The Government has reiterated that it intends to make Client Money Protection mandatory by next April 1.
It has done so as it issues guidance and application forms for prospective schemes, which will have obtain approval.
Schemes can apply for this from August 27.
The new guidance is intended for both client money protection schemes and for agents.
The schemes will be required to study each applicant agent’s Professional Indemnityy insurance to see whether it is appropriate; obtain proof that client money is being held in an appropriate client money account; obtain copies of the agent’s written client money handling procedures; and conduct financial due diligence on the agent.
The schemes will also be required to monitor that agents continue to meet the rules on an ongoing basis.
Rules could also include the requirement that agents must not allow rental money in a client money account to accumulate over a certain amount or beyond a timeframe before requiring the money to be transferred to the landlord.
Additional guidance will be issued to local authorities on enforcement.
Comments (3)
When one considers the vast number of cases in the lettings industry where rouge agents have run away with clients’ money, or used it in the hope of paying it back before it’s been discovered it’s gone, I cannot think why it wasn’t made mandatory years ago.
Landlords tend not to hold other peoples money except deposits for a very short time. If the deposits are not put into a scheme (either custodial or insured) then they may not get possession of their property back (S21 )- a pretty good incentive! Agents may hold rents and a fund for repairs so the position is very different. In fact if an agent is not currently protecting clients money it does not show them as being very professional and may not indicate they do not even have professional indemnity insurance. Or perhaps I am missing something here?
Why is this not being also aimed at private landlords too? If a tenant’s deposit is to be protected then it should apply to all parties who hold tenant money. I assume the risk which is being mitigated is the disappearance of tenant money? It should it not apply to all circumstances to make the intention achievable?