Written by Lewis Ridley
Updated over a week ago
If you’re looking to get started in the world of property sourcing, ensuring your compliant isa necessary step. You need to have all the proper insurance and authorisation because you start dishing out deals to eager investors.
In a nutshell, property sourcing compliance requires four things: registry with the property ombudsman, indemnity insurance, registry with the FCA, and a data protection license.
Let’s explore these individual compliance elements below.
The Property Ombudsman (TPO), scheme offers a free, impartial service for resolving disputes among consumers and property agents. They protect individuals who are buying and selling property and make sure issues are resolved quickly.
This service prevents any issues or complaints making their way to court. Therefore, if you sell a deal to a property investor that doesn’t go the right way, TPO will act as an impartial middleman to solve the issue and make sure the right parties are compensated.
TPO is an extra layer of security you need to have if there is any issue with the deals you’re sourcing.
As a property sourcer, you’ll also need professional indemnity insurance in case a claim is ever made against you, and you need the money to compensate. This is also a requirement by TPO if you want to be part of their scheme.
Indemnity insurance prevents you having to settle disputes with your own cash. If you didn’t have indemnity insurance and a client wanted to make a claim, you could be thousands out of pocket.
As property sourcers are governed by the Estate Agents Act 1974, they are required to get register for anti-money laundering with the Financial Conduct Authority.
You can also register with HMRC if you don’t want to go through the FCA. The fee to register is £110 and only takes a few minutes.
As you’ll be holding information about people, you’ll need to have a Data Protection License before you can start operating as a property sourcer. However, you might not always need one – it depends on how much information you’re looking to store and update.
To see if you need a license, fill out this survey If you’re certain you do, you can register with the ICO here.
Although it’s not a legal compliance requirement, it is recommended you have a limited company for your sourcing business. This means you’re not personally liable if things go south, and your personal assets will be protected.
Setting up a limited company is very easy, however. You can simply head over to Companies House and set one up for around £15. So, there isn’t many excuses not to do it.
Getting compliant to become a property sourcer isn’t a difficult thing to do. However, if you are found to be operating a sourcing business outside of regulation, you could be subject to a large fine.
Follow the compliance steps mentions above you should be fine when it comes to sourcing high-quality deals for investors.
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