Scheme membership is the obligation. The client account is a condition of it.
Regulation 3 of SI 2019/386 is short: a property agent who holds client money must be a member of an approved or designated client money protection scheme. That is the whole duty, and it is England only, under enabling powers in the Housing and Planning Act 2016 ss.133 to 135.
What people expect to find in those Regulations and do not is the separate client account. That obligation lives in the approval conditions at SI 2018/751 reg 5(2): members must hold client money in a client money account with an FCA-authorised bank or building society; have and comply with written procedures for handling client money; publish those procedures on their website; and hold professional indemnity insurance appropriate to their size, income, type of work and the amount of client money held.
The transitional arrangement that once allowed agents to join a scheme while still trying to open an account expired on 1 April 2020. After that date schemes must require every member to have an appropriate client account in place to maintain membership.
If you hold no client money, you need no scheme
This is a real and legitimate structure, and MHCLG's guidance sets out the evidence it will accept: the tenant pays rent direct to the landlord, deposits are paid direct to the landlord, and maintenance invoices are issued direct to the client. Plenty of agencies operate this way deliberately, and it removes the scheme requirement, the client account condition and a substantial amount of monthly reconciliation work.
What it does not survive is partial application. A float held for a landlord's repairs, or a holding deposit taken while referencing runs, is client money regardless of how the rest of the business is arranged.
The rules that changed under you in 2026
Rent in advance before an assured tenancy is entered into is prohibited from 1 May 2026, and section 9 binds agents directly — you may not invite it, encourage it, accept an offer of it or accept it. Rental bidding is prohibited from the same date: advertise a specific proposed rent and neither invite, encourage nor accept an offer above it. Discrimination against tenants with children or on benefits is prohibited, covering adverts, withholding information, preventing viewings and refusing a tenancy. Rent increases are limited to once a year on a revised section 13 procedure with at least two months' notice.
What we do for a letting agent
Client account bookkeeping and monthly reconciliation to a standard your scheme will accept. Revenue recognised correctly — commission only, never the gross rent, with management fees spread across the management period and tenant-find fees at the point the tenancy is secured. The VAT treatment of referencing, inventories, portal costs and any insurance or mortgage introductions you make. And the annual accounts, corporation tax, payroll and management figures behind all of it.
Common questions
Which scheme should we join?
Any of the six approved ones — the choice is commercial rather than legal. They are Client Money Protect, Money Shield, Propertymark, RICS, Safeagent and UKALA Client Money Protection. What differs between them is cost, the compensation caps the Secretary of State has approved under reg 5(1A), what else comes with membership, and the accounting conditions they impose. Propertymark, for instance, requires an annual Accountant's Report where a member holds more than £1 million in client accounts excluding registered insured deposits, or operates as a Client Accounting Service Provider — and requires the accountant to be a member of an FRC Recognised Supervisory Body with a practising certificate and no connection to the company. Read the conditions before choosing on price.
What are the transparency duties, exactly?
Four of them, and each is a separate breach at up to £5,000. Under reg 4 you must display the certificate at each premises in England where you deal with people face to face, at a place where it is likely to be seen; publish a copy on your website if you have one; produce a copy free of charge to any person who may reasonably require it, which includes enforcement officers; and notify every client in writing within 14 days if your membership is revoked or you change scheme. MHCLG's guidance is explicit that the notification duty applies even if no certificate was ever issued. Failing to display and failing to produce on request is two penalties, not one. Multiple offices of a single legal entity count as one breach.
What else must we display under consumer law?
A fee list, and a statement naming both your schemes. Consumer Rights Act 2015 s.83 requires a letting agent to display a list of fees at each face-to-face premises, on its website, and in England on third-party sites. Each fee needs a description sufficient to enable a person to understand the service or cost, must state whether it is per dwelling or per tenant, and must give the amount inclusive of any applicable tax. Subsections (6) and (7), added by the Tenant Fees Act with effect from 1 June 2019, require you to state that you are a member of a client money protection scheme and to give the name of the scheme, and to do the same for your redress scheme. The penalty is up to £5,000.
Are we caught by the AML rules?
It depends on the rent, and the test changed on 30 June 2026. MLR 2017 reg 13(4)(b)(ii), as amended by SI 2026/621, now sets the threshold at £10,000 or more per month rather than €10,000. Both conditions must be met: a term of a month or more, and rent of £10,000 or more per month during at least part of the term. It applies to land generally, so commercial lettings count. If you also carry out any estate agency work — even occasional sales instructions — you are in scope through the estate agency limb regardless of rent levels, and registration there is required before you trade at all. HMRC's letting agency guidance page still says euros and is three years out of date; work from the Regulation.
What is client money in a lettings business?
Wider than rent, and MHCLG lists seven categories. Rent held after your fees are deducted. Utilities, council tax or communication services held in advance. One-off repair payments. Maintenance floats. Miscellaneous advance payments for professional work. Security deposits that are not yet protected — the window before they reach an authorised tenancy deposit scheme. And holding deposits. Money properly held in an authorised deposit scheme is excluded by reg 2, but the unprotected window before it gets there is not. Maintenance floats are the other one agencies miss, because they feel like working capital and are not.
Do we need to worry about the landlord ombudsman?
Not for your own membership. The Renters' Rights Act sections 64 to 74, which create the landlord redress scheme, are not commenced, and the roadmap indicates 2028 as an expectation rather than a date. More usefully, the government's guide confirms that agents are not required to join it — you remain in your existing agent redress scheme, The Property Ombudsman or The Property Redress Scheme. What will affect you is that landlords who use managing agents remain responsible for their own behaviour, so expect landlord clients to ask harder questions about what you are doing on their behalf once the scheme exists.