Posts with tag: CMP

Poll highlights lack of knowledge about client money protection amongst landlords and tenants

Published On: December 4, 2020 at 9:41 am


Categories: Landlord News,Law News,Tenant News

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A recent poll by Client Money Protect, one of the Government’s approved client money protection (CMP) schemes, has found that 77% of landlords and tenants don’t know what CMP is.

Following the results of this poll, the scheme is urging landlords and tenants to check that their letting agent offers this level of protection, which became mandatory in April 2019. 

According to the Property Redress Scheme, in the eight months since the pandemic started (from mid-March to mid-July), there has been a 66% increase in letting agents ending their redress membership because they have ceased trading in comparison to the eight months prior to the pandemic (Jul 2019 – March 2020). This indicates that an average of more than ten letting agents a week are closing down. 

Kate Mutter-Bowen, from Client Money Protect, commented: “It is now eighteen months since it became a legal requirement for all letting agents to have client money protection. Most people know when they book a package holiday to check it is ATOL protected, meaning if the holiday firm goes bust, they do not get stranded abroad or end up out of pocket. 

“However, people often part with far greater sums of money when they let or rent a property and yet they don’t check that this money is protected. The lettings industry must work harder at educating consumers on the importance of checking their letting agents will protect their money.”

In the poll, only 35% said they checked that their letting agent had Client Money Protection. 

Simone Potter Reed, Investigator at National Trading Standards Estate and Letting Agency Team (NTSELAT) said: “It is of the utmost importance that all letting agents are members of a Client Money Protection Scheme to provide security and peace of mind for tenants and landlords. 

“NTSELAT recognises that the pandemic has caused letting agents to face challenging times, however, the cost of joining any CMP scheme is financially much less than the monetary penalty amount of up to £30,000 for failing to be a member of a CMP scheme, which are issued by enforcement officers. This is a hefty price to pay for failing to become a member of a scheme at the outset. 

“NTSELAT advise that tenants and landlords check if their agent is registered with one of the six approved CMP schemes before entering into business with them.  Take the time to make those checks to avoid financial detriment.”

Mandatory CMP Schemes seen as a Major Milestone for Lettings Industry

Published On: April 1, 2019 at 8:00 am


Categories: Law News

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It is now compulsory for letting agents to be part of a Client Money Protection (CMP) scheme. This change is a significant milestone for the lettings sector. Being part of such a scheme will bring all-round benefits for agents, landlords and tenants, according to rental payment automation provider PayProp.

The introduction of CMP schemes as a mandatory requirement has been introduced today, exactly two months before the Tenant Fees Act comes into force. Such a scheme is designed to keep client money safe.

The majority of agents are already compliant, but this regulatory strategy has been designed to promote an improvement to professionalisation across the industry.

CMP schemes exist to help protect the funds that landlords and tenants pay to agents, including rent and deposits. If an agent were to steal a client’s money or the agency goes bankrupt, a back up would then be in place to allow consumers to make a claim for the return of their money.

David Cox, Chief Executive of ARLA Propertymark, has commented on the introduction of mandatory CMP scheme requirements: “Following our successful campaign, spearheaded in Parliament by Baroness Hayter of Kentish Town, and supported by 30 organisations including member agents, the other professional bodies for letting agents, tenant groups and landlord bodies, the Government ruled in favour of mandating CMP for all letting agents in England from Monday 1st April 2019. From Monday, all agents will need to have joined an Approved CMP scheme, or they will be operating illegally and risk facing large fines.

“Those who haven’t yet joined a scheme must sign up to one immediately. Propertymark has received formal Approval from the Housing Minister, Heather Wheeler MP, to operate a Government-authorised CMP scheme on behalf of its members, so they are all automatically covered. Those who aren’t part of a professional body can sign up to Money Shield, a straight-forward and cost-effective solution with formal Approval.”

A choice of providers made available to agents

There is an estimated £3 billion of client money being held by letting agencies. It is also thought that around 60-80% of agencies are currently already members of a CMP scheme (either directly or through a trade association).

A number of compliant CMP schemes are available for agents to choose from. Examples include Propertymark, the National Approved Letting Scheme, Money Shield, RICS and Client Money Protect. All of these options have been approved by the Government to operate as a CMP scheme.

Neil Cobbold, chief operating office of PayProp, has commented: “It’s positive that the estimated 20-40% of agents who have not been offering CMP now have clarity from the government on which CMP schemes are compliant with the law.

“Having several approved CMP providers helps to keep costs competitive for agents, while ensuring that all the schemes work to the highest possible standard in a competitive marketplace.”

Transparency is the main focus

It is promising that at least 60% of agents are already compliant. This shows that there is support behind the Government’s commitment to increase transparency in the lettings market.

Cobbold continued: “Regulation like this reduces the risk for landlords and tenants, allowing them to operate in the knowledge that their money is safe. And that is of course great for the industry’s longevity.

“Mandatory CMP can be effectively supported by agents adopting digital payment systems which are secure, keep records of all activity and reduce the margin for error.

“This new legislation, combined with agents adopting modern and transparent payment systems, can contribute towards greater accountability and even a reduction in cases of letting agent fraud. This will reflect positively across the whole industry.

“What’s more, introducing mandatory CMP ahead of the Tenant Fees Act on June 1 is vital as a small minority of agencies may struggle financially once fees are banned, potentially putting some client money at risk.”

Rent Protection Scheme Likely Not to be Providing Full Protection

Published On: December 10, 2018 at 9:02 am


Categories: Tenant News

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In April 2019, new rules will come into place with the aim in mind to protect rental money paid by tenants.

The rules will require all letting agents in the UK to be registered with a government-approved Client Money Protection (CMP) scheme. This will protect the rental money that a tenant pays to a letting agent, and should the letting agent go out of business, this money then still reaches the landlord of the property.

However, the Residential Landlords Association (RLA) has warned that there could be considerable risk to landlords. This is likely to have more of an effect on landlords with larger portfolios, due to a proposed cap in how much the CMP scheme has to pay out, in the event of an agent collapse.

Details of the CMP scheme’s policy, published by the government, suggests that:

  • The level of insurance held by the CMP schemes may not necessarily cover the full value of the tenants’ rental money held by letting agents
  • There are certain circumstances in which the insurance held by the CMP schemes may not pay out, or at least pay out in full
  • In the same way that the current Financial Compensation Scheme works, the CMP schemes will be able to cap the amount they pay out

David Smith, Policy Director for the RLA, said: “It is right that money provided to agents by tenants for landlords should be protected. It is disappointing that the Government’s plans will not offer full protection and we urge Ministers to think again or they will undermine confidence in the scheme. 

“Otherwise we will encourage landlords to ensure that they do not put all their eggs in one basket and spread the risk.” 

Whilst the rent protection could have less of a benefit to larger portfolio landlords, CMP schemes could go a long way to providing more peace of mind for landlords at the end of the spectrum.

Propertymark Launches new CMP Scheme: No Trade Body Required for Agents

Published On: August 23, 2018 at 9:02 am


Categories: Lettings News

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Previously known as ARLA Lite, the new Client Money Protection scheme has launched. Jointly owned by trade body Propertymark and The Dispute Service, in association with The Property Ombudsman, this allows agents to have insurance without being a member of a trade body.

Called Money Shield, Propertymark is the scheme administrator.

This is available to all agents, and describes itself as a “straightforward and cost-effective solution, allowing agents to obtain robust protection for their clients without membership of a professional body”.

It is said to cost £400 per firm.

The unusual press release announcing its launch said: “Spokespeople from Money Shield, Propertymark, TDS and TPO said: ‘Before the Government’s announcement on compulsory CMP last year, many consumers didn’t consider the financial risks of using an agent who didn’t offer protection.

‘Consumer awareness has now grown, and landlords and tenants are now far more aware of the dangers and associated risks.

‘We urge all letting agents and estate agents across the country to get ahead of the curve and enrol now before the legislation comes into effect, to gain ground on your competitors and avoid falling foul of the law.’”

Compulsory CMP is due to be implemented early next year, shortly before the ban on tenancy fees comes into effect.

David Cox, Chief Executive, ARLA Propertymark comments on the story from Shelter and National Housing Federation about discrimination in the rental sector: “This is a systemic problem with how housing benefit works. Rents are paid in advance, whereas housing benefit is paid in arrears, and therefore with such a shortage of rental accommodation, landlords and agents will naturally choose a tenant who can pay the rent when it is due, rather than a tenant who is always a month in arrears.

“We have called on Government time and time again to resolve this problem. But our calls have fallen on deaf ears. To make the situation worse, many lenders also have a clause in their buy-to-let mortgage agreements which prevent landlords from letting to housing benefit tenants. This situation does not exist because of landlords or letting agents, it is a systemic problem caused by Government and the banks.”

AIIC Calls for Landlords and Letting Agents to Respond to CMP Consultation

Published On: September 12, 2016 at 10:41 am


Categories: Landlord News

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The Association of Independent Inventory Clerks (AIIC) has called on landlords and letting agents to respond to the Government’s consultation on mandatory Client Money Protection (CMP).

AIIC Calls for Landlords and Letting Agents to Respond to CMP Consultation

AIIC Calls for Landlords and Letting Agents to Respond to CMP Consultation

The new Housing Minister, Gavin Barwell, launched the consultation at the end of August. Those that wish to respond to the consultation have until Monday 3rd October to do so.

CMP schemes protect rent and deposits held by letting agents, giving their clients peace of mind and the opportunity to recover funds, should they go missing.

In his open letter that launched the consultation, Barwell quoted industry estimates that letting agents hold around £3 billion worth of landlords’ and tenants’ money.

Earlier in the year, SAFEagent reported that one in five landlords and tenants are not protected by CMP.

A number of influential industry bodies, including the Association of Residential Letting Agents, the National Approved Letting Scheme and the Residential Landlords Association, have shown their support for the Government’s review of mandatory CMP, and now the AIIC is backing the consultation.

The Chair of the AIIC, Patricia Barber, believes that mandatory CMP would be a step in the right direction for the lettings industry.

She says: “The majority of letting agents are trustworthy and reliable, but that doesn’t mean that they don’t need to offer CMP. As average rents and deposits continue to rise, it’s only fair that landlords and tenants are provided with the peace of mind that their money is protected.

“One of the Government’s concerns is that law-abiding and conscientious agents shouldn’t have to pay the additional subscription to be a member of a CMP scheme. However, as John Midgley of SAFEagent pointed out, it’s only a small cost per year and one that the vast majority of customer-focused letting agents would be happy to set aside.”

She continues: “What’s more, the Government itself quotes figures which suggest that up to 80% of agents are already offering CMP to their clients. This perhaps shows that the small percentage who don’t may need to be the ones forced to join a scheme through making it mandatory.

“It’s pleasing that the Government is reviewing whether CMP should be compulsory, and we hope that as many passionate agents and landlords as possible contribute their insight to the outstanding consultation.”

The consultation is here: