Mandatory Client Money Protection coming soon

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Client Money Protection:

The government has confirmed that all property agents in England will need to be part of an approved Client Money Protection (CMP) scheme by April 1 next year.

Client Money Protection (CMP) is a compensation scheme which recompenses landlords and tenants should an agent misappropriate their rent, deposit or other client funds. It is a requirement for trade body members to have CMP.

The regulations give Local Authorities the powers to:

• Impose fines of up to £30,000 on agents who do not belong to a scheme beyond this date
• Impose fines of up to £5,000 on agents who fail to display correct scheme membership details on the business premises and on websites

CMP insurance cover is available through several providers. Agents should review their options to ensure they have this cover in place before CMP becomes a legal requirement next year.

Under current legislation, the Consumer Rights Act 2015 made it a legal requirement for every letting agent in England to display whether or not they are a member of a CMP scheme, their lettings fees and which redress scheme they belong to.

Letting Agents in Wales are now required to be a member of a Client Money Protection scheme (and display this to consumers) as part of their Rent Smart Wales registration.

Trading Standards Officers have the enforcement powers to impose fines of up to £5,000 for any firm that fails to comply.

Agents already belonging to an industry trade body may already be covered by the insurance. The following trade bodies offer comprehensive CMP cover to their member firms: ARLA, RICS, UKALA and NALS.

Agents not belonging to a trade body should seek advice from insurance brokers and providers.

ALRA Propertymark’s CEO, David Cox has said:

“After a long fight, ARLA Propertymark’s campaign for mandatory Client Money Protection (CMP) is finally won.

“With the help of Baroness Hayter of Kentish Town, and cross-party consensus in the House of Lords, this is a vital step forward in improving consumer protection in the rental sector; probably more so than the myriad of other laws passed over the last two decades.

“We look forward to working with the Government to guarantee that the level playing field we’ve fought so hard to create becomes a reality on the 1st April next year.â€�

From Hasard:

“My Lords, I thank the noble Baroness and the noble Lord, Lord Palmer of Childs Hill, for their time and commitment to the client money protection review. I am pleased to announce that the Government intend to make Client Money Protection mandatory in line with the recommendation of the review chaired by the noble Baroness and the noble Lord, Lord Palmer of Childs Hill. This will ensure that every agent is offering the same level of protection, giving tenants and landlords the financial protection that they deserve. The Government will consult on how mandatory Client Money Protection should be implemented and enforced.”

Lord Bourne of Aberystwyth, 28 March 2017
The Parliamentary Under-Secretary of State, DCLG and Wales Office
Full Hansard Transcript

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Norfolk eHomes reportedly not paying rents or protecting deposits

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The local Norfolk newspaper Eastern Daily Press (EDP) has reported on a story that landlords using the Swaffham letting agent eHomes have been left with rents unpaid to them and tenants deposit unprotected.

The Property Ombudsman has already ordered eHomes to pay one landlord £10,000 including £6,600 in unpaid rent.

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Obtaining permission from mortgage provider to rent rooms?

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I am seeking advice on how best to approach my mortgage provider. Under their current rules they permit two rooms being let.

However, it is currently a three bedroom property and intend on making the loft into a en-suite bedroom another room on a lower ground floor extension.

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Landlord-tenant dispute turns nasty

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Tenant fined:

Any landlord-tenant dispute has the potential to get nasty. Apart from violence to the person, and given that the landlord’s property is in open view, it’s not unheard of that a tenant will take out revenge on the rental property itself. For example, attacking perhaps the most vulnerable parts of the property, windows, with heavy objects.

It’s always a good idea to try to settle any differences before the tenant leaves, but sometimes that’s not possible and either one or other party cannot be reasonable. Sometimes, from the landlord’s side, a small loss is better than a large expense through vandalism.

This case is a bit different because the tenant was in fact a lodger living with the landlord and the property attacked was the landlord’s car, not the rental property.

Hieu Le, a Master’s Degree student at Nottingham Trent University used a stone to damage the landlord’s BMW car.

The prosecutor, Robert Carr, as reported by The Nottingham Post, claimed that Le was a lodger who has paid his rent on time and had paid a £250 damage deposit to his landlord. (Lodger’s deposits do not need to be protected because the lodger is on a licence, not an AST). But as he left the lodging, the landlord had checked his room to find there was some damage and had refused to return any of Le’s deposit money.

Le had become so incensed at the landlord’s actions, which he claimed included retaining some of his belongings, he had picked up a stone and was seen to be “making a swirling motion” over the bonnet of the landlord’s BMW

Le had turned up at the house to confront his landlord, but the landlord declined to come out of the house, he closed the door on Lee and watched him from a bedroom window.

Carr said of the landlord:

“He saw Le making a swirling motion around the bonnet of the car. He could see marks appearing on the bonnet and said Mr Le had a stone in his hand, scratching the paintwork.â€�

Later the police had questioned Le, now living at Welbeck Walk, Nottingham, but Le declined to answer, it was claimed by Carr.

In mitigation, Le’s council, Devon Edwards, told the judge:

“Mr Le fully accepts this offence was the result of frustration which made him make a decision he will for ever regret. He is very disappointed with himself.”

Le, who is taking a Master’s Degree in international relations and plans to take a PhD next year, pleaded guilty to causing the damage and was given a two-year conditional discharge. As well as paying for repairs, he was ordered to find £85 prosecution costs and £20 government tax. He must now pay £1,351 repairs for scratching his landlord’s car in the squabble about a deposit.

Mr Edwards told the court that Le does not receive a student loan, but is funded by her mother who lives in Vietnam.

Deputy District Judge Steven Jonas at Nottingham Magistrates’ Court told 23-year-old Hieu Le:

“You are not allowed to take the law into your own hands. You can’t behave like this. For somebody like you, studying hard to make a better life, this is outrageous behaviour. I am sure you are deeply ashamed.â€�

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Universal Credit: landlords agree reform is needed

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Responding to the National Audit Office’s report today on the roll out of Universal Credit, David Smith, Policy Director for the Residential Landlords Association, commented: “Whilst it is clear that Universal Credit is here to stay, today’s report recognises the difficulties faced by tenants and landlords as a result of rent arrears. “The RLA’s most recent […]

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Meet the Developer event 7th July

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Experience for yourself and first-hand what Birmingham has to offer for the property investor by attending an exclusive ‘Meet the Developer’ event hosted by Property Investor Partnership on Saturday 7 July.

This event will commence at 11am and will include a tour of Digbeth and the Jewellery Quarter

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Universal Credit’s ‘Full Service’

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I’m writing to draw your attention to a piece recently produced by the RLA relating to Universal Credit, Full Service.

If you follow the link, click here,  you’ll find an excellent article, produced by Natalie Williamson

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Income backed-buy-to-let mortgage launched

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Buy-to-Let Mortgage:

Given the increased scrutiny landlords have to go through when applying for a new or renewal buy-to-let mortgage, Kent Reliance’s new income-backed product for limited companies and individual borrowers could prove a godsend.

The specialist mortgage provider has announced the new product, which it says will now take a broader view of customer affordability when the rental property yield on its own does not meet minimum requirements.

Using earned income to supplement the interest coverage ratio (ICR) for buy-to-let loans, this could be the first of many such offerings as competition for buy-to-let lending is still intense among mortgage lenders.

The product, says Kent, has been specifically tailored for non-portfolio landlords looking to borrow through a limited company arrangement or on an individual basis.

Adrian Moloney, sales director for One Savings Bank, which Kent Reliance is a part of, says:

“This new, broader approach to buy-to-let affordability will provide additional flexibility to allow earned income to form part of the affordability assessment for a buy-to-let application.

“High property values, particularly within London and the south east, can result in lower yields and as a result, some applicants may be refused lending, even on good quality properties. We are looking to fix that.

“To support this product, we have also updated our buy-to-let calculator so brokers can immediately see if a case fits the income backed criteria prior to submission, thereby simplifying the process and enabling a faster turnaround.�

Andrew Montlake, director of London-based broker Coreco, said it was great to see a specialist lender such as Kent Reliance continue to work hard with brokers to understand and meet consumer’s needs.

He says:

“There are a whole host of buy-to-let landlords who invest in property for long-term growth who have spare income to make up for lower rental yields, and more choice of lenders who top-slice is needed in the market.

“Lenders need to continue to innovate and evolve their offerings to meet ever-changing circumstances and Kent Reliance has a great track record of doing this.�

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Dilemma on arrears, eviction, and late deposit protection?

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Having served s21 1(b) and 21 4(a) on 8th April with an expiry for the 17th June, after seeking advice in March, I’ve started to complete the court possession form. Had been advised at the time of service not to do the s8 at the same time as not 2 months in arrears.

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Right to rent checks

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Right to rent checks were first introduced in February 2016 meaning before a landlord rents a property, they must have carried out checks to ensure that the tenant or tenants have the right to rent in the UK. These checks must be carried out on all tenants even if they are not named on the tenancy agreement.

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