Two rulebooks, running at once, using similar words differently
A combined agency is the hardest compliance position in this sector, not because either regime is difficult but because they are close enough to be confused and different enough that the confusion costs you.
On the sales side: statutory trust under EAA 1979 s.13, client account under s.14, prescribed records under reg 6(3) of the 1981 Regulations, six-year retention, and an annual audit by a qualified auditor within six months of the period end. Criminal enforcement under s.14(8), and prohibition orders under s.3 in the background.
On the lettings side: scheme membership under reg 3 of SI 2019/386, a client account by virtue of the scheme approval conditions at SI 2018/751 reg 5(2)(f), written procedures published on your website, PII appropriate to the client money held, a certificate to display and publish, and a fourteen-day notification duty. Civil enforcement to £30,000, plus £5,000 per transparency breach.
Where combined agencies actually get caught
Three things, in our experience and in the enforcement record.
The audit nobody mentioned. An agency that grew from lettings into sales joins a CMP scheme early, does everything the scheme asks, and never has the Estate Agents Act audit — because the scheme does not ask for it and the accountant did not know it existed.
Premises on the AML register. Fees are per premises. A branch opened two years ago and never added to the registration is a notifiable material change that was not notified, and failure to notify material changes is the second most common breach on HMRC's published list.
Commingled client money. Not fraud — just one account doing both jobs, which makes it materially harder to demonstrate compliance with the 1981 Regulations for the portion that is in scope of them.
What we do for a combined agency
Separate the two from the ledger up: distinct client money handling, distinct records, and management accounts that show sales and lettings as two businesses with two margins. Then the monthly three-way reconciliation on the sales client account so the regulation 8(1) audit is a short exercise rather than an archaeology project, and the scheme-facing reporting the lettings side needs.
And a single calendar with both sets of dates on it, because they do not align: the audit runs six months from your accounting period end, the AML declaration runs on the registration anniversary, and neither cares what your corporation tax deadline is.
We do the accounting. A registered auditor signs the report.
Accountants for Estate Agents
Client account bookkeeping and the monthly three-way reconciliation. The records reg 6(3) actually 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.
Anstey Bond LLP
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.
Common questions
Can we use one client account for both sides?
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.
Do we need both the audit and the scheme?
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.
Which redress scheme covers us?
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 rather than two, but check the scope on your certificate rather than assuming. 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.
Does the AML registration cover both?
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 exactly 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.
How should the accounts present the two sides?
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 obscures the operational question that actually matters month to month: whether the lettings book covers the fixed cost base, so that sales income is profit rather than survival.