New laws have been introduced under which any lettings agents not registered with one of six recognised Client Money Protection (CMP) schemes will be found to be trading illegally – and face fines of up to £5,000.
As a business which has long been members of the Royal Institute of Chartered Surveyors (RICS) and ARLA Propertymark, our team at Garness Jones Residential certainly welcomes this tightening of legislation, which will without doubt provide greater protection to landlords.
As a firm which places a clear focus on supporting professional landlords who are looking to develop substantial property portfolios for rent, we are always very much aware of the need to manage their money and ensure it is safe at all times.
Essentially we operate to help landlords make their investments go further and become more profitable.
We work hard to ensure their properties enjoy high tenancy rates, and then collect, protect and manage their money like it is our own – whilst never for a second considering it to be our own.
That is where some agencies have gone wrong.
At some agencies there has been no clear distinction between their own business funds, and those collected on behalf of the landlords they serve. That can become a dangerous situation for both.
The new law, introduced at the start of this month, now requires all letting agents in England to be members of a CMP scheme. They must also hold client money in a separate bank account, hold appropriate indemnity insurance and establish money handling procedures.
These are all measures we already had in place at Garness Jones, as we know the successful and safe management of landlords’ money is a key part of our service – in fact perhaps the most important part for all landlords who entrust us.
This has been an issue which has needed addressing for some time, given a landlord with 20 rental properties bringing in £600 a month has £12,000 invested in a letting agent each month.
That is close to £150,000 over year – a clear example of the kind of money which can be passing through the largest agencies representing many landlords – and a clear example of why new regulations have been required.
Landlords will always rely on agencies for efficient service.
They look for them to efficiently collect and remit the monthly rent without delay, and pursue non-payment of rent chase arrears. This is something particularly important to those with buy-to-let property portfolios, as cash flow is crucial to helping them not only manage their current property port-folio, but expand it.
The new CMP schemes all offer essentially the same service – to protect any money held by a letting agent on behalf of a landlord or tenant should the cash be misappropriated.
The new laws should make little difference to agencies which have always put their clients first, but will thankfully offer greater peace of mind to many that their money and investments are safe.
Peace of mind is the first and most essential guarantee we give all of the landlords we work for, and always will.