If it seems like it has been years since the issue of mandatory client money protection was first raised, that’s because it is. On numerous occasions, we’ve been told about possible dates for implementation of regulations, but it hasn’t happened. Now, following a campaign by ARLA Propertymark, the finishing line is in sight, and all lettings agents in England will have to belong to an approved CMP scheme by 1 April 2019.
Now, we’re not always sure that the Government has the property rental sector’s best interests at heart, but in this case, we’re all in favour. There have been too many cases where tenant’s funds have ‘disappeared’. Our industry is fighting hard to build and strengthen a professional and responsible reputation, and we cannot allow the continuation of practices which are unscrupulous, dishonest, negligent or just plain sloppy.
Of course. it isn’t just tenants who can lose out. Landlords too can incur significant losses if the rent they’re due isn’t protected. It has been too easy for lettings agents to beg, borrow and indeed, steal from their clients.
Let’s assume that a letting agent starts with completely honest intent. They have two accounts, one their working capital account and one for client money. If financial difficulties occur, without CMP, it’s far too easy to dip into clients’ money. It may be something as minor as a few days of cash-flow crisis, but we’ve heard of cases where situations have escalated, money has been siphoned out of the agency, and businesses have collapsed owing tens of thousands of pounds to tenants and landlords.
For years, other professionals have worked with similar protection schemes. Since the introduction of the Consumer Rights Act 2015, it’s been a requirement for every lettings agent in England to display whether or not they are a member of a CMP scheme. Letting Agents in Wales already have to comply as part of the Rent Smart Wales initiative. Finally, England is catching up.
Sadly, some tenants and landlords remain unaware of CMP schemes. Let’s hope that a little more publicity will help to alert them.
In my view, agents should be in CMP schemes regardless of legislation and certainly shouldn’t wait until the April 2019 deadline. In fact, I’d go as far as to say that it’s scandalous if they’re not. This industry has had its rotten eggs for too long, and they have to go. The tenant fee ban may be a blunt instrument, but it will, at least, wipe out a lot of rogue traders.
Client Money Protection is a serious issue as reflected in the proposed penalties. Local Authorities will be given powers to fine agents up to £30,000. You can be fined £5,000 just for failing to display the correct scheme membership details on your website or at your premises.
I’d like to ask any agent not currently operating a CMP scheme what they’re waiting for. Why wait for legislation to force you to do what’s clearly the right thing?