Planning on getting a letting agent to manage your investment? Make sure they're a CMP member!

From 1st April 2019, all letting agents in England and Wales legally have to be a member of an approved CMP scheme. The structure, first proposed in 2016 by ARLA PropertyMark, was approved last May by the government, and goes into effect on Monday morning. The scheme went through a lengthy process to finally be made a regulation next week, which started with the Housing and Planning Act 2016 which “introduced powers allowing the government to bring in legislation making membership of an approved or designated CMP scheme mandatory” (ARLA PropertyMark). This was then reviewed in 2017, before a public consultation in December of the same year, and finally into approval in May 2018.

But, what is a CMP? With this new regulation estimated to affect over 4,000 letting agents across the UK, it’s important to know. CMP stands for Client Money Protection, and is a piece of law designed to protect a clients’ money during their engagement with their letting agent. It offer financial protection for both landlords and tenants that their money is under protection whilst it’s being held by an agent. As well as this, it aims to help improve the letting agent industry in the coming years, and ensures standards are continually raised.

According to the ARLA PropertyMark website, the CMP regulations state that (source):

Agents must

o Belong to a government approved CMP scheme

o Display a certificate which confirms the agent’s membership to an approved CMP scheme (including in-branch and on the firms website)

o Produce a copy of the certificate to anyone who reasonably requires it, free of charge

o Notify all clients within 14 days if their CMP membership is revoked, or they change to a different approved CMP scheme

o Provide clients with the name and address of the schemes to which they become a member

Local authorities will have the power to

o Impose fines of up to £30,000 on agents who do not belong to a scheme beyond the 1st April 2019

o Impose fines of up to £5,000 on agents who fail to display correct scheme membership details on the business premises and on websites

Government approved CMP schemes must

o Have written procedures for handling client money, which they must follow

o Publish their procedures for handling client money on their website

o Provide a copy of their procedures for handling client money to any person who may reasonably require a copy, free of charge

o Keep records and account that show all dealings with client money

o Repay any client money, including where feasible any interest earned, without delay if there is no longer any requirement to retain that money or the client request it

o Hold client money in a client money account with a bank or building society authorised by the Financial Conduct Authority

o Hold and maintain professional indemnity insurance cover that is appropriate for the member, size, income, type of work and the amount of client money held

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