Banks take Tenants to the Dark Ages
Wednesday 16th August 2023
By Patrick Bullick
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We hold all our business and client accounts with HSBC. It functions pretty well - online. And there is the key word. ‘Online’.
In the last couple of years some UK banks have been closing down letting and estate agents' general client accounts, on the grounds that the bank needs to have KYC on all people banking with them - including each landlord and tenant for whom the agent is holding funds.
Agents do have some specifically allocated accounts in certain situations. Perhaps for example, holding a large deposit on an expensive corporate let. What I am talking about is the accounts in which multiple landlord rents are processed, management floats held and of course, how tenants deposits are held.
Until about 15 years ago we used to hold individual deposit accounts for each tenant because, on a point of principle, we felt they should be paid interest on their deposit. We were one of the last firms to stop holding individual deposit accounts for tenants.
By the end, very low interest rates made the exercise somewhat pointless. However, the deciding factor for creating one large Tenants General Deposit Account was that as we transferred everything onto ‘online’ banking we could only have 50 accounts visible online. We could only see a small portion of the accounts we held. So, it was impossible to transfer funds from an individuals allocated account to the main client account – or vice versa - without visiting our branch - which had closed down.
Natch!
The speed with which we can return tenants deposits and process landlords rents ‘online’ is now fantastic. We have an internal policy of trying to get funds out to tenants and landlords on a ‘same day’ basis.
That speed and efficiency would be wrecked if the bank were to insist on individual bank accounts for each landlord and tenant which appears to be some banks policy - though the application of the policies is pretty random.
The referencing and ‘right to rent’ procedures which agents follow means the data we have on tenants is extensive, and the KYC on landlords all has to comply with Anti-Money Laundering (AML) legislation. The vast majority of agents are AML registered firms. It is only those who don’t do sales and have no rents exceeding 10,000 Euros a month which are exempted. Few in other words.
So the banks which are demanding the closure of agents general clients’ accounts are doing so completely unnecessarily, at great inconvenience to the agent - their client- and to the significant detriment of landlords and tenants.
They need to Think and Stop – Now.
Until next time.
PB
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