CMP and EPCs: Your guide to two major legislation changes for lettings agents

1 April 2019

Client Money Protection (CMP) is now mandatory, and there have also been changes to the energy efficiency regulations, which could impact your landlords.

Two major legislation changes came into effect on 1st April. These are that Client Money Protection (CMP) is now mandatory, and major fines will be levied against agencies that do not comply with the new law. The second change, which might have snuck under the radar for letting agents focused on CMP, is an increase to the amount landlords must spend to improve properties that do not meet minimum energy efficiency standards.

Mandatory Client Money Protection

All agencies must belong to a Government-approved Client Money Protection scheme from 1st April 2019. Agencies must ensure that the level of CMP membership provides sufficient cover to compensate clients for the maximum amount of client money that they hold. In addition, agencies must:

  • Display a certificate which confirms their membership of an approved CMP scheme (both in their branch and on their website)

  • Show a copy of the certificate to anyone who reasonably requires it, free of charge

  • Notify all clients within 14 days if their CMP membership is revoked, or they change to a different approved CMP scheme

  • Provide clients with the name and address of the scheme to which they become a member

Local authorities will have the power to impose fines of up to £30,000 on agents who do not belong to a scheme and up to £5,000 on agents who fail to display the correct details at their branch or on their website. Agencies who are found to be in breach of the regulations will be deemed to have been in breach of the regulation across all local authority areas in which they operate.

Changes to energy efficiency standards

The energy efficiency regulations, introduced last year, made it against the law for landlords to let residential or commercial properties with an Energy Performance Certificate rating of less than E from 1st April 2018. Landlords with existing tenancies were given a further two years to make improvements to their rental properties to bring them up to the minimum standards required. This means landlords will:

  • Need to spend up to £3,500 towards improving rental properties that have an F or G rating to bring them in line with the minimum energy efficiency standards, which must have a minimum of an E rating from 1st April 2020

  • Landlords can choose which improvements they make, according to the guidance, as long as they are confident that those improvements will bring their property to a minimum E rating. Improvements could include insulating the loft, roof or walls; upgrading the boiler; or installing low-energy lighting.

  • If they make improvements which are not “relevant energy efficiency improvements”, and the property is still below an E rating, they’ll need to make further improvements.

  • A landlord who has made all the “relevant energy efficiency improvements” but the property is still below E, will be able to apply for an exemption.

Local authorities will have the power to impose fines of up to  £4,000 and, if the property still isn’t up to standard after three  months, landlords could be fined up to 20% of the property’s rateable value. They could also lose rental income during the period that the property is unlettable.

It's important to note that this article isn't exhaustive and doesn't constitute legal advice.

Further reading