ECSH63340 - Regulation 13 - Estate agents and letting agents

Category Heading	Description
The Law	https://www.legislation.gov.uk/uksi/2017/692/regulation/13 The Estate Agents Act 1979
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	You must ensure that a full review of the E-SIP is undertaken prior to your intervention. All risks detailed in the E-SIP must be addressed. Areas to cover with the business will include. Business profile (including number of properties currently on the market and those sold in the last 12 months) Risk Assessment, Policies Controls and Procedures, Customer Due Diligence, Enhanced Due Diligence, Ongoing Monitoring, Record testing, Outcomes, any advice and next steps. Please ensure you read the project document for each campaign. Initial record testing will normally cover the previous 12 months. 10% or 10 of the properties marketed and sold will form the basis of your initial testing sample. This sample may need to be expanded depending on your findings and any breaches identified.
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 Obligation to apply enhanced customer due diligence - Regulation 33 Enhanced customer due diligence: politically exposed persons - Regulation 35
FAQs	N/A