Agents must keep client money (rent, deposits or other money collected by an agent for a landlord) in a separate client account and be able to identify the money allocated to each client, applicant, tenant or ex-tenant. The money cannot be used for any other purpose and must be forwarded to the relevant party as soon as administratively possible when it is due to be returned. The client account cannot be used for the deduction of fees unless the agent has consent from the person concerned.
An agent must process rent to the landlord once it has been received. It should be passed on as soon as administratively possible after the money has cleared and sent to the landlord in line with the agent’s terms and conditions.
A landlord should receive rental statements in line with the agreed agency terms and conditions. These statements will detail the amount received, deductions, retentions, VAT and the balance to be forwarded to the landlord. It is a legal requirement to keep all invoices for six years for tax purposes.
An agent should only instruct contractors when the funds to pay for this are available, or will be received shortly. It is not sufficient to rely on the next rental payment to pay contractors.
However, there may be circumstances when an agent has to instruct a contractor in a genuine emergency when funds are not available. Agents can, without consent, retain money from the rent on a monthly basis to accrue funds for future agreed works.