Since the enactment of the Property Services (Regulation) Act 2011, property service providers have had to abide by the new regulations. We have set out below some tips to help avoid common breaches to these regulations;

Training

Property Service Providers should ensure that staff have sufficient knowledge on the new regulations. This should involve regular training of staff, induction of new staff and regular reviews of compliance within the firm. Where breaches are identified, either internally or following a review, there should be controls introduced to ensure that the possibility of re-occurrence is reduced or eliminated.

Preparation of balancing statements

A balancing statement should be prepared for both the period end date for the accountants report and also the date 6 months after the commencement of the period (likely to be 30th June and 31st December). These should reconcile the balance as per the client bank account to a listing of the amounts due to individual clients. The balancing statements must be prepared within 2 months after the balancing date and should contain evidence of this (ie. they should be signed and dated by the Property Service Provider).

Reconciliation of client account

The client account should be reconciled regularly to ensure that the amount held relates to client funds and that the list of amounts held on behalf of clients is complete and accurate.

Negative client balances

Where a client has a negative amount on the balancing statement (ie. they have been overpaid money from the client bank account), this is a breach of the regulations. This would occur in a situation where the Property Service Provider has received less money into the account on behalf of the client than it has paid to/on behalf of the client. Regular reconciliation of the client account should help prevent this occurring.

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