An agency that sells and lets property is under both client money regimes, each with its own rules.
Statutory trust under EAA 1979 s.13, client account under s.14, records under reg 6(3) kept for six years, and an annual audit by a qualified auditor within six months of the period end. Criminal enforcement under s.14(8).
Each side has its own law, its own client account rules and its own enforcement.
Scheme membership under SI 2019/386 reg 3, a client account under the scheme conditions, published written procedures, PII, a certificate to display and a fourteen-day notification duty. Civil penalties up to £30,000, plus £5,000 per transparency breach.
An agency that grew from lettings into sales joins a CMP scheme and does everything the scheme asks. The scheme does not ask for the Estate Agents Act audit, so it never happens.
HMRC fees are per premises. A branch never added to the registration is a material change that was not notified, the second most common breach on HMRC’s published list.
Sales and lettings money in a single account makes it much harder to show compliance with the 1981 Regulations for the sales money.
One calendar with both sets of dates: the audit six months after your period end, the AML declaration on the registration anniversary.
Separate client money handling and records for each side, from the ledger up, and management accounts that show sales and lettings as two businesses with two margins.
A three-way reconciliation every month on the sales client account, so the regulation 8(1) audit is short, and the reporting your CMP scheme needs for the lettings side.
Business Pulse plans the year for both sides and reviews each margin against the plan every month or quarter.
Client account bookkeeping and the monthly three-way reconciliation. The records reg 6(3) prescribes — payer, capacity held, the interest in land, tracked separately by property. The agency's annual accounts, corporation tax or partnership return, payroll, VAT and the management figures you run the business on. All the preparation that decides whether the report comes back clean.
Buzz Accounting Ltd is licensed by the AAT and a member of the ICPA. It is not a chartered accountancy firm and not a registered auditor.
Colin Ellis, ICAEW and a Responsible Individual, audits the client account and signs the report. Regulation 8(1) of the Estate Agents (Accounts) Regulations 1981 requires a qualified auditor, and EAA 1979 s.14(6)–(7) defines that as someone eligible for appointment as a statutory auditor under the Companies Act 2006. Propertymark says the same thing for its own Accountant’s Report, citing Companies Act 2006 s.1239.
Anstey Bond LLP is a separate firm, registered for audit by the ICAEW. Companies House OC360626.
You can hold both in accounts that satisfy both regimes, but the records have to keep them apart and most agencies find separate accounts simpler to defend. The sales side must satisfy s.14(2) — an account with an authorised institution, in the name of a person engaged in estate agency work, with the word “client” in its title — and reg 4, which permits non-client money in it only where it is the minimum required to open or maintain the account or to restore improperly withdrawn funds. The lettings side must satisfy the scheme's conditions. Where it goes wrong is the audit: your auditor is testing the estate agency money against the 1981 Regulations, and a commingled account means demonstrating which balances are in scope before you can demonstrate anything else.
Yes, if you hold client money on both sides, and that is the defining feature of a combined agency. The regulation 8(1) audit attaches to estate agency work; the CMP scheme attaches to letting agency work and property management work. They are separate instruments with separate triggers, and satisfying one has no bearing on the other. The commonest failure we see is an agency with excellent lettings compliance — scheme joined, certificate displayed, procedures published — that has never had the client account audit its sales side has required all along.
You need to be covered for both activities, and they come from different orders. Residential estate agency work is caught by the Estate Agents (Redress Scheme) Order 2008, UK-wide, in force from 1 October 2008. Lettings agency work and property management work in England are caught by SI 2014/2359, in force from 1 October 2014. Both approved schemes — The Property Ombudsman and The Property Redress Scheme — offer membership covering both activities, so in practice this is one membership. Check the scope on your certificate. The penalties differ: up to £1,000 for the estate agency breach under EAA s.23B, up to £5,000 for the lettings one under art 8 of the 2014 Order.
The estate agency registration is what you need, and it is required before you carry on any estate agency activity at all — with no rent threshold and no size test. The letting agency limb has the £10,000 a month threshold, but if you are already registered as an estate agency business you are within HMRC's supervision regardless. What does need checking is premises: the fees are charged per premises, at £400 for registration and £400 for the annual declaration, and an unregistered branch is the kind of omission that appears in HMRC's published non-compliance list. If you open a branch, the fee is charged in full in the first six months of the registration year and at half in the second.
As separate revenue streams with separate margins, because they behave nothing alike. Sales commission is lumpy, point-in-time, and depends on transaction volume you do not control. Lettings management income is recurring, recognised over time, and is what makes an agency valuable to a buyer. Mixing them into one turnover figure hides the thing a lender or a purchaser most wants to see. It also hides the question that matters month to month: whether the lettings book covers the fixed costs. If it does, sales income is profit.
We start by establishing which regime you are in.