Letting agents must offer compulsory money protection to cover rents, deposits and other money they handle for landlords and tenants in England from April 1, 2019.
The government is holding up the tenant fee ban until after compulsory money protection starts so that any money held by letting agents who may close because of the prohibition is protected.
From April 1, 2019, letting agents must belong to a money protection scheme or cease trading. Local councils will monitor membership and have the power to fine letting agents who have not registered with a scheme up to £30,000 and up to £5,000 for failing to display their membership details on documents and websites.
Many trade associations for letting agents insist members have compulsory money protection insurance.
The scheme means agents must separate client money from their day-to-day business cash flow. If the agent goes bust or client money is missing from the account, the scheme ensures landlords and tenants do not end out-of-pocket.
John Midgley, chair of SAFEagent, a trade group for letting agents campaign for compulsory client money protection, welcomed the measure.
He said: “It’s been a long road to mandatory client money protection for all agents, but we’re delighted the hard work paid off and we’re finally here.
“This new law is huge win for the consumer, as mandatory client money protection will ensure tenant and landlord money is safe.
“Despite this great news, it’s important to remind all consumers that although regulations have been laid, they won’t be law until April 2019. That means their money is still at risk if their chosen agent does not have client money protection.”
