One of the main advantages of a PropTech solution is being able to automate the time-intensive and repetitive jobs that employees don’t always enjoy doing. Not only that, it does them quicker, cheaper and error-free – consistently.
And that’s why so many estate and lettings agencies have looked to technology to keep their businesses ahead of the competition.
But it’s not just business effectiveness that is at stake these days. Every landlord and letting agent knows that this business has always been mired in red tape. There are essential compliance checks for every area of the business, every step of the way, to ensure standards are met across the industry. And the signs are that this is going to become an even bigger challenge.
It moreover comes with a critical risk for landlords and agencies – a very hefty price in the form of fines. And human error is not considered to be an excuse.
Everyone makes mistakes. But not technology. It doesn’t differentiate between the first task and the hundredth – if it has the ability to undertake a process, it will do so time after time, with consistently excellent results.
Compliance burden or benefit?
So when it comes to compliance in the housing sector, PropTech is the sensible solution for a whole range of compliance issues, including banking.
One issue that some agents fell foul of last year was Client Money Protection (CMP), with over £3 million in penalty notices issued over breaches of CMP compliance rules in London alone.
In one case, an agency had a valid CMP insurance policy, but they were fined £24,000 because the director named in the policy had resigned and no one had updated the insurers. Human error.
Despite CMP insurance being a legal requirement in England since 2019 and a requirement in Scotland and Wales as well, some agencies are still being fined despite warnings from Trading Standards.
But why is CMP compliance such an issue for the industry?
After all, the schemes are there to protect and reimburse your landlords and tenants if client money is stolen by a third party, or is lost or misappropriated, or the business goes into administration. These schemes provide reassurance to both landlords and tenants that their money is safe, giving agencies a great selling point to market to potential clients. And when, like now, there is a cost-of-living crisis and every penny counts, that is a significant benefit to sell.
One issue could be cost, but agencies can take steps to keep that under control. There are six government-approved schemes to choose from – including one run by Propertymark. And the cost is largely determined by the amount of client money held – the higher the amount, the greater the risk, the more it costs.
Where does a PropTech solution come in?
How agencies can help themselves
Every approved scheme is different. But what is almost universal is that the less money there is in your client account at the end of the day, the less risky your business is to insure. Choosing a payment provider that can help reconcile your client account to zero every day means less risk for the CMP provider and a lower insurance cost for you.
Supplying the correct documentation at the right time can also be a challenge. But some suppliers, ourselves included, can assist clients with understanding exactly what evidence and documents need to be provided for each CMP provider. In general, they will want to see detailed records of clients’ accounts, including bank statements from the FCA-authorised bank or building society client account provider.
In this way, we can help to keep our clients compliant and free from the fines that could put their business at risk.
There is no annual check on compliance. It is a rolling statutory obligation. Why risk leaving compliance down to human error when technology and reliable suppliers from across the industry can help your business stay on the right side of the law?
With the Renters Reform Bill on the horizon, the message is clear, there’s never going to be less compliance than there is now, only more. The good news is we’ll be working constantly to provide the right tech solution to help agencies across the UK stay ahead of the game.