Posts with tag: letting agents

Agents urged to prepare as Lloyds Bank announces closure of undesignated client accounts

Published On: August 21, 2019 at 8:11 am


Categories: Lettings News

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With Lloyds Bank notifying clients that it will be closing undesignated client accounts, PayProp is advising letting agents to have a back-up ready. 

The well-known and widely used bank recently contacted numerous agents, asking them to open separate client accounts for all of their individual landlords.

PayProp believes that this move to close undesignated client accounts could be the bank’s response to existing anti-money laundering legislation, set to be tightened in 2020.

It also acts as an extension of the legal requirement for agents to operate separate client money and business accounts, which has been in force since April this year.

Lloyds contacting agents over undesignated client accounts

It was discovered earlier this month that Lloyds Bank has been contacting letting agencies to notify them that undesignated client accounts will be closed, giving them 60 days’ notice.

Two options have been provided to its letting agent clients:

  1. Close undesignated client accounts and replace them with multiple designated client accounts, or
  2. Close their undesignated account and make ‘alternative banking arrangements’.

Neil Cobbold, Chief Operating Officer of PayProp UK, says: “This appears not to be an isolated incident as several agents claim to have been contacted by Lloyds. Therefore, all letting agencies need to be thinking about the way they will handle their client payments from now on.

“Those that bank with Lloyds must consider whether they want to open individual client accounts for each of their landlords or consider alternative options. Those who use other banks may have to prepare for similar action.”

An extension of Client Money Protection (CMP) rules?

It became a requirement earlier this year for agents to operate separate client money and business accounts, as well as joining a CMP scheme.

The rules require agencies to hold money in a client money account with a bank or building society authorised by the Financial Conduct Authority (FCA). They must also comply with written procedures for handling client money as well as keeping records and accounts that show all dealings with client money.

Cobbold says: “Agents may have thought that the introduction of mandatory CMP and the requirement for separate business and client bank accounts would be enough to ensure transparency and satisfy the banks.

“However, after review, Lloyds Bank appears to have decided that the best way to comply with anti-money laundering regulation is to mandate that any client money must be held in one account per landlord. This approach is likely to have been influenced by current and proposed legislation and could be followed by other banks soon.

“Whatever happens in the future, agencies must have the necessary procedures in place, with a clear audit trail and professional approach to record keeping.”

How can agents manage payments effectively?

With this news from Lloyds on plans to close undesignated client accounts, many agents may be wondering whether they should now consider opening accounts for each of their landlords. They may also be worrying about the prospect of additional banking fees and administration work.

Cobbold explains: “If the thought of opening and managing hundreds of separate client bank accounts is concerning agents, there is a range of things they can do to put their mind at ease.

“They could switch banks or explore PropTech options which could help them to manage their payments using automation.”

“The news from Lloyds should act as a warning for agencies, encouraging them to spring into action and get a plan in place, as this is an issue which is unlikely to go away and could escalate further in the coming months.”

Could AI automation help agencies save time and focus on compliance?

Published On: August 7, 2019 at 8:44 am


Categories: Lettings News

Tags:, a new Artificial Intelligence (AI) assistant, has been developed in order to help reduce the workload of the typical letting agent. 

The AI says that agencies should consider how they can factor in the additional responsibilities alongside their existing obligations and the needs of their business.

With new regulations proposed for the property sector by the Regulation of Property Agents (RoPA) working group, such as a new industry regulator, stricter licensing, a Code of Practice and mandatory qualifications, workloads might be about to increase.

Tom Reiss, CEO and co-founder of says: “These new requirements will benefit the industry in the long-term, discouraging rogue operators and contributing towards raising the public perception of agents.

“In the short-term, however, there will be additional work involved and some agents will feel under pressure to comply in time, not to mention some of the additional costs involved.”

How can agents utilise automation to comply with regulation? points out that agents can save time on administration and subsequently spend less time on existing compliance obligations by using automation.

Having more time spare will free them up to focus more on RoPA’s new regulatory framework, as well as improving customer service and targeting new landlord business.

Reiss explains: “So many parts of the lettings process can now be automated, taking no time at all. This reduces the number of repetitive tasks staff have to carry out and the scope for human error at the same time.

“Automation can help agencies to save time and focus on complying with the new regulations without compromising on customer experience or business growth.”

Services such as can also set up rental payment structures for tenancies and automatically issue correct and up-to-date documents to the relevant parties.

Reiss concludes: “Letting agents no longer need to spend time doing these tasks, many of which they can no longer charge for due to the tenant fees ban.

“Using AI to automate large parts of the lettings process can help agents to stay on top of day-to-day business, prepare to comply with the new regulations and stay up-to-date with existing legislation.”

Agents, would you consider AI automation to help with your business?

Section 21 Changes will Increase Need for Professional Letting Agents

Published On: July 30, 2019 at 8:41 am


Categories: Law News

Tags: ,

Automated rental payment provider PayProp has spoken out about Government plans to abolish Section 21 of the Housing Act 1988.

It believes that scrapping this act will further increase the need for professional letting agencies to guide landlords through the lettings process.

Guidance from agents would, in such a case, be crucial to help landlords to legally regain possession of their properties, says PayProp.

It was in April that the Ministry of Housing, Communities and Local Government (MHCLG) announced its intention to abolish Section 21 evictions. It stated that such a move would be ‘the biggest change to the private rental sector in a generation’.

In replace of Section 21, the Ministry has proposed a new system under which landlords would be required to serve a Section 8 notice, providing a ‘concrete, evidenced reason already specified in law’ in order to regain possession of their property.

As it stands, Section 21 allows landlords to regain possession of their property without providing a reason. However, Section 8 can only be used when a tenant has fallen into rent arrears, been involved in criminal or anti-social behaviour or broken the terms of their tenancy agreement.

The Government has made a pledge to amend Section 8, so that it allows landlords to use it if they wish to sell their property or move back in themselves, and ‘expedite’ the court process to make the system more effective.

However, many in the lettings industry worry that the new system might make it more difficult for landlords to regain possession and discourage future investment in the PRS.

A huge overhaul for landlords?

PayProp has pointed out that the scrapping of Section 21 would be the latest in a long line of changes to the evictions process. The last significant updates were made to the legislation in 2015 and 2018. This increased workload for landlords could have an impact on the buy-to-let market.

In a recent study by Landlord Action, 33% of landlords said they would leave the market if the Government removed Section 21 without providing a clear alternative, while 38% said that they would consider selling properties.

Neil Cobbold, Chief Operating Officer of PayProp UK, says: “It’s no surprise that many landlords would consider their options if Section 21 was scrapped, as it would mean yet another change in lettings legislation after so many others in recent years.

“If introduced, the changes would represent a huge overhaul in processes for landlords. Therefore, it’s important for letting agents to raise awareness of the situation among landlords now, so they have time to prepare.”

Complexities of the evictions process

Cobbold has also explained why the expertise of professional letting agents would be crucial if the evictions process is to be reformed.

“Requiring the use of Section 8 to regain possession of their properties will mean landlords need to understand a new set of rules, steps and documents,” he says.

“Evicting tenants can be a legally complex and long-winded process, and if a new system is introduced, letting agencies will need to help landlords to follow the right steps and issue updated documentation,” Cobbold explains.

“If the evictions process is not followed properly it can cause complications for landlords. It’s also important to remember that landlords’ investments and tenants’ homes are at stake,” he says. 

Need for professional agents continues to grow

Cobbold believes that further changes to legislation and a more complex and time-consuming lettings process could mean fewer landlords will self-manage their properties in the future.

Meanwhile, figures supplied by the Government show the number of small-scale and accidental landlords has fallen, with the proportion of landlords letting one property falling from 78% to 45% between 2010 and 2018.

“This market shift means demand for professional letting agencies will rise – agents should see the potential for increased business and ensure they are prepared to meet landlords’ expectations,” adds Cobbold. 

“They can do this by offering an unrivalled landlord proposition which is fully compliant, transparent and efficient.”

The MHCLG is currently consulting on the proposed removal of Section 21 from the Housing Act 1988 and improving Section 8 eviction grounds.

The consultation was launched on July 21 and closes on October 12 2019. It can be viewed on the GOV.UK website:

Final Report on New Regulatory Proposal for Letting Agents Released

Published On: July 19, 2019 at 8:24 am


Categories: Lettings News

Tags: ,

The final report on the proposal of a new regulatory framework for letting and managing agents in England has been released.

Based on the Regulation of Property Agents Working Group (RoPA)’s recommendations, the final report has been compiled by the Ministry for Housing, Communities and Local Government (MHCLG).

The aim is to raise the professional standards in the industry, with the introduction of a regulatory framework recommending the following is introduced:

  • A new system of regulation;
  • A new licensing regime;
  • A mandatory code of practice for all property agents;
  • Mandatory qualifications;
  • Transparency and use of leasehold and freehold charges;
  • A new regulator;
  • Assurance and enforcement under the new system.

Neil Cobbold, Chief Operating Officer of PayProp, comments: “The industry will be eager to know how a new regulator will work alongside existing trade bodies and redress schemes. Moreover, the new system will need to be clear so agents and agencies know their responsibilities and consumers can understand their rights and routes to redress.

“The introduction of mandatory qualifications and licences required for operating could be successful in identifying those agencies which aren’t professionally committed to the industry and prohibit them from operating. Qualifications for all agents, no matter their experience, could also help towards achieving the ‘level playing field’ the government has been striving to create.

“However, it is important that the qualifications agents are required to have are spelt out as soon as possible so that agencies can plan for the training time and costs to reduce the impact on their business.

“Meanwhile, a Code of Practice will help to establish minimum standards for agencies and work as a benchmark for consumers using their services.

“That being said, the additional cost of funding the new regulator through an ‘industry levy’ on agents and agencies is not specified, so there could be concerns this cost could drive up landlord fees. In turn, this could drive more landlords towards the short-lets sector, which will not be regulated, or to self-management, which will not initially be covered by the new regulator.

“As we move forward with these proposals, agents’ key considerations will revolve around associated costs, time taken for implementation and how existing workforces and new recruits will be affected in the future.

“This historic shake-up can be positive for agencies, adding an additional layer of professionalism and contributing towards improving the public perception of the industry.

“The next crucial step for agents will be to start preparing for change immediately, as the report indicates that the regulator could be in place in two years. The government will need to implement the new system clearly and efficiently, with capacity for effective enforcement.”

Mark Hayward, Chief Executive of NAEA Propertymark and David Cox, Chief Executive of ARLA Propertymark have also commented on the final report: “This is a significant moment for those in the property industry and a huge leap forward in stamping out bad practice. We have long called for Government intervention to ensure everyone in the industry is licensed, adheres to a strict code of practice and holds at least a Level 3 qualification (A-level). 

“Following the extensive considerations by the working group, it is now for Government to create the structures for a properly regulated industry, whose professional knowledge and skills are trusted and respected by all.

“These are substantial changes, which will require agents to start making preparations now to ensure that they are well placed for when these proposed qualification requirements are introduced. 

“While we anticipate that the need for property qualifications will be phased in, we advise agents to get ahead of the competition and to stand out by adopting the new requirements early. Propertymark can support you and your organisation both with getting qualified and preparing for regulation.”

Failure to Prosecute Rogue Letting Agents Must Stop says NLA CEO

Published On: July 5, 2019 at 8:59 am


Categories: Law News

Tags: ,

Rogue letting agents are continuing to get away with illegal activity as local authorities fail in their duty to prosecute offending parties. The National Landlords Association (NLA) has warned that this is undermining efforts to improve the image of the private rental sector (PRS).

The NLA has found that over half of local authorities failed to prosecute a single letting agent during the four year period from 2014/15 to 2017/18.

The association made a Freedom of Information (FOI) request to 20 local authorities, discovering that 53% of them made no prosecutions. A further 32% prosecuted three or less.

The best results were seen from Liverpool City Council, which prosecuted 13 letting agents in total during this period. Then we have Hammersmith and Fulham Council that didn’t even bother to reply to the FOI.

Out of the 20 Councils questioned, 13 responded that they had already introduced landlord licensing schemes.

With around 16,500 letting agents currently operating in the UK, they play a vital role as intermediaries between landlords and tenants. However, some letting agents have continued to act illegally, despite law changes such as the Tenant Fees Act.

Some have been making unauthorised alterations to a landlord’s property, leading to a breakdown of trust between the tenant and the landlord. It has also been noted that certain rogue letting agents have let one property to multiple tenants without the landlord being aware, effectively making it an illegal house in multiple occupation (HMO). Licensing laws on HMOs are even stricter than those for a single occupant property, leaving a landlord liable to fines of up to £30,000 or even criminal charges.

Richard Lambert, CEO of the NLA, says: “It is clear that too many local authorities (are) failing in their duty to prosecute rogue letting agents. These bad ones can really poison the relationship between landlords and tenants. We want to see local authorities take much firmer action.

“We were shocked to find that so few letting agents are being prosecuted by local authorities. While many local authorities have introduced licensing schemes to crack down on rogue landlords, they seem to be allowing letting agents to get off scot-free. This must stop.

“In the meantime, landlords should make sure their chosen agent is reputable and is a member of a client money protection scheme that will safeguard their assets — rental money, deposit or other funds — if they misappropriate them or go bust.”

How can Letting Agencies Impress Professional Landlords?

Published On: July 4, 2019 at 9:03 am


Categories: Lettings News


PayProp has noted the drop-off in small-scale and accidental landlords in recent years, which may be down to challenging market conditions such as tax increases and changes to industry regulations.

With this in mind, the automated payment provider has highlighted that letting agents should be ensuring professional landlords are receiving a service that meets their expectations.

Professional landlords dominating the market

The latest figures from buy-to-let mortgage lender Paragon show that new lending has mostly consisted of complex and professional landlord business for this year.

This report shows a proportion of ‘complex’ buy-to-let completions, including customers operating through corporate structures or managing large portfolios. This has increased from 72% to 88% during the first half of 2019, compared to the same period in 2018.

According to Paragon, lending to experienced professional landlords represented 92% of the company’s future business at the end of March.

Neil Cobbold, Chief Operating Officer of PayProp, has suggested that this jump in completions for ‘complex’ buy-to-let mortgages may be down to small-scale and accidental landlords moving properties into corporate structures, in order to take advantage of favourable tax rates.

Looking at the English Private Landlord Survey 2018, we can see 48% of rental properties are let by landlords in possession of five or more properties, which includes 17% of the survey base.

The official report found that the proportion of landlords owning only one property has decreased from 78% to 45% since 2010. But is this due to landlords selling their properties, buying more, moving them to a corporate structure, or a combination of all these factors?

The report also shows an increase in the number of landlords with five or more properties, going from 5% to 17%.

Neil Cobbold said: “Following huge changes in the lettings market over the last few years, it’s perhaps no surprise to see research suggesting that the number of accidental or part-time landlords may be dwindling while professional portfolio landlords appear to be thriving.

“Despite a boom in the number of tenants, letting a property has become more complex and carries an increased risk, something that may well have discouraged one-property landlords who were previously self-managing.

“At the same time, it has been easier for those with a more structured business in place to absorb the market changes and tricky conditions.”

Make impressing professional landlords a priority

PayProp believes that there are several things letting agencies can do to make sure that the needs and expectations of professional landlords are met. In particular, this includes providing a full service that allows landlords to remain profitable.

Cobbold stated: “As the market becomes more complex, one of the key strengths letting agents need is the ability to provide valuable knowledge and guidance to landlords with large portfolios.

“Not only this, they need to demonstrate why their service represents value for money and how they can keep void periods to a minimum.

“Furthermore, agents who use technology to provide a streamlined and efficient service can impress large-scale landlords who manage a huge number of processes each month.

“Protecting landlords’ money and remaining transparent is equally important if agencies want to ensure long-term business relationships with their clients.

“Of course, part-time landlords remain important to a letting agency’s client base, but being ready to work with professional landlords can be hugely profitable due to the larger portfolio sizes on offer.”