Finance News

Client Money Protection May be Made Mandatory for Letting Agents

Rose - April 21, 2016
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Client Money Protection (CMP) at last made it into the Housing and Planning Bill yesterday, after an amendment from Baroness Hayter and Lord Palmer was approved.

The amendment would ban letting agents from taking money from tenants and landlords unless they hold separate client money accounts. It was added to the bill during

Client Money Protection May be Made Mandatory for Letting Agents

Client Money Protection May be Made Mandatory for Letting Agents

the report stage in the House of Lords.

Although the amendment does not make CMP mandatory, it allows the Government to review the need for a compulsory measure.

It is believed that the Housing Minister, Brandon Lewis, ruled out enforcing CMP, however, Baroness Hayter said that “constructive” discussions with ministers had led to a change of course.

She said the amendment will “require every letting agent to have money they hold belonging either to the tenant by way of advance rent or to a landlord as rent received to be protected, so that even if the letting agent disappeared or went bankrupt, such money would be safe and available to the landlord.

“Such money is not the agent’s money and, as with clients’ money handled by solicitors and others, should be held separately in a protected client account.”

Just last week, Lewis seemed to rule out introducing CMP during a speech at the Association of Residential Letting Agents (ARLA) conference, when he said he did not want to create too much regulation for the sector.

The Managing Director of ARLA, David Cox, responds to the amendment: “This is positive news for consumers and a great example of the industry and policy makers working together to champion consumer interests. At present, property agents are not legally required to join CMP schemes, which leaves tenants and landlords at risk of losing money.

“This new measure means that when Government reviews its property transparency measures later this year, there is a real chance that CMP could finally become mandatory for all property agents in the UK. Consumers may finally have a guarantee that their money is safe and we will continue to work alongside the Department for Communities and Local Government to make this a reality.”