Rogue Agents – How To Avoid Them
Up until now, landlords and tenants who were victims of rogue agents stood to lose rent or deposit monies that the agent may have misappropriated, leaving both parties vulnerable and at a loss. Whilst the vast majority of agents were operating lawfully and correctly, those few rogue agents that weren’t caused a great deal of worry, stress and often left consumers out of pocket.
As of the 1st April 2019, all letting agents operating in England will need to have joined an approved Client Money Protection scheme or will be operating illegally. Client Money Protection (CMP) is a compensation scheme which recompenses landlords and tenants should an agent misappropriate their rent, deposit or other client funds. There will now be a civil penalty of up to £30,000 for non-compliance with the requirement to belong to a scheme. You can find out more about CMP here.
Letting agents must now:
- Hold client money in a client money account with a bank or building society authorised by the Financial Conduct Authority.
- Hold and maintain appropriate Professional Indemnity Insurance cover that is appropriate for the member’s size, income, type of work and the amount of client money held.
- Have and comply with written procedures for handling client money.
- Keep records and accounts that show all dealings with client money.
- Repay any client money, including where possible any interest earned, without delay if there is no longer any requirement to retain that money or the client requests it.
At Hannells, we have been voluntarily adhering to the above rules and providing Client Money Protection for landlords and tenants for a number of years as part of our ongoing membership of the regulatory body ARLA Propertymark. David Cox, Chief Executive, ARLA Propertymark said: “CMP has always been mandatory for Propertymark members, but when it becomes a requirement on 1st April, all letting agents will be operating on a level playing field and consumers will be protected regardless of which agent they choose. This is a triumph for the industry, and will go a long way towards improving the regulatory environment in the lettings sector and increasing protection for consumers who rely on agents to handle their money safely’’.
Most landlords and tenants we talk to are surprised to learn that unlike other industries with large monetary transactions taking place, such as travel agents or solicitors, the sales and lettings industry still has no compulsory regulation or regulatory body to help weed out rogue agents. The only exception to this is an obligation to join a Property Redress Scheme like The Property Ombudsman, however this is mainly in place for resolving complaints over service. At Hannells we are in favour of compulsory regulation of our industry, as there is still nothing to stop anyone setting up as an agent with little experience. Many do. Landlords paying Hannells for a full management service rely on our expertise to help them navigate the tricky regulations that the sector faces and it is important that agents are properly trained and know what they are doing.
The government has future plans for regulation. However, this will not be for some time and so relies on agents paying for and adhering to a code of practice voluntarily. Every year, unregulated agents can cause landlords and tenants unnecessary stress and hassle and sometimes loss of money, by giving incorrect or misleading advice or offering poor standards of customer service.
The good news (for Hannells Landlords and Tenants anyway!), is that we are an ARLA Propertymark regulated agent and have been for a number of years. This helps demonstrate that we have the knowledge and experience to guide you through your property dealings as smoothly and painlessly as possible. Operating under strict rules of conduct, as a member, we must meet certain standards relating to professional and ethical practice as well as keeping client money separate from the company’s and having our bank accounts audited by an accountant each year to comply.
We are also committed to all of our lettings team studying for and obtaining qualifications specific to the lettings arena and aim to be the only Derby Letting Agent with all it’s staff fully qualified with an industry accredited award. So, watch this space!
As a company we encourage and support the improvements being made and that are needed to drive up the standard of letting agents. We firmly believe compulsory regulation will weed out the rogue agents and the ones that have simply jumped on the opportunity that a growth market brings but without the required knowledge or skills to advise or operate professionally.
If you have any queries over the above please feel free to contact our lettings team on 01332 294396 or simply click here.
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