A guide to running your property business legally

A guide to running your property business legally

Government legislation 

If you’re a property agent, you’ll need to comply with certain legislation.

This includes:

Other legislation may also apply.

Our guidance on property sales  (pdf, 479KB) (opens new window) explains what you need to do.

It includes:

  • what you need to do when marketing a property
  • the rules about passing on offers
  • how to avoid making misleading statements 

Redress schemes

You must join a redress scheme.

Redress schemes give consumers a way to escalate a complaint if they’re unhappy with how you’ve dealt with it.  

If you don’t join a redress scheme you may be fined up to:

  • £5,000 for lettings
  • £1,000 for sales

You may also be banned from trading.

The approved redress schemes for property agents are:

Read our guidance on the requirement to join a redress scheme (pdf, 410KB) (opens new window) .

Fees and charges

You must provide your client with a detailed breakdown of any charges, even if they’re estimated. You can’t just show a total figure.

You must give your clients the following information in writing and in advance:

  • when you’ll charge an agency fee, including any fees or charges that you’ll make if the property is taken off the market without a sale
  • the amount of your fee, if you aren't sure you need to say how you’ll calculate it
  • other charges apart from your agency fee
  • any circumstances in which your client may have to pay an extra fee and how much it might be, if you aren't sure you need to say how you’ll calculate it
  • your percentage agency fee: this should include VAT and an example based on the agreed marketing price, for example, 'if your house sells for £300,000 you’ll pay a fee of £3600, 1.2% inc VAT'
  • your fixed agency fee, this should include VAT
  • a flat rate agency fee, this should include VAT

If you’re trading to another trader, you don’t have to include the VAT.

Your estimate of charges

Your estimate must say what it’s for. It should give your client a rough idea of the maximum amount they’ll need to pay. When you put your estimate in writing, you can say that it is 'an estimate of £X, that will not be more than £Y, without client approval'.

If you have a special brochure for your client’s property, you must tell them how much it’ll cost to produce each copy. If you need extra copies, you must ask your client to approve the additional costs.

Transparency of fees

Read our guidance on transparency of fees. (pdf, 1MB) (opens new window)

Transitional provisions of the Tenant Fees Act 2019

One year after the implementation of the Tenant Fees Act 2019 for new tenancies, the concept of Prohibited Payments applies to all tenancy agreements which are within scope, irrespective of the date of that agreement. It has retrospective effect for tenancy agreements within scope which are dated before 1 June 2019.

Contractual clauses within those older agreements which would have obligated the tenant make a Prohibited Payment have no legal effect. 

Read our guidance on the transitional provision of the Tenant Fees Act. (pdf, 184KB) (opens new window)

On 1 June 2020, The Tenant Fees Act became retrospective, meaning it now applies to all applicable assured shorthold tenancies, student lets and licenses to occupy housing, regardless of the date the tenancy began. Read the updated Government guidance regarding the Tenant Fees Act.

Handle clients' money properly

You'll need to handle your clients’ money properly.

This includes:

  • deposits
  • payment of interest
  • keeping client accounts

We should talk to your accountant about the detailed requirements for handling clients' money.


You may be asked to hold a deposit. This means that you’re holding money on trust, so you’ll need to account for the client's money in a very precise way.

There are two types of deposit:

  • Pre-contract: a deposit is paid before the exchange of contracts to show a serious intention to buy
  • Contract: a deposit is paid at the exchange of contracts

You must put the deposit in a special account, called a 'client account', which is set up for this purpose at a bank, or other financial institution.

You can pay money from a connected contract, such as money used to buy carpets or curtains, into a client account.

You cannot pay any other client money, such as rents, into this account. 

Keeping client accounts

When you keep a client account, you must:

  • keep detailed records of all transactions 
  • give detailed receipts for all money you receive
  • have your accounts examined and reported on by a qualified auditor within six months of the end of your accounting year
  • be able to produce your latest auditor's report, if asked to do so by an authorised person, such as a trading standards officer
  • keep the accounts and records for six years after the end of the accounting period to which they relate, even if you take them over from someone else

Payment of interest

If the interest on a deposit of over £500 is more than £10, you must pay it to the client.

If you don’t, you could face prosecution and a fine of up to lever four on the standard scale. 

Guidance on property sales and lettings

The guidance on property sales and lettings (pdf, 479KB) (opens new window) is intended to help property agents to comply with the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the Business Protection from Misleading Marketing Regulations 2008 (BPRs).

It focusses on activities related to the sale or letting of property and land within the UK.

If your marketing of property or services reaches, or is capable of reaching, consumers or business customers in the UK these regulations apply irrespective of:

  • which country you're based in
  • whatever country the property for sale or let is located

The guidance applies to you if, as part of your business, you:

  • supply marketing or other services related to the sale or letting of property or land. For example, if you are an estate agent, a buyers' agent, an internet property retailer, a property auctioneer, a letting agent, a property management agent or a solicitor offering services that count as estate agency or lettings agency work
  • sell or let property or land. For example, if you're a property developer that markets and sells your own developments
  • buy property or land for resale. For example, if you're a company that buys up below market value property as an investment opportunity, or provide some ancillary service related to any of the above