Landlord’s guide to client money protection schemes

Landlord’s guide to client money protection schemes

17:48 PM, 18th June 2012, About 12 years ago 5

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Letting agents regularly go bust amid claims of owing landlords and tenants thousands of pounds, so here’s a quick guide to what to look for to safeguard your money.

Letting agents are not regulated, which means anyone can open and trade as a letting agent without any qualifications or licence.

Like any other business, if a letting agent stops trading, landlords and tenants become creditors and risk losing any rents or deposits held by the agent.

To stop this, several industry groups run ‘client money protection’ schemes – sometimes called ‘CMP’.

Belonging to a client money protection scheme does not mean a landlord will receive compensation if something goes wrong – the schemes have terms and conditions, like time limits for claims and caps on pay outs, so check the finer points do not exclude your rental business.

The main CMP schemes are:

National Approved Letting Scheme (NALS)

NALS will pay up to £25,000 for any one claim, with a cap for landlords of three months’ rent. The total top pay out for a single claim is £300,000, while the scheme will only pay £3 million in any one year.

Association of Residential Letting Agents (ARLA)

ARLA will compensate a landlord up to a limit of £25,000. Landlord claims are limited to three months’ rent. The total payable for a member company is £500,000. In any one year, the scheme has a limit of £3 million.

Royal Institution of Chartered Surveyors (RICS)

RICS will pay a maximum of £50 000 per letting agents, subject to an overall limit for the scheme of £5.3 million for any one year.


SafeAgent is not a CMP scheme, but an umbrella group for letting agents who are members of a CMP scheme. The aim is to promote money protection by displaying a single, recognisable logo that shows any money with a letting agent is safeguarded.

Letting agents belonging to client money protection schemes should display a logo of one or more of the schemes listed above on their web sites and letterheads.

Even if you see the logo, still check the CMP scheme web site to make sure membership is valid.

Some unscrupulous letting agents say they are members and use the logo when client money is not protected.

Don’t forget that just because the agent was part of a CMP scheme one year does not mean membership is still in force years later – check every year.

Keeping on top of rent payments is the best way of minimising any losses, even if the letting agent is a client money protection scheme member.

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8:56 AM, 20th June 2012, About 12 years ago

There are in fact 5 CMP schemes - RICS, ARLA, NAEA, NALS and the Law Society. Whilst NAEA & ARLA are both under the NFoPP umbrella, its important to note that both organisations members will have CPM. It must be noted that only Licensed members of ARLA and NAEA will have CMP, Individual members will not if their firms partners, principals or Directors are not themselves members. Individual ARLA and NAEA members can only display their accreditation and logo on personal stationery. This is under review by ARLA as it may cause confusion to consumers. Together with NALS, these 5 organisations offer CMP via insurance backed schemes whilst RICS & the Law Society's members contribute to a fund.

Only agents who are bound by membership of these 5 schemes may hold deposits under the TDS. These agents will not only have CMP, but also Professional Indemnity Insurance, a dedicated, ring fenced clients account which is audited each year, membership of an independent redress scheme and be bound by a strict code of practise.

For an agent to be a member of SAFEagent, they will need to demonstrate that they hold CMP and as such will be a member of obne of the 5 regulators as CMP is categorically not available elsewhere. . Premiums are paid annually in advance and cover continues unless that member leaves the regulator of which they are a member, or they are expelled.
SAFEagents display a sticker in their window which clearly shows the year for which they are covered. In the event that membership is not renewed or lapses, checks are made to ensure that that agent does not use the SAFE mark on their website.

Mark Alexander - Founder of Property118

9:08 AM, 20th June 2012, About 12 years ago

Thank you for the further clarification Eric, excellent.

10:19 AM, 20th June 2012, About 12 years ago

Letting Agents although compliant can not join SafeAgent unless they are also a member of bureaucratic organisations such as ARLA id suggest their aim is not to "promote money protection" instead promote the voluntary bureaucratic schemes.

In addition id suggest to Landlords to not allow any Letting Agent to hold onto three months rent of which these schemes apparently cover, ensure you get paid month by month. You wont find me letting 3rd parties hold 3 months or more rent on my behalf because they have a logo on their website or letterhead.

19:56 PM, 20th June 2012, About 12 years ago

@Your Letting - perhaps you would be kind enough to clarify your comment - "Letting Agents although compliant can not join SafeAgent unless they are also a member of bureaucratic organisations such as ARLA". The reason I ask is that an agent cannot have Client Money Protection Insurance unless they are members of one of the 5 regulators. SAFEagent was only intended to promote consumer awareness and has no interest in promoting anything else. There is, after all, no benefit in doing so as SAFE is entirely independent and non commercial. Its an initiative started by agents for agents.

I record that the only bureaucracy in respect of such organisations is the requirement for independently audited accounts, CMP and proof of PI insurance as well as membership of an independent redress scheme. There are many good agents who don't subscribe to such schemes, however, its how the consumers tells them apart from the rogues which is the key issue.

Mark Alexander - Founder of Property118

22:20 PM, 20th June 2012, About 12 years ago

@Eric Walker - I totally agree, until CMP becomes compulsory for letting agents, evidence of one or more corporate memberships to the 5 professional bodies or an up to date SAFE sticker in a letting agents window is all that landlords and tenants can rely on to ensure their money really is protected.

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