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All letting agents for privately rented homes will be required to register with a mandatory government-backed scheme which aims to protect landlord and tenant money, as part of a new law announced earlier this month.

With a deadline of 1st April 2019, all letting agents in England must sign up to a protection scheme as soon as possible. Failure to register with a scheme before this deadline can result in a fine for agents of up to £30,000.

It’s hoped that these new regulations will help protect landlords‘ and tenants’ money from unscrupulous letting agents, and reduce instances of theft or loss, through bankruptcy of agents, of money held on account.

The scheme will protect an estimated £2.7 billion of client money which is held by agents. Currently, tenants and landlords may not be able to recoup their money if the letting agent fails to repay it.

Heather Wheeler MP, the Housing and Homelessness Minister, brought forward the new legislation with the intention of strengthening protection for funds held by letting agents. She has commented on the measures, and stated that it is unacceptable for landlords and tenants to be put at risk of their money being lost, simply due to the fact that their letting agent has not registered with a scheme which protects that money.

Agents must join an approved CMP (Client Money Protection) scheme to provide tenants and landlords with the reassurance that they will not be left out of pocket and that their funds are safe while kept by their agent.

Although the vast majority of letting agents act responsibly with their client’s money, the new law will put an end to people losing their money through no action of their own.

Currently, an agent’s membership of a money protection scheme is voluntary, with around 60 per cent of agents already registered with an industry body.

So far, five schemes have won approval, and all property agents working in the private sector who hold money from clients must register with one scheme before the regulations come into force.

Independently of this, a working group is considering implementing a new regulatory framework, which would include a proposed independent regulator and Code of Practice, as well as the introduction of compulsory professional qualifications for agents.

The law comes as part of a ongoing government crackdown on the small minority of rogue letting agents, and an attempt to raise the standards of agents across the property sector. This will provide tenants and landlords with the confidence that they are being charged fair fees and given a professional level of service.

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