Letting agent compliance checklist: client money, deposits and account security

Missing client money, unprotected deposits or unauthorised payments can leave your agency with a serious problem to put right. Your letting agency’s compliance checklist should start with current protection arrangements, then work through client account reconciliations, individual deposit records and payment access. Give each check an owner, a trigger and retained evidence. That helps you spot missing money or paperwork before the problem grows.

This is a director-level review of client money, deposits and account security, not a complete property compliance checklist. Work through the checks below in order, using the national requirements that apply to your agency.

Which arrangements apply to your agency?

In England, private rented sector letting or property management agents holding client money must join a client money protection scheme (GOV.UK). Check your membership is current and your certificate is displayed and available when requested.

In England, agents carrying out lettings agency or property management work within the statutory scope must also belong to a government-approved redress scheme (GOV.UK). Keep membership evidence alongside your complaints procedure.

In Scotland, anyone carrying out letting agency work within the statutory definition must be registered on the Scottish Letting Agent Register (Scottish Government). Check the registration against the business actually carrying out the work.

In Scotland, agents holding and handling client money must hold CMP insurance unless they can demonstrate equivalent or greater protection through another body or membership organisation (Scottish Government).

Organise your checklist by England, Wales, Scotland and Northern Ireland. Record licences, registrations, protection arrangements and complaints routes separately for each part of your business, rather than copying an England checklist across your portfolio.

Can you explain every client account balance?

Start with every client account, not just the busiest. A proper reconciliation compares the bank statement, cash book and total client ledger balances at the same date. The cash book records money movements; the client ledgers show whose money you hold.

1. Obtain the bank statement and accounting reports using the same cut-off date.
2. Match bank transactions to cash book entries, including receipts, payments and transfers.
3. Compare the reconciled cash book balance with the total of individual client balances.
4. List genuine timing differences, such as a recorded payment not yet appearing at the bank.
5. Investigate unexplained differences and retain the reconciliation with reviewer approval.

Matching headline balances are not enough. A receipt posted to the wrong landlord can leave the total unchanged while both landlord records are wrong. Compare actual rent schedules with actual receipts, then investigate missing, duplicated or misallocated transactions.

An average-rent estimate can be a broad sense check, but it cannot replace transaction matching. In Scotland, agents holding and handling client money must reconcile transactions at least monthly (Scottish Government).

Do deposit records match each instruction?

Download deposit scheme records and compare them with your tenancy or occupation contract records individually. Comparing only the number of deposits with the number of managed properties can hide missing records and duplicates.

Check the amount before your agency takes payment. Include holding deposits in your review, not just tenancy deposits.

• England: for tenancies covered by the Tenant Fees Act, the tenancy deposit cap is five weeks’ rent where annual rent is below £50,000. A holding deposit cannot exceed one week’s rent (GOV.UK).
• England: for assured periodic tenancies where annual rent is £50,000 or more, the tenancy deposit cap is six weeks’ rent (GOV.UK).
• Wales: a holding deposit cannot exceed one week’s rent (Welsh Government).
• Wales: give the prospective contract-holder the prescribed holding deposit information before taking payment (Welsh Government).
• Scotland: a tenancy deposit cannot exceed two months’ rent. Do not take a holding fee, whether refundable or not (Scottish Government).
• Northern Ireland: a tenancy deposit cannot exceed one month’s rent (nidirect).

After receiving a holding deposit, record what happened to it. Check the repayment date, any reason for retention and the evidence supporting that decision.

• England: record the deadline for agreement, which is the fifteenth day counting receipt as day one, unless a different deadline is agreed in writing with the prospective tenant (Ministry of Housing, Communities and Local Government).
• England: unless a statutory exception applies, check that repayment was made within the seven-day period beginning with the tenancy agreement date, the landlord’s decision not to proceed before the deadline, or the deadline for agreement where no agreement is reached (Ministry of Housing, Communities and Local Government).
• England: check that any retention rests on a permitted ground: a disqualifying Right to Rent result that neither the landlord nor instructed agent knew or could reasonably have known before accepting payment, material false or misleading information, withdrawal before the deadline, or the prospective tenant failing to take all reasonable steps while the landlord and agent take theirs. Withdrawal and failure-to-progress grounds cannot be used where prohibited demands or unreasonable conduct by the landlord or agent caused the problem. Keep evidence supporting the ground used (The National Archives).
• England: retain the written explanation of retention and evidence that it was given to the payer within the seven-day period beginning with the landlord’s decision not to proceed before the deadline, or the deadline for agreement if no agreement is reached. Without timely written notice, the holding deposit must be refunded even if a retention ground otherwise exists (Ministry of Housing, Communities and Local Government).
• England: if the holding deposit was applied towards the first rent payment or tenancy deposit instead of refunded, keep evidence of the payer’s consent (Ministry of Housing, Communities and Local Government).
• Wales: check that any retention rests on false or misleading information the landlord is reasonably entitled to consider when deciding whether to grant the contract, withdrawal before the deadline, or the prospective contract-holder failing to take all reasonable steps while the landlord and instructed agent take theirs. Record the reason and keep the supporting evidence (The National Archives).

1. Include managed properties and let-only instructions where your agency handled the deposit.
2. Match the property, tenant or contract-holder, deposit amount, scheme reference and relevant dates.
3. Check transfers into and out of your agency, releases and changes of responsibility.
4. Record exceptions, including arrangements where no deposit was taken.
5. Compare scheme records with your accounting entries and investigate every unexplained mismatch.

For example, a deposit transferred with an acquired portfolio may appear in the accounts but remain under an old scheme reference. Keep transfer confirmation rather than treating the discrepancy as harmless. Our deposit protection guide provides a useful companion to this review.

Are deposit deadlines and delivery evidence recorded?

Use the correct national deadline and starting point. Do not put the same reminder against every deposit.

• England: where the protection requirements apply, protect the deposit within 30 days of receipt (GOV.UK).
• England: supply the required deposit information within 30 days of receiving the deposit (GOV.UK).
• Wales: protect the deposit in an authorised scheme and give the required information to the contract-holder within 30 days of payment (Welsh Government).
• Scotland: the ordinary deadline for lodging a private residential tenancy deposit is 30 working days from the tenancy start date. If the deposit is paid in instalments, lodge each instalment within 30 working days of that instalment being paid (Scottish Government).
• Scotland: give the required deposit information within 30 working days after the tenancy starts (Scottish Government).
• Scotland: for deposits paid in instalments, provide the required information for each instalment within the applicable 30-working-day deadline, confirming the cumulative amount for instalments after the first (legislation.gov.uk).
• Northern Ireland: protect a private tenancy deposit within scope within 28 days of receipt, and supply the required written information within 35 days of payment (nidirect).

Retain the protection confirmation, the exact information supplied, recipient details and dated delivery evidence. A blank template or an internal tick saying “sent” does not show what reached the recipient.

Who can change details and approve payments?

Review who can view accounts, change payee details, create payments and approve them. Someone who needs accounting access does not automatically need authority to change a landlord’s bank details.

1. List banking and accounting users, their permissions and the person approving that access.
2. Inventory card readers, security keys and banking devices. Account for missing items and ask the bank to disable them.
3. Remove unnecessary access when staff leave or responsibilities change.
4. Verify changed payment instructions independently, using contact details already held rather than those in the change request.
5. Keep a bank-detail change log showing who changed what, why, how it was verified and who approved it.

Where practical, separate payment preparation from approval. Review unexpected changes, changes outside someone’s role and details changed back shortly after a payment. These are reasons to investigate, not proof of wrongdoing.

How should you record checks and resolve exceptions?

Turn each check into a repeatable control. Use these fields in your checklist so that an unresolved issue cannot disappear into someone’s inbox:

• Nation and check: identify the relevant account, instruction or requirement.
• Responsible person: name the person completing the check and its reviewer.
• Frequency or trigger: specify the reporting cycle, renewal, receipt, transfer or staff change.
• Evidence: link the statement, report, confirmation, delivery record or approval.
• Action: record the discrepancy, owner, target date and evidence of resolution.

When a check fails, preserve the records and trace the transaction or document trail. Do not post an unexplained adjustment merely to make balances agree. Escalate unresolved issues to the responsible director.

When should you arrange an independent check?

Consider an independent review when reconciliations remain unexplained, deposit records disagree or responsibilities are unclear. It can also be useful after a portfolio transfer or a change of accounting system.

Match the review to your concern. For client money controls, ask for examination of reconciliations, individual balances, payment permissions and approval records. For deposits, ask for a comparison of scheme, accounting and tenancy records, including let-only instructions and transfers.

Keep the purpose clear: a review is not CMP insurance, deposit protection itself or a guarantee of complete legal compliance. This is information, not legal, tax or financial advice.

Frequently asked questions

Does your agency need client money protection in England?

In England, private rented sector letting or property management agents holding client money must join a client money protection scheme (GOV.UK). Check that your membership is current.

Does a matching bank balance prove the client accounts are correct?

No. Reconcile the bank statement, cash book and client ledger totals at the same date, then examine individual balances and transactions. Equal totals can still hide money allocated to the wrong landlord or tenant.

Should you include let-only instructions in your deposit review?

Yes, where your agency received, protected or administered the deposit. Record who is responsible for protection, information delivery and any transfer.

The Letting Partnership provides outsourced client accounting and client money compliance services to letting agents. To discuss your client money or deposit concerns with us, explore TLP Comply CMP and Deposit HealthChecks.

Talk to our team