Client Money Protection has finally made it into the Housing and Planning Bill yesterday after an amendment from Baroness Hayter and Lord Palmer was approved.
The amendment, banning letting agents from taking money from tenants unless they hold separate client money accounts, was added to the Bill during the report stage in the House of Lords.
While the amendment falls short of mandatory provision for CMP, it is an ‘enabler’, allowing the Government to review the need for a mandatory measure. The review could be as early as next month or June.
Housing minister Brandon Lewis was understood to have ruled out making lettings agents ring-fence tenant or landlord funds, but speaking to peers yesterday, Baroness Hayter said “constructive” dialogue with ministers had led to a change of course.
She said: “The amendment would require every letting agent to have the money they hold be protected so even if the letting agent disappeared or went bankrupt the money would be safe.
“Such money does not belong to the agent, and as with solicitors who handle client money, it should be held in a separate account.”
Only last week Lewis had seemed to have ruled out introducing CMP during a speech at the Association of Residential Lettings Agents conference when he said he didn’t want to create too much regulation at the same time.
David Cox, managing director of ARLA, said: “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 Client Money Protection 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 DCLG to make this a reality.”
Hayter told EYE last night: “I am delighted the Government listened to professional letting agents, as represented by ARLA, to tenants and to landlords, and adopted the Labour initiated amendment giving government the powers to introduce compulsory CMP for letting and managing agents.
“The minister also undertook that if their review demonstrated a need for this, they would work with stakeholders to bring forward these regulations. I am therefore confident this will be in place before too long.”
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Good.
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A separate client account makes sense. However, this seems a Trojan horse for mandatory CMP.
Mandatory CMP would be another negative news for landlords: Especially with the recent wave of consolidation, landlords need more competition amongst lettings agents, not less with the small guys being squeezed out.
Also, I find this rhetoric about ‘consumers’ irritating. Agents work for landlords who run a business. It is fair game that agents’ organisations try to get centre stage, but really landlords should run the show.
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I couldn’t disagree more with Romain. London is like the “Wild West” – an agents free for all without any supervision, minimum standards, insurance, or protection for either landlords or tenants. You believe that “landlords need more competition amongst lettings agents, not less” or in other words the downward pressure on fees generated by unregulated agents.
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Why would landlords NOT want more competitions amongst agents?
Of course landlords want a downward pressure on fees. In London landlords are fleeced as much as tenants.
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Are Landlords always fleeced? Not at all. Our fee structure is very competitive and I believe (as do our clients) offers very good value particularly given the level of service. I am RICS and we are members of NAEA, ARLA etc etc and are fully insured. Our business is doing very well, but there are huge costs operating in Central London and we cannot compete on fees with someone who sets themselves up as an estate and letting agent with a laptop and a mobile phone above a kebab shop. Is that what you want? If there was a level playing field in terms of standards and supervision then fine. Nearly all of our new business comes from recommendation (often because an unregulated agent has made a complete mess of things or has disappeared with deposits or rent or both). Its not wonder that agents are held in such low esteem and that we all get tarred with the same brush.
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All a small agent need to do is have the tenant pay the rent direct to the landlord, and bill the landlord for the management services. So this should not make it harder for small agents to start up.
People doing R2R may not like it……
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Anyone know when this might come into law – assuming it does the clock is ticking on any letting agent who’s had his fingers in the till as they’ll have to settle up or …..
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Never play with money that isn’t yours. Those companies that have been using it as a source of funding have something seriously wrong with their business if it is the only way they can stay profitable.
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Enforcement?
Until all the members of the agent staff are personally and equally responsible for repaying any client money if their employer does not have client money protection not much will change. The bad agents will carry on as know, and just close down there LTD if they get fined too much.
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Enforcement?
Until all the members of the agent staff are personally and equally responsible for repaying any client money if their employer does not have client money protection not much will change. The bad agents will carry on as know, and just close down there LTD if they get fined too much.
Unless RightMove etc are not allowed to list any properties until they confirm the agent has valid client money protection insurance.
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