Since April 2019, all letting agents handling client money have been legally required to hold valid Client Money Protection (CMP) scheme membership and abide by the regulations involved in this.
CMP has long been compulsory for licensed members of the industry body, Propertymark, which Pennington is part of, and the scheme exists to protect landlords and tenants in how agents look after their money.
This is a significant piece of regulation as letting agents hold around £3.5 billion in clients’ funds at any time, so protection against fraud and misuse, as well as against slapdash practices, is paramount.
There are very strict – and clear – regulations that govern CMP and an example is they prescribe that a tenant’s deposit should be registered with an accredited deposit scheme, within 30 days of the deposit being taken.
In what is quite a complicated case earlier this year, a landlord faced paying a fine of £5,000 to her former tenant after her letting agency was late putting the tenant’s deposit in one of the approved schemes – only doing so six months after the statutory 30-day deadline. This is unacceptable practice from the letting agency and they would know that this is in breach of the regulations.
The tenant had caused water damage to the property during their stay and the landlord was awarded money deducted from the tenant’s deposit to cover the repair cost. The tenant then discovered that the money was not protected until after the deadline and took the landlord to tribunal, seeking compensation of three times the monthly rent. The landlord looked to the agent for responsibility, but the agency had gone into liquidation and she cannot now get confirmation that it was the agent that was late submitting the deposit.
It is an awful situation for the landlord, especially as it was through no fault of her own and inexcusably bad practice from the agency. In other cases with rogue agencies there have been fines of up to £20,000 for being in breach of regulations because they had started to trade before they got their CMP application process underway.
The best advice I can give is to get assistance from a professionally qualified agent, who is Propertymark licensed. You can check credentials on their website as all members, throughout the country, will be named on the site. I cannot stress enough how important it is to have this protection for your money and by using a licensed agent, landlords and tenants will have the peace of mind their agent will provide a professional service and adhere to industry standards, giving protection for the property and all money associated with it.
If you need any advice on this or would like to discuss any other matters on the local property market, please do not hesitate to contact me.