Working with a letting agent can be an effective way for a landlord to manage their property. Whether you’re letting out a single property or an entire portfolio, it’s important that the letting agency is one you can trust, they are handling your money, after all. From rent collection to managing repairs, you need to know what the agency’s processes are. Additionally, how payments will reach you and most importantly, what protection is in place if money goes missing.
Checking an agent’s membership of a money protection scheme is a crucial step in protecting your property and your income. In this article, we’ll explore the importance of this scheme and how to check you’re working with a reputable agency.
Understand when protection is required
In England, letting and property management agents that hold client money must belong to a government-approved client money protection scheme (CMP). The scheme has been in place since 1 April 2019, and similar regulations are in place in Scotland and Wales (the rule doesn’t apply in Northern Ireland). It’s important to check any payments handled outside of this requirement to ensure complete transparency over your funds.
Some examples of client money can include rent that’s waiting to be transferred. Or maintenance floats being kept for future repairs, such as a fund for emergency repairs.
Verify membership before transferring funds
When choosing a suitable property management agency, you should verify their membership with a CMP scheme and that all of the details match your agreement. Each nation has its own rules about this. England, for example, requires the certificate to be displayed on the website and in public-facing offices. It’s important to confirm these details before any money is exchanged.
Ensure other safeguards are in place
Besides CMP, you should ensure other safeguards are in place for handling any money concerning your property. Tenancy deposit protection, for example, holds deposit money from tenants securely in case of disputes over deductions. A redress scheme can also provide an independent route for complaints about an agent and their services. However, neither should be treated as guarantees that your rent or maintenance funds have client money protection. It’s also important to understand that a CMP doesn’t guarantee rental income if a tenant stops paying; this would require insurance.
Store all of your records carefully so that you know where to turn in the event of payment issues while working with a letting agency or tenants.
Keep an eye on your accounts
As part of your agreement with a letting agent, you should detail agreed payment dates, authorised deductions and limits for repair spending. Keep a close eye on transactions. If anything doesn’t add up, follow up quickly with the agency. If things need to escalate, you can contact the CMP or relevant scheme for the affected transactions.
Before handing over responsibility for your rental property, take time to ask questions and understand how an agency will manage your money. A verified CMP membership, clear payment arrangements and accurate records can help you find an agency you can trust. Once your relationship is established, keep on top of your own record-keeping to draw attention to any concerns. And remember to act quickly before things escalate.