ECSH63340 - Regulation 13 - Estate agents and letting agents

Category Heading Description The Law Regulation 13 - Estate agents and letting agents What it means Estate Agency Business (EAB) -The Regulations define ‘Estate Agent’ as a firm or sole practitioner, who or whose employees carry out Estate Agency work (within the meaning given by section 1 of the Estate Agents Act 1979). Please see the link above. The definition of estate agency work is very broad and will cover businesses that will not consider themselves to be ‘Estate Agents’ which is why we refer to ‘Estate Agency businesses’. These may include businesses that are construction companies, social housing providers and asset management companies as these may carry out estate agency work. In simple terms EABs are doing things on behalf of a client, who wishes to sell or buy property/land: (a) To find a purchaser or seller (introduction) or (b) Follow the introduction to secure the purchase or sale Letting Agency Business (LAB) - In these Regulations, “letting agent” means a firm or sole practitioner who, or whose employees, carry out letting agency work, when carrying out such work. For the purposes of paragraph (3), “letting agency work” means: (a) consisting of things done in response to instructions received from – (i) a person (a “prospective landlord”) seeking to find another person to whom to let land, or (ii) a person (a “prospective tenant”) seeking to find land to rent, and (b) done in a case where an agreement is concluded for the letting of land - (i) for a term of a month or more, and (ii ) at a rent which during at least part of the term is, or is equivalent to, a monthly rent of 10,000 euros or more. The key part of this regulation to define who is a LAB is “in response to instructions received from” and “seeking to find”. Purpose The regulations and Estate Agents Act 1979 detail the legal definition. Time Line HMRC has supervised EABs since April 2014, previously supervision was undertaken by the Office of Fair Trading. HMRC are the sole supervisor of EABs. The EU 5th Money Laundering Directive brought high value lets into scope from 10 January 2020. Businesses must be registered by 10 June 2021, but the LAB must comply with the requirements of the regulations from the 10 January 2020. HMRC are again the sole supervisor of LABs. What to establish For both EABs and LABs you must always establish that they are undertaking relevant activity. This can be established when you make the initial contact with the business. How to test compliance and evidence to obtain (This content has been withheld because of exemptions in the Freedom of Information Act 2000) Best Practice Sector specific information: AMP N/A ASP N/A EAB When planning your visit always make sure you have done your research on the business model, including size and nature of activity. LAB When planning your visit always make sure you have done your research on the business model, including size and nature of activity. HVD N/A MSB N/A TCSP N/A Further Reading Registration-guide-for-estate-agency-businesses Guidance-on-the-definition-of-estate-agency-work – Chapter 3 National Risk Assessment Dec 2020 National Risk Assessment Oct 2017 EAB Webinars: GOV.UK Money laundering - Understanding-risks-and-taking-action-for-estate agency-and-letting-agency-businesses EAB Guidance Customer due diligence - Regulation 27 Customer due diligence measures - Regulation 28 Enhanced customer due diligence: politically exposed persons - Regulation 35 FAQs