If you let through a non-CMP property agent, you may want to rethink
On the 3rd May 2018, the UK government announced that it will be mandatory for property agents to be members of a Client Money Protection (CMP) scheme from April 1st 2019. It’s great news for landlords and tenants, and something that we believe should have been mandatory for a long time. It should help in the war against rogue property agents.
In this article, you’ll find out how you can ensure that you benefit from CMP.
What is CMP?
CMP is an insurance product that protects any money that a tenant pays to a property agent to pass to the landlord. CMP is offered to agents by several providers, though the scheme must be approved by the government.
What does CMP do?
If a property agent goes bust while ‘holding’ your rental money without CMP, that rental money is lost. As a landlord, you are out of pocket, by the amount of rent the property agent is holding.
This is important to the tenant, too. Tenants who have paid their rent in the same scenario will probably have to pay a second time.
CMP ensures that any rental money held for you will be paid should the property agent go bankrupt. It protects client money – in this case, client money being both that of the tenant and the landlord.
How do CMP schemes become a government approved?
To be a government-approved CMP, the scheme must:
- Have written procedures for handling client money, and publish these on their website
- Provide a free copy of these procedures if requested to do so
- Keep records of all client money movements
- Repay client money promptly if there is no reason to continue to hold it
- Have professional indemnity insurance
- Hold client money in an authorised account
What will the new regulations mean to property agents?
The Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc.) Regulations 2018 stipulates that agents must:
- Belong to a CMP
- Display a certificate that confirms membership of a CMP, both in-branch and on its website
- Provide a copy of this certificate, free of charge, if requested
- Tell clients within 14 days if their CMP has been revoked, or if they switch to another CMP
- Provide to clients the name and address of the CMP scheme of which they are a member
The level of cover must be sufficient to cover the maximum amount of money that the agents hold for their clients.
After April 1st 2018, if a property agent is not a member of a CMP scheme, the local authority can fine the agent up to £30,000. It can also impose fines of up to £5,000 if details of CMP membership are not displayed on its website and in its premises.
How does this new law affect clients of Ezytrac?
While it will be obligatory for letting agents to be a member of a CMP scheme from April 1st next year, is it worth the risk of letting or renting through a non-CMP member in the meantime?
So, here’s our advice: you should make sure that your property agent is a member of a CMP. Do that today. It may be the best protection against a rogue property agent that you will have.
Of course, as a client of Ezytrac, your money is protected in several ways, including:
- We pay landlords rent that has been paid within 24 hours of it hitting our client account
- As a member of ARLA, we must be a member of a CMP scheme
The laws, rules, and regulations that apply to the buy-to-let sector are constantly changing. We’ll continue to do our best to keep you updated with those changes. In the meantime, if you’ve got a question you’d like answered, get in touch with the team at Ezytrac on +44 0 1522 503 717. It’s unlikely that you’ll be the only one asking, and the answer could help other landlords up and down the country.
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