All lettings agents in England will need to be members of a Government approved Client Money Protection Scheme by the beginning of April next year, it has been announced.
The industry welcomed the announcement and various organisations said that mandatory membership of a scheme is an important step forward in terms of tenant protection.
The Ministry of Housing, Communities and Local Government (MHCLG) has set out regulations for mandatory membership of a CMP scheme from 01 April 2019. CMPs protect the rental money that a tenant pays to a letting agent to pass onto their landlord. The announcement says that there will be a maximum penalty of £30,000 for non-compliance.
According to Isobel Thomson, chief executive of that National Approved Letting Scheme (NALS) the move is a milestone. ‘Regulations to make Client Money Protection mandatory for all letting agents will ensure a safer private rented sector for consumers,’ she said.
‘For many years now, NALS has campaigned for mandatory CMP, following too many cases of rogues and criminals taking money from innocent tenants and landlords. This law will change that. NALS agents are already part of a client money protection scheme, but for those who aren’t yet, it’s time to get their house in order,’ she added.
The Property Ombudsman has also welcomed the move. ‘Ultimately it will make the sector a fairer place for consumers, and we look forward to this coming into effect next year,’ said Gerry Fitzjohn, chairman of The Property Ombudsman board.
David Cox, chief executive of the Association of Residential Letting Agents (ARLA), described it as an important development. ARLA members are already members of such schemes.
‘It is a vital step forward in improving consumer protection in the rental sector; probably more so than the myriad of other laws passed over the last two decades. We look forward to working with the Government to guarantee that the level playing field we’ve fought so hard to create becomes a reality,’ he said.
Making CMP mandatory before the introduction of the tenant fees ban, will ensure that consumers are protected should an agent use their client funds to avoid any negative impact the ban on tenant fees may have on their business, according to Tim Frome, associate director at Hamilton Fraser, administrator for existing scheme Client Money Protect.
‘We would encourage all agents that do not already have CMP through being a member of a trade association to act now. Membership of a CMP scheme will provide tenants and landlords with peace of mind their money is protected. Our scheme, Client Money Protect, will now begin the process of gaining authorisation in line with the Government’s timetable,’ he added.
