Citation, commencement and application

1. —(1) These Regulations may be cited as the Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc.) Regulations 2019.

(2) These Regulations come into force on 1st April 2019.

Interpretation

2. In these Regulations—

“ approved or designated client money protection scheme ” means a client money protection scheme that has been approved or designated for the purpose of these Regulations by the Secretary of State under regulations made under section 134 of the Housing and Planning Act 2016;

“ client money ” means money—

“ regulated property agent ” means a person who is required to be a member of a client money protection scheme under regulation 3 ;

“ scheme administrator ” has the same meaning as in the scheme approval regulations (see regulation 2 of those regulations); and

“ scheme approval regulations ” means the Client Money Protection Schemes for Property Agents (Approval and Designation of Schemes) Regulations 2018.

Requirement to belong to a client money protection scheme

3. —(1) A property agent who holds client money must be a member of an approved or designated client money protection scheme.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transparency requirements

4.—(A1) Paragraph (1) applies if the scheme administrator of an approved or designated client money protection scheme provides a certificate under regulation 8(1) of the scheme approval regulations to a regulated property agent.

(1) The regulated property agent must—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) display the certificate—

(i) at each of the agent's premises in England at which the agent deals face-to-face with persons using or proposing to use the agent's services as a property agent; and

(ii) at a place in each of those premises where the certificate is likely to be seen by such persons;

(c) publish a copy of the certificate on the agent's website (if any); and

(d) produce a copy of the certificate to any person who may reasonably require it, free of charge.

(2) A regulated property agent must notify each client in writing—

(a) if the agent's membership of an approved or designated client money protection scheme is revoked; or

(b) if the agent ceases to be a member of a particular approved or designated client money protection scheme and becomes a member of a different approved or designated client money protection scheme.

(3) A notification under paragraph (2) must—

(a) be given to each established client within 14 days of the event mentioned in paragraph (2); and

(b) if it is given under paragraph (2)(b), give the name and address of the scheme of which the agent becomes a member.

(4) In this regulation—

“ client ” means—

“ established client ” means a person who is a client on the day on which the event mentioned in paragraph (2) occurs.

Enforcement

5. —(1) It is the duty of every local authority in England to enforce the requirements of regulations 3 and 4 in its area ... .

(1A) Paragraph (1) is subject to—

(a) regulation 8(3), and

(b) section 26 of the Tenant Fees Act 2019.

(2) A breach of regulation 3 or 4 by a property agent is taken to have occurred in each local authority area in England in which—

(a) the agent has premises; or

(b) housing is situated in relation to which the property agent's English letting agency work or English property management work( ) is undertaken.

(3) A local authority in England must have regard to any guidance given by the Secretary of State or the lead enforcement authority (if not the Secretary of State) about the exercise of its functions under these Regulations.

Penalty for breach of the requirement to belong to a client money protection scheme

6. —(1) Where a local authority in England is satisfied beyond reasonable doubt that a property agent has breached regulation 3, the authority may impose a financial penalty in respect of the breach.

(2) The financial penalty—

(a) may be of such amount as the authority imposing it determines; but

(b) must not exceed £30,000.

Penalty for breach of the transparency requirements

7. —(1) Where a local authority in England is satisfied beyond reasonable doubt that a property agent has breached regulation 4, the authority may impose a financial penalty in respect of the breach.

(2) The financial penalty—

(a) may be of such amount as the authority imposing it determines; but

(b) must not exceed £5000.

(3) Paragraph (1) does not apply in relation to a breach of regulation 4(1) if the agent has taken all reasonable steps to obtain a copy of a certificate confirming the agent's membership of the approved or designated client money protection scheme and the scheme administrator has not provided it.

Enforcement outside an authority's area

8. —(1) A local authority in England may impose a financial penalty under these Regulations in respect of a breach of a requirement under regulation 3 or 4 which occurs outside that authority's area (as well as in respect of a breach which occurs within that local authority's area).

(2) Where a local authority (“LA1”) proposes to impose a financial penalty under these Regulations in respect of a breach of a requirement under regulation 3 or 4 which occurs (or which also occurs) in the area of a different local authority (“LA2”), LA1 must notify LA2 of its intent to do so.

(3) On receipt of a notification under paragraph (2) LA2 is relieved of its duty under paragraph (1) of regulation 5 in relation to the breach of the requirement referred to in the notice.

Further provision about financial penalties

9. —(1) Only one penalty may be imposed on the same property agent in respect of the same breach, subject to paragraph (2).

(2) More than one penalty may be imposed on the same property agent in respect of a breach where—

(a) the breach continues after the end of the relevant period, unless the property agent appeals against the final notice within that period; or

(b) if the property agent appeals against the final notice within the relevant period, the breach continues after the end of 28 days beginning with the day after that on which the appeal is finally determined, withdrawn or abandoned.

(3) In paragraph (2)—

“ relevant period ” means the period of 28 days beginning with the day after that on which the final notice in respect of the previous penalty for the breach was served; where

“ final notice ” has the meaning given by paragraph 3(2) of the Schedule to these Regulations.

Procedure for and appeals against financial penalties

10. The Schedule to these Regulations (procedure for and appeals against financial penalties) has effect.

Regulation 10

SCHEDULE Procedure for and appeals against financial penalties

Notice of intent

1. —(1) Before imposing a financial penalty on a property agent for a breach of regulation 3 or 4, a local authority must serve a notice on the agent of its intention to do so (a “notice of intent”).

(2) The notice of intent must be served before the end of the period of 6 months beginning with the first day on which the authority has sufficient evidence of the breach (“ the relevant day ”), subject to sub-paragraph (3).

(3) If the breach continues beyond the end of the relevant day, the notice of intent may be served—

(a) at any time when the breach is continuing; or

(b) within the period of 6 months beginning with the last day on which the breach occurs.

(4) The notice of intent must set out—

(a) the amount of the proposed financial penalty;

(b) the reasons for proposing to impose the penalty; and

(c) information about the right to make representations under paragraph 2.

Right to make representations

2. The property agent may, within the period of 28 days beginning with the day after that on which the notice of intent was served, make written representations to the local authority about the proposal to impose a financial penalty on the agent.

Final notice

3. —(1) After the end of the period mentioned in paragraph 2 the local authority must—

(a) decide whether to impose a financial penalty on the property agent; and

(b) if it decides to do so, decide the amount of the penalty.

(2) If the authority decides to impose a financial penalty on the agent, it must serve a notice on the agent (a “final notice”) imposing that penalty.

(3) The final notice must require the penalty to be paid within the period of 28 days beginning with the day after that on which the notice was served.

(4) The final notice must set out—

(a) the amount of the financial penalty;

(b) the reasons for imposing the penalty;

(c) information about how to pay the penalty;

(d) the period for payment of the penalty;

(e) information about rights of appeal; and

(f) the consequences of failure to comply with the notice.

Withdrawal or amendment of notice

4. —(1) A local authority may at any time—

(a) withdraw a notice of intent or final notice; or

(b) reduce the amount specified in a notice of intent or final notice.

(2) The power in sub-paragraph (1) is to be exercised by giving notice in writing to the property agent on whom the notice was served.

Appeals

5. —(1) A property agent on whom a final notice is served may appeal to the First-tier Tribunal against—

(a) the decision to impose the penalty; or

(b) the amount of the penalty.

(2) An appeal under this paragraph must be brought within the period of 28 days beginning with the day after that on which the final notice was served.

(3) If a property agent appeals under this paragraph, the final notice is suspended until the appeal is finally determined or withdrawn.

(4) An appeal under this paragraph—

(a) is to be a re-hearing of the local housing authority's decision; but

(b) may be determined having regard to matters of which the authority was unaware.

(5) On an appeal under this paragraph the First-tier Tribunal may quash, confirm or vary the final notice.

(6) The final notice may not be varied under sub-paragraph (5) so as to make it impose a financial penalty of more than—

(a) £30,000, in respect of a breach of regulation 3; or

(b) £5,000, in respect of a breach of regulation 4.

Recovery of financial penalty

6. —(1) This paragraph applies if a property agent does not pay the whole or any part of a financial penalty which, in accordance with this Schedule, the agent is liable to pay.

(2) The local authority which imposed the financial penalty may recover the penalty or part on the order of the county court as if it were payable under an order of that court.

(3) In proceedings before the county court for the recovery of a financial penalty or part of a financial penalty, a certificate which is—

(a) signed by the chief finance officer of the local authority which imposed the penalty; and

(b) states that the amount due has not been received by a date specified in the certificate;

is conclusive evidence of that fact.

(4) A certificate to that effect and purporting to be so signed is to be treated as being so signed, unless the contrary is proved.

(5) In this paragraph “ chief finance officer ” has the same meaning as in section 5 of the Local Government and Housing Act 1989 .

Proceeds of financial penalties

7. —(1) Where a local authority imposes a financial penalty under these Regulations, it may apply the proceeds to meet the costs and expenses (whether administrative or legal) incurred in, or associated with, carrying out any of its enforcement functions in relation to the private rented sector.

(2) Any part of any financial penalty recovered which is not to be applied in accordance with paragraph (1) must be paid into the Consolidated Fund.

(3) In sub-paragraph (1)—

“ enforcement function ” means, in relation to a local authority—

“ private rented sector ” means—

and for the purpose of this definition “ residential premises ” has the meaning given by section 1 of the Housing Act 2004 except that it does not include social housing within the meaning of Part 2 of the Housing and Regeneration Act 2008 .