Is Your Money Safe? A Simple Safeguarding Tip for Landlords and Tenants
In this two-minute read, we explain why your letting agent should be part of a client money protection (CMP) scheme.
The lettings sector used to be the Wild West of the property market, with a small group of unscrupulous agents giving the industry a bad name.
Thankfully, the introduction of stricter regulations in recent years has sent many cowboy agents riding off into the sunset.
But no industry is perfect, and landlords and tenants still need to be wary of rogue operators.
If you’re looking to do business with a letting agent, one of the first things you should check is that they are a member of a client money protection scheme (CMPS).
By law, all letting agents in England who handle ‘client money’ – in other words, hold rent or holding deposits on behalf of customers – must be a member of a CMPS. (Note: this is different to a tenant deposit scheme, which agents should also utilise.)
A CMPS is basically an insurance policy. It means that if an agent goes bust or does a runner while holding funds on behalf of clients, the landlords and tenants affected receive compensation. (This didn’t always happen in the old days.)
How can I tell if an agent is a member of a CMPS?
There are six approved CMPSs: Client Money Protect, Money Shield, Propertymark, RICS, Safeagent (previously NALS), and UKALA Client Money Protection.
For the record, here at Millbanks, we’re members of ARLA Propertymark Client Money Protection Scheme.
Agents must display details of their CMPS membership on their website and in their office.
Always verify an agent’s membership claim by cross-checking with the relevant CMPS (you can do this online in minutes).
It’s good practice
If an agent gives you a blank look or the run-around when you ask about their CMPS membership, alarm bells should ring.
A good letting agent will have no trouble answering the question (and be impressed by your industry knowledge).
An agent who isn’t a member of a CMPS can be fined up to £30,000. Local authorities, through their Trading Standards operations, enforce these rules.
From all of us here at Millbanks, stay safe and thanks for reading.