Is it finally the end for dodgy letting agents?
You may or may not know of all the increased legislation affecting the way lettings agents operate, but it is a significant amount of change. And just as well, it seems, for if you read any of the property press you’ll hardly go a week without another lettings agent being exposed for fleecing its landlords or tenants.
There has been a fair amount of fuss from lettings agents about the paperwork involved with three particular new legal requirements. While it is indeed a bit of a faff to have everything in order and monitored, it is excellent news for landlords and tenants because they finally have concrete measures around whether to work with a particular agent.
You see, these pieces of legislation make it illegal for a lettings agent to operate without them. They’re not guidelines or recommendations or suggested practices, they are the law. So if an agent doesn’t have them in place, they shouldn’t be open for business. And if you want to be sure that all is above board, all you need to do is ask to see the certificates. If an agent doesn’t have them, that’s a fairly clear indication that they think they’re above the law.
Here are the three areas affected:
Every lettings agent needs to register with HMRC – which includes signing a Fit & Proper Checks form and paying an annual fee – in order to obtain an Anti Money Laundering Certificate. Agents are required to allocate a specific person to be responsible for things like carrying out a risk assessment on the business for vulnerabilities around money laundering; preparing and maintaining a written policy statement of control and procedures; monitoring the effectiveness of their policies and devoting enough resources to the task. No ambiguities; no passing the buck; no “I thought Denise was doing it”.
Client Funds Protection
As of April 2019, any property business must register with one of 2 schemes to obtain a Client Funds Protection Certificate: these are much like insurance policies and require rigorous checks before a policy is granted. The Client Money Protection (CMP) Scheme reimburses landlords, tenants and other clients should an agent misappropriate their rent, deposit or other client funds or if the agent goes into administration. Agents can be fined up to £30,000 for failing to join a scheme. Best of all, agents must display their logo and accreditation in any office space, emails and on their website. Unique Property Company is a member of Money Shield.
Any property company is legally required to be a member of a Property Redress Scheme. These were set up to provide an independent ombudsman service for landlords and tenants who are unhappy with the service provided by their letting agent and unable to find a resolution. If the agent is not a member, they are trading illegally and can be fined £5,000. There are currently 2 schemes to choose from, both regulated by the government and each requiring agents to display the logo and accreditation in office space, emails and websites. We are members of The Property Redress Scheme.
The benefits of having these in place are of course many, including fraud-prevention, protection for deposit monies and indeed collecting of taxes for the exchequer. None of these are negatives and, while it costs money to have them in place, it’s not exactly back-breaking: we spent just over £1,000 to be in full compliance.
So great news for landlords, tenants and the many professional lettings agents out there, and bad news for the shonky ones. Yet when there are seemingly so many agencies flouting the law, we find ourselves wondering whether they’re simply oblivious to current legislation, or whether it’s premeditated fraud. But premeditated fraud to save £1,000 – with the risk of a £30,000 fine or being banned from estate agency – seems, well, a bit dumb.
But then, when has that ever stopped anyone?