Since April 2019, all letting agents and property managers in England who hold client money have been legally required to belong to a government-approved Client Money Protection (CMP) scheme. This requirement was introduced under the Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc.) Regulations 2019.
What Is Client Money?
Client money is any money you hold or receive on behalf of another person in connection with letting or property management work. This includes:
- Tenancy deposits (before they are placed in a deposit protection scheme)
- Rent collected on behalf of a landlord
- Funds held for property maintenance or repairs
- Any other money you hold in trust for a client
Why CMP Is Required
CMP insurance protects landlords and tenants if an agent misappropriates their money or if the agency goes into administration. Without CMP, clients have no financial safety net if something goes wrong.
Who Must Have CMP?
Any agent or property manager who holds client money in the course of letting or property management work in England. If you do not hold client money at any point — for example, if tenants pay rent directly to the landlord and deposits go straight to a protection scheme — you may not need CMP, but you should take advice to confirm this.
Sales agents who hold deposits (such as reservation fees or exchange deposits) should also consider whether CMP or equivalent protection is needed, although the 2019 regulations specifically target letting and property management.
Approved CMP Schemes
The government has approved several schemes including:
- Client Money Protect
- Propertymark (through ARLA membership)
- RICS (for chartered surveyors managing property)
- Safeagent (formerly the National Approved Letting Scheme)
Each scheme sets its own membership fees and requirements. Compare them based on cost, claims process, and any additional benefits.
Your Obligations
- Join a scheme before you handle any client money
- Display your CMP certificate prominently in your office and on your website
- Provide a copy to any person who requests it
- Hold client money in a separate designated client account — never mix it with your business funds
- Keep accurate records of all client money received and paid out
- Renew your membership annually
Penalties for Non-Compliance
Operating without CMP membership when required is a civil offence. Local authority Trading Standards can impose a fine of up to £30,000. Repeated offences or deliberate non-compliance can result in banning orders under the Housing and Planning Act 2016, which would prevent you from engaging in letting or property management work entirely.
Best Practice
- Reconcile your client account regularly (at least monthly)
- Ensure all staff who handle client money understand their responsibilities
- Have a clear written procedure for handling, recording, and disbursing client money
- Consider professional indemnity insurance alongside CMP for additional protection
CMP is a legal requirement for letting agents and property managers who hold client money. If you are unsure whether you need CMP, seek legal advice. Details of approved schemes are available on the GOV.UK website.