It is estimated that around £2.7 billion of client money is held by property agents, including rental payments held temporarily and monies held on a longer term basis for repairs and maintenance.
However, it is currently not a legal requirement for agents to be part of a client money protection scheme, which would give financial protection to both tenants and landlords by way of compensation in circumstances where the agent has become insolvent or behaves dishonestly.
A consultation launched by the Government this year is designed to streamline what are already standard practices, to give them the surety of regulation and also importantly eliminate what they have referred to as ‘rogue agents’.
The key purpose of the consultation is to implement a mandatory client money protection scheme. There is still discussion as to whether this should be Government administered or rather Government approved. It is likely to be the latter as there are already a good number of these schemes in place and obvious advantages in preserving the status quo.
With regards to enforcement, the current contender appears to be the respective local authorities. Although this puts strain on already stretched local authorities, the intention is to use the monies recovered through penalties to help them facilitate enforcement.
The proposed penalties are set to be up to a £5000 fine for default. Although a total ban on being able to provide services was suggested by the consultation group, this has not been accepted by the Government.
It was also announced on 1 October 2017 that all property agents must register with an appropriate organisation which will regulate minimum training standards as well as implement an industry code of conduct. Not to mention the Tenant Fees Bill which will ban agents from charging fees on residential lettings to tenants. The profession as a whole has certainly got a lot of attention in the last couple of years and well warranted too, given the increased reliance on the rental sector.