Membership of a Government-approved Client Money Protection (CMP) scheme became a legal requirement at the beginning of April 2019 for all agents in England dealing with residential lettings.
What does this regulation mean for landlords and how can you check that the letting agents that you work with comply with these regulations?
What is CMP?
CMP is a compensation scheme which recompenses landlords and tenants should an agent misappropriate their rent, deposit or other client funds.
From 1st April 2019, all letting agents in England risk facing fines for operating illegally if they have not joined an approved CMP scheme.
To be eligible for CMP, the legislation stipulates that agents must hold clients’ money in a separate bank account to operating funds and have the appropriate indemnity insurance so client money can be reclaimed if any employees commit fraud.
One positive aspect of a CMP is that it does not act on behalf of the letting agency. It is independent, providing protection of client money whilst being held by members and the scheme insures its liability for the payment of any claims.
What happens if my letting agency has not signed up to a CMP scheme?
If you are a landlord, it is essential that you check that your letting agency has a CMP scheme. If they have not, they are now breaking the law. More importantly for you, your money is not protected if that agent should misappropriate rent or other funds.
When you book a holiday, you don’t hand over your money to a travel agent if you don’t know your money is safe. The same now goes for property agents.
If your letting agents were to stop trading, your money would not be safeguarded, and you risk losing any rents or deposits held by the agent.
Before the legislation, it was estimated that only 60-80% of agents had voluntarily joined a CMP scheme. Not all agents were offering the security and reassurance to their clients that their money was safe. There will be rogue agencies that try to avoid their legal responsibilities – it is more important than ever to ensure your letting agents are members of a CMP scheme.
It is important that you can completely trust the agency who manages your properties. Thankfully, as you can see below, Bricknells Rentals are fully compliant with CMP regulations.
Bricknells Rentals: fully compliant with CMP regulations
You may have noticed the ARLA logo at the bottom of our website which is a sign that we are an ARLA Propertymark member. ARLA were actually instrumental in lobbying the government to raise standards in the lettings industry and make CMP a legal requirement. They led the campaign with support from our industry.
We are proud to be ARLA Propertymark members and pleased that it is a membership requirement to have CMP. We are members of their Government-authorised CMP scheme, which means that Bricknells are fully compliant with this regulation.
Agents must display a certificate confirming membership of an approved scheme in their branch and on their website. You can view our certification here.
As a landlord, what do I need to do?
The new law ensures that it is compulsory for agents handling money to have CMP but rogue letting agents are still in operation. Before handing money over or signing up to an agreement with a property agent, please make sure you see a copy of their CMP certificate. You can find a list of the schemes authorised by the government here.
An agent has misappropriated my money, what should I do?
It is clearly very important to check that your letting agent is not breaking the law and is fulfilling legal requirements by being a member of a Government-approved CMP. However, if you are unfortunately in a position where your rent or other money has been misappropriated, we recommend following these steps:
- Report the misappropriation to the police.
- Check that your agent is a member of CMP.
- Contact the CMP and start the claims process – to do this you will need the tenancy agreement, the terms of business with the agent, bank statements illustrating a pattern of payments and then the non-payment by the agent and the tenant’s bank statements illustrating that rental payments have been made.
- If the CMP finds that their member has misappropriated funds, then they will reimburse any client money found to be owing to you within the terms and conditions of their scheme.
If you do have any worries about the security of your rental income with other agents, then please get in touch with us. You can speak to our expert Chris Holmes by calling us: 01709 365 584
Bricknells Rentals is a letting agency that you can have complete confidence in.