector holding client money obtain membership from a government-approved or designated client money protection scheme. Client money should be held in an account with a bank or building society authorised by the Financial Conduct Authority (FCA).
Responsibility for enforcement
It’s the responsibility of local authorities in England to enforce the two main elements of the regulations. These include firstly that agents belong to such a scheme and secondly that they are transparent about which scheme they belong to.
The agent will usually pay a standard levy which is then adjusted depending on the amount of other client funds in their account. This includes all the money held in their client account except for tenancy deposits protected by a Government-authorised tenancy deposit protection scheme.
Approved schemes include Client Money Protect, Money Shield, Propertymark, RICS, Safeagent (previously NALS) and UKALA Client Money Protection.
Ensure you know your agent’s CMP provider
Making it clear who their CMP provider is, is a key requirement of the CMP regulations. Agents should clearly display on their website a copy of the certificate for whichever scheme they have chosen to belong to.
The membership certificate should also be displayed clearly and prominently in each of the company’s branch offices for both tenants and landlords to easily see. That means on display in a window rather than gathering dust in a back office.
As a landlord, you also have a right to request a copy of the certificate, which should be provided free of charge. If your agent changes schemes they must tell you within 14 days.
If a client fails to display a certificate or notify clients when they’ve moved schemes they can face up to a £5,000 fine. Failing to belong to a scheme can incur a penalty of up to £30,000. If you’re still in any doubt you can also check if your agent really is a member by searching on the schemes’ websites or by calling them directly.
Being clear about the CMP regulations and understanding your agent’s responsibilities should help provide better peace of mind.
For more information on how Kings Group can assist you on your letting journey, please contact one of our branches in Essex, London or Hertfordshire today. We also offer a free and instant online valuation to give you an idea of how much your home could be worth on the current market.
