Client Money Protection has finally made it into the Housing and Planning Bill yesterday after an amendment from Baroness Hayter and Lord Palmer was approved.

The amendment, banning letting agents from taking money from tenants unless they hold separate client money accounts, was added to the Bill during the report stage in the House of Lords.

While the amendment falls short of mandatory provision for CMP, it is an ‘enabler’, allowing the Government to review the need for a mandatory measure. The review could be as early as next month or June.

Housing minister Brandon Lewis was understood to have ruled out making lettings agents ring-fence tenant or landlord funds, but speaking to peers yesterday, Baroness Hayter said “constructive” dialogue with ministers had led to a change of course.

She said: “The amendment would require every letting agent to have the money they hold be protected so even if the letting agent disappeared or went bankrupt the money would be safe.

“Such money does not belong to the agent, and as with solicitors who handle client money, it should be held in a separate account.”

Only last week Lewis had seemed to have ruled out introducing CMP during a speech at the Association of Residential Lettings Agents conference when he said he didn’t want to create too much regulation at the same time.

David Cox, managing director of ARLA, said: “This is positive news for consumers and a great example of the industry and policy makers working together to champion consumer interests. At present, property agents are not legally required to join Client Money Protection  schemes which leaves tenants and landlords at risk of losing money.

“This new measure means that when Government reviews its property transparency measures later this year, there is a real chance that CMP could finally become mandatory for all property agents in the UK. Consumers may finally have a guarantee that their money is safe and we will continue to work alongside DCLG to make this a reality.”

Hayter told EYE last night: “I am delighted the Government listened to professional letting agents, as represented by ARLA, to tenants and to landlords, and adopted the Labour initiated amendment giving government the powers to introduce compulsory CMP for letting and managing agents.

“The minister also undertook that if their review demonstrated a need for this, they would work with stakeholders to bring forward these regulations.  I am therefore confident this will be in place before too long.”

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