Does your letting agent offer Client Money Protection?
This month the law changed to make the rental market more transparent and ensure that all landlord and tenant money is better protected.
As of April 1 2019, it's now mandatory for all letting agents to be part of a government-approved Client Money Protection (CMP) scheme.
Alongside joining a scheme, compliant agents will also have to hold client money in a bank account approved by the Financial Conduct Authority, display their CMP certificate prominently in their offices and on their website, have appropriate CMP handling procedures in place and provide a free copy of their CMP certificate to anyone who reasonably requires it.
What is CMP?
Client Money Protection, also known as CMP, protects the money that letting agents hold on behalf of landlords and tenants, such as rent or deposit payments.
In the event that a letting agent goes out of business or misappropriates consumer money, CMP schemes provide landlords and tenants with insurance and the opportunity to reclaim their money.
It is estimated that agents hold almost £3 billion of client money and, while approximately 60-80% of agents were already members of a CMP scheme before the April deadline, the remainder of the industry has now been brought in line, creating a level playing field for all.
What does this mean for landlords and tenants?
The new legislation is a positive step for the rental industry and will come as welcome news to landlords and tenants.
Despite the majority of agents already offering CMP, before April 1 consumers were still at risk of working with approximately 20-40% of agents not offering this much-needed requirement.
Now all landlords and tenants can rest assured that it is a legal requirement for all agents to join a CMP scheme. This means they can have peace of mind that their money will be safe in the event the agency closes or uses it fraudulently.
What’s more, due to challenging market conditions and the introduction of the Tenant Fees Act in June, some small letting agencies may find it difficult to continue operating this year. Therefore, the introduction of mandatory CMP membership for agents is even more timely as more client money could be at risk as we move through the remainder of 2019.
Make sure you work with a compliant letting agent
When landlords choose which letting agent they want to manage their property, it’s important to work with an agency like Balgores Property Group which is compliant with the new CMP rules.
What’s more, tenants should make sure that any agency they let a property through is a member of a CMP scheme to make sure the money they are paying out remains in safe hands.
For more information on Client Money Protection or any advice on letting or renting a property, please get in touch with the Balgores Property Group team.
To find out how much your property could be worth on the current local rental market, you can request a free and instant online valuation today.