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.