How letting agencies can ensure compliance.
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This article is a guide to the key regulations which letting agents in England and Wales must observe when running their business in order to be compliant with the law.
- FCA Authorisation
Under financial services legislation in the UK, any individual or business carrying out a “regulated activity” must be authorised to do so by the Financial Conduct Authority (FCA).
Letting agents who engage in activity such as the following will therefore need to seek FCA authorisation: providing rent guarantee insurance, advising on mortgage contracts, offering legal insurance indemnity etc. These activities count as financial services, and are being increasingly offered by letting agencies. You can register with the FCA here.
- Client Money Protection Scheme Membership
Since April 2019, it has been a legal requirement for every letting agent to be part of a Client Money Protection (CMP) Scheme, and have a certificate to prove their membership.
Under such a scheme, the letting agent holds their clients’ money in a bank or building society which has been authorised by the Financial Conduct Authority and has professional indemnity insurance. There are 3 such CMP schemes: Client Money Protect, Money Shield, Propertymark, RICS, Safeagent, and UKALA Client Money Protection. Failure to be part of an approved CMP scheme can result in a fine of up to £30,000.
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- HMRC Registration
As we previously mentioned, money laundering is a key concern in the real estate sector leading to a number of anti-money laundering regulations being enacted. One such regulation requires letting agencies to be registered with HMRC, the UK revenue authorities. Letting agents must register if they secure the sale or renting of land between their clients and third parties.
You can register your business here.
- Redress Scheme Membership
It has been a legal requirement since October 2014 for every letting agent to be a member of a government-approved letting agency redress scheme. These schemes aim to protect consumers by providing them with an official body to lodge complaints against letting agents and claim compensation.
- Rent Smart Wales Registration (Wales only)
All letting agents who rent and manage property in Wales must complete certain training then register with Rent Smart Wales in order to obtain an agent license. Rent Smart Wales is a licensing authority which also establishes the requirements for letting agents in Wales e.g. the obligation to take out professional indemnity insurance. You can register your business here.
Legislate is a contracting platform where licensors, landlords and letting agents can create valid contracts. Legislate’s lodger agreements address relevant data protection and security laws, to help you stay compliant. You can read a tutorial here or watch a short demo. If you would like to try Legislate, please book an introductory call.
The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.