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Client Money Protection Scheme: You Can Rely On Us

 
 
 
 
  07 Jul 2018

The matter of money is integral to tenants and landlords’ daily activities, and it is always better to be protected when it comes to payments and money being held as a deposit. If you haven’t heard of The Client Money Protection (or CMP) scheme, or you have but you are not sure why it is important, Jezzards are happy to provide you with insight into why this is positive news for tenants and landlords.

CMP is a scheme which provides compensation to landlords and tenants if an agent misappropriates client funds, the deposit or the rental fee. All ARLA Propertymark members are required to have a CMP in place, and at Jezzards, we are pleased to say that we comply with this.

One of the biggest issues in the market relates to rental fees lying unprotected while being held in the custody of the agent. It is not uncommon for rental fees to be held by the agent for five to seven days before the money is passed to the landlord. However, during the consultation period, the working group was informed that rent is often held for a much longer period. Evidence was provided that foreign students were required to provide a years’ worth of rent in advance.

There is also the fact that fraud, while not being overly common in this sector, can happen.

Changes are coming with respect to agents and CMP

The bill that is currently being debated in Parliament will require agents who manage rental property in England to be a member of an approved CMP scheme. This must be achieved by the 1st of April 2019. There are severe punishments which can be imposed on agents who don’t comply with this regulation. Local authorities will be provided with the powers to:

  • Impose a fine of up to £30,000 on agents who are not members of the scheme after the 1st of April 2019
  • Impose a fine of up to £5,000 on agents who do not display their correct scheme membership details, and this includes on their website or business premises

While some observers may believe that these fines are excessive, there is no denying the importance of managing client money in the correct manner. It is believed that over £2.7 billion in funds is held by letting agents at any time. This money includes rental fees and money that is used to undertake repair and maintenance work at properties. Of this £2.7 billion, it is believed that £700 million isn’t protected. This means if an agent goes bust or they abscond with the money, landlords and tenants are vulnerable.

CMP offers vital protection for people that need it most

Not many landlords or tenants could afford to lose out on the money associated with their account, which makes the need for protection essential. There have been moves to offer support and since May of 2015, agents have been required to state whether they belong to a CMP scheme. This measure was welcomed because it allowed landlords to select an agent knowing if they were a member of a scheme or not, but this feature wasn’t afforded to tenants. Therefore, the recent developments regarding CMP are pleasing because it will enable tenants to make a more informed decision regarding their rental options.

As of April, of next year, agents who don’t hold membership of such a scheme will be liable for the large fines stated above, which means that an added level of protection will be afforded to tenants and their money.

We are pleased to say that we have provided a reliable Client Money Protection scheme since we started. This means if you are worried about this scheme, you can rely on Jezzards to protect you and your tenants. If you’re a landlord and you are worried about the latest or forthcoming regulations, and you want peace of mind, come and speak with local letting market specialists on 03330 433 633.


Author

Jezzards Estate Agents



 

 

Jezzards properties Hampton

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