Client money protection and redress: what letting agents must have

Almost every compliance article written for this industry is about the property. Certificates, deposits, licensing, hazards. The obligations that attach to the agency itself get far less attention, and they are the ones that can stop you trading.

Client money protection

If you hold client money — rent collected on behalf of a landlord, tenancy deposits, float for works — you must be a member of an approved client money protection scheme. Membership is not optional and it is not a mark of quality; it is a legal requirement for agents in England engaged in letting agency or property management work.

CMP exists to reimburse landlords and tenants if an agent misappropriates or otherwise fails to account for money held on their behalf. Which means the scheme has entry requirements, and those requirements are really the substance of this obligation.

Redress scheme membership

Separately, every letting agent and property manager in England must belong to a government-approved redress scheme, so that a landlord or tenant with a complaint you have not resolved can escalate it to an independent ombudsman.

This is per-agency and it is checked. Operating without it risks a penalty of up to £5,000, and a council can impose it repeatedly. It is also the obligation most likely to lapse quietly during a change of ownership or a restructure, because renewal notices go to whoever registered originally.

Fee transparency and display duties

Your fees must be displayed — prominently, in each office where you deal with people face to face, and on your website — inclusive of VAT. Alongside them you must state which client money protection scheme you belong to and which redress scheme.

This one is trivially easy to comply with and frequently wrong, usually in one of three ways: fees shown exclusive of VAT, a scheme named that the agency has since left, or a fee list that reflects last year’s pricing because the website and the practice diverged.

The Renters’ Rights Act raised the stakes

The Act’s direction is toward a private rented sector where the agent is as regulated as the tenancy. A landlord ombudsman is coming, and a property portal with it. Agencies whose agency-level compliance is currently held in a folder and a memory are the ones for whom that transition will be expensive.

The practical response is unglamorous: treat CMP membership, redress membership, professional indemnity and your client account reconciliation as dated obligations with renewal dates and evidence, exactly as you would treat a gas certificate. They have expiry dates. They have evidence. They are checked by the same people.

Where the agency layer sits in a system

Most property software models the property and stops. Agency-level obligations end up outside it, which is why they lapse silently — there is no property whose dashboard turns amber when your redress membership expires.

For groups where this matters most — several trading entities, separate client money per principal, different scheme memberships per entity — we have built the client money and statutory workflow modules as bespoke enterprise work rather than as a standard feature, because the shape of the requirement follows the group’s structure rather than any industry template.

This article is general information about the position in England and not legal or regulatory advice. Scheme rules and thresholds change; check the current requirements with your scheme.