Residential Landlords Association (RLA)
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Today in politics: Client Money Protection and HMO rules

Today we look at government plans to extend the deadline for mandatory CMP for agents by 12 months and a question on whether local authorities can introduce their own minimum room sizes in HMOs.

Commons to give final approval to CMP rules

Plans to extend the grace period for the introduction of Client Money Protection Schemes for property agents will be approved today.

The rules extend the initial grace period for letting agents struggling to obtain a pooled client account for a further 12 months, to 1 April 2021. 

Housing Minister, Christopher Pincher MP said:

“Now that mandatory Client Money Protection has been in place for several months, there is some evidence that UK banks are reluctant to offer pooled client accounts to agents. 

“That requires attention because one of the key requirements of the 2019 regulations is for letting agents to hold their clients’ money in a client account. 

“For the majority of letting agents, the only workable model is to hold the money in a pooled client account, avoiding the need for thousands of individual client accounts. 


“That presents money laundering risks, however, because funds from multiple sources can be co-mingled and moved rapidly through a pooled client account, which presents challenges in identifying the true owners of the funds.

“To address those risks, money laundering regulations place specific requirements on non-regulated firms, including the large majority of letting agents. 

“Those requirements include banks conducting due diligence on both the customer that holds the pooled account—the letting agent—and that customer’s clients. 

“That enhanced consumer due diligence has made it difficult for some letting agents to obtain a pooled client account because banks, driven by a concern to ensure compliance with anti-money laundering regulations as well as other commercial factors, may be reluctant to offer them.


“We continue to monitor quarterly the number of agents affected. I am happy to report to the Committee that the number of agents reporting such difficulties to client money protection schemes remains low. 

“In the period between October and December 2019, which is the last quarter for which we have data, 251 letting ​agents reported difficulties in obtaining a client account—that amounts to around 2.5% of agents that currently belong to a client money protection scheme.”

Councils CAN require higher standards in HMOs than those set by the government, says minister

Sir Christopher Chope MP (Conservative, Christchurch – Former Chair of the APPG for the PRS) has received a response to his written question asking what steps MHCLG is taking to ensure that local authorities cannot impose additional room size standards for houses in multiple occupation than the statutory minimum standards laid down by his department; and if he will make a statement.

Housing Minister, Christopher Pincher MP responded:

“Under House in Multiple Occupation (HMO) legislation, rooms in licensable HMOs that are under 6.51 square metres cannot be used as sleeping accommodation. 

“Local housing authorities have discretion to consider local circumstances and require higher standards within HMO licence conditions but must not set lower standards. 

“My department is working with local authorities to raise standards across the private rented sector, to protect vulnerable tenants, including those living in HMOs.”


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