Common Compliance Mistakes Letting Agents Make

Letting agents operate in a highly regulated sector. Between tenancy deposits, safety certificates, client money, advertising rules, tenant fees, data protection and changing rental reform, there are many opportunities for mistakes to happen.

Most compliance mistakes are not deliberate. They often come from weak processes, outdated templates, poor record keeping or staff not being trained on the latest rules. However, even unintentional errors can lead to complaints, financial penalties, lost landlord instructions and reputational damage.

This guide explains some of the most common compliance mistakes letting agents make and how agencies can reduce the risk.

Why Letting Agent Compliance Matters

Compliance is not just a box-ticking exercise. It protects tenants, landlords and the agency itself.

A letting agent is often responsible for handling rent, deposits, tenancy documents, maintenance records, safety certificates and communication between landlords and tenants. If any part of that process is handled incorrectly, the consequences can be serious.

Common risks include:

• Deposit disputes
• Tenant complaints
• Local authority enforcement
• Ombudsman complaints
• Civil penalties
• Breach of contract claims
• Reputational harm
• Loss of landlord trust

Good compliance is also a commercial advantage. Landlords want to know their agent is protecting them from avoidable risk.

Mistake 1: Failing to Protect the Tenancy Deposit Correctly

One of the most common compliance mistakes is failing to protect a tenant’s deposit correctly.

In England and Wales, deposits taken for most assured shorthold tenancies must be protected in a government-approved tenancy deposit protection scheme. The tenant must also be given the required prescribed information within 30 days of the deposit being received.¹

Mistakes can include:

• Protecting the deposit late
• Forgetting to serve prescribed information
• Using incorrect tenant or landlord details
• Failing to re-serve documents after a renewal where required
• Not keeping proof that documents were served
• Confusing a holding deposit with a tenancy deposit

This is a high-risk area because deposit protection errors can affect the landlord’s ability to recover possession and may expose the landlord to financial penalties.

Mistake 2: Charging Prohibited Tenant Fees

The Tenant Fees Act 2019 restricts what tenants can be charged in England. Letting agents must be careful not to charge fees that are prohibited or to overcharge for permitted payments.²

Common mistakes include charging tenants for:

• Referencing
• Inventory preparation
• Check-in or checkout
• General administration
• Professional cleaning by default
• Renewal paperwork
• Unreasonable late payment charges
• Excessive lost key or security device costs

Agents should review all templates, fee schedules, holding deposit processes and move-in communications to make sure they do not include outdated charges.

Mistake 3: Weak Client Money Protection Processes

Client Money Protection, often known as CMP, is a legal requirement for letting agents in England, Scotland and Wales. CMP protects landlords and tenants if client money such as rent or deposits is misappropriated.³

Compliance mistakes can include:

• Not belonging to an approved CMP scheme
• Failing to display the CMP certificate
• Not having proper client accounting controls
• Mixing client money with office funds
• Poor reconciliation of rent and deposits
• Not training staff on handling client funds

Client money is one of the most sensitive areas of agency compliance. Poor controls can quickly lead to serious financial and regulatory issues.

Mistake 4: Missing Right to Rent Checks

In England, landlords and agents must check that adult occupiers have the right to rent before the tenancy starts. This applies whether or not the person is named on the tenancy agreement.

Common Right to Rent mistakes include:

• Checking only the lead tenant
• Failing to check all adult occupiers
• Completing checks after the tenancy has started
• Not keeping copies or records
• Missing follow-up checks for time-limited rights
• Accepting documents without following the correct process

Right to Rent checks should be built into the pre-tenancy workflow so they cannot be missed.

Mistake 5: Advertising Properties Without Key Information

Letting agents must be careful when marketing rental properties. Advertising should be accurate and should not mislead tenants or landlords.

Common mistakes include:

• Not including important costs
• Misdescribing property size, facilities or availability
• Failing to mention restrictions or conditions
• Using outdated photographs
• Advertising a property before key details are confirmed
• Omitting material information that may affect a tenant’s decision

The Property Ombudsman’s updated letting agent code, approved by the Chartered Trading Standards Institute, sets standards for professional conduct and consumer protection.⁴ Clear and accurate advertising helps reduce complaints and improves tenant trust.

Mistake 6: Poor Safety Certificate Tracking

Letting agents often help landlords manage safety obligations. Even where the legal responsibility sits with the landlord, the agent may be contractually responsible for arranging checks or reminding the landlord.

Common safety compliance mistakes include:

• Expired gas safety certificates
• Missing electrical installation condition reports
• No record of smoke alarm testing
• Carbon monoxide alarm issues
• No evidence that certificates were given to tenants
• Poor tracking of renewal dates
• Assuming the landlord has arranged checks without written confirmation

Agencies should use a reliable compliance calendar or property management system to track expiry dates and required documents.

Mistake 7: Not Serving the Correct Documents Before the Tenancy Starts

Letting agents should have a clear move-in document checklist.

Depending on the tenancy and location, this may include documents such as:

• Tenancy agreement
• Deposit protection certificate
• Prescribed information
• Energy Performance Certificate
• Gas safety certificate, where applicable
• Electrical safety report, where applicable
• How to Rent guide in England
• Relevant licences, where applicable
• Inventory and check-in report

A common mistake is assuming a document has been sent without keeping proof. Agents should retain evidence of service, such as email records, signed acknowledgements or portal activity logs.

Mistake 8: Mishandling Holding Deposits

Holding deposits are another area where agents can make compliance mistakes.

Problems can arise when agents:

• Take too much as a holding deposit
• Fail to explain the terms clearly
• Retain the holding deposit without a valid reason
• Miss the deadline for entering into the tenancy agreement
• Fail to return the money promptly when required
• Treat the holding deposit as non-refundable in all circumstances

Holding deposit terms should be written clearly and provided before payment is taken.

Mistake 9: Using Outdated Tenancy Templates

Rental law and guidance change over time. Agencies that keep reusing old templates risk including clauses that are unfair, unenforceable or inconsistent with current legislation.

Common template issues include:

• Prohibited tenant fees
• Unclear deposit clauses
• Outdated notice wording
• Unfair professional cleaning clauses
• Incorrect rent increase provisions
• Old references to repealed or amended rules
• Missing clauses for modern tenancy management, such as email service or data protection notices

Templates should be reviewed regularly by a qualified legal professional or a trusted compliance provider.

Mistake 10: Poor Record Keeping

Many compliance failures become harder to defend because the agency cannot prove what happened.

Letting agents should keep clear records of:

• Deposit protection
• Prescribed information
• Tenant ID and Right to Rent checks
• Safety certificates
• Property licences
• Maintenance reports
• Tenant and landlord communications
• Rent statements
• Client account reconciliations
• Inventory and checkout reports
• Complaints and resolutions

If a complaint, dispute or investigation arises, good records can make the difference between a defensible position and a costly problem.

Mistake 11: Ignoring Property Licensing Requirements

Some properties require a licence from the local authority. This may apply to houses in multiple occupation, selective licensing areas or additional licensing schemes.

Common mistakes include:

• Assuming licensing only applies to large HMOs
• Not checking local selective licensing rules
• Missing licence renewal dates
• Advertising or managing an unlicensed property
• Failing to update licence conditions
• Not recording which properties are licensed

Licensing rules vary by local authority, so agents should check requirements for each property rather than relying on general assumptions.

Mistake 12: Handling Complaints Poorly

Complaints are a compliance issue as well as a customer service issue.

Letting agents should have a clear complaints process and should respond professionally. Poor complaint handling can escalate a minor issue into an ombudsman complaint or negative review.

Common mistakes include:

• Ignoring complaints
• Responding emotionally
• Failing to investigate properly
• Not keeping written records
• Missing response deadlines
• Not explaining escalation routes
• Failing to learn from repeated complaints

A strong complaints process helps protect the agency and shows landlords and tenants that concerns are taken seriously.

Mistake 13: Not Keeping Up With Rental Reform

Letting agent compliance is not static. Rules and guidance change, and agencies need to update their processes accordingly.

Recent and ongoing reforms have affected areas such as tenant fees, rental standards, possession processes, enforcement and agent responsibilities. GOV.UK guidance on the Tenant Fees Act was updated in 2026 following changes connected with the Renters’ Rights Act.⁵

Agents should avoid relying on old blog posts, outdated templates or informal advice. Compliance should be reviewed regularly so the agency can adapt before problems arise.

How Letting Agents Can Reduce Compliance Risk

The best way to avoid compliance mistakes is to build compliance into everyday agency processes.

Letting agents should consider:

• Using a central compliance checklist for every property
• Training staff regularly
• Reviewing templates at least annually
• Keeping evidence of every key document served
• Using software to track certificate and licence expiry dates
• Auditing files regularly
• Having clear client money procedures
• Checking local licensing rules before marketing
• Keeping written records of advice given to landlords
• Reviewing complaints for patterns

Compliance should not depend on memory. It should be built into systems, workflows and staff training.

Final Thoughts

The most common compliance mistakes letting agents make are usually preventable.

Late deposit protection, prohibited fees, poor client money handling, missed safety certificates, weak record keeping and outdated templates can all create serious problems for landlords, tenants and agencies.

A professional letting agency should treat compliance as part of its core service. By using clear processes, keeping accurate records and staying up to date with legal changes, agents can reduce risk and provide a better service to both landlords and tenants.

In a regulated and fast-changing rental market, strong compliance is not optional. It is one of the clearest signs of a well-run letting agency.

Footnotes

1. GOV.UK, Tenancy deposit protection.
2. GOV.UK, Tenant Fees Act 2019: statutory guidance for enforcement authorities.
3. Propertymark, Client Money Protection.
4. The Property Ombudsman, Codes of Practice.
5. GOV.UK, Tenant Fees Act 2019: statutory guidance for enforcement authorities, updated 1 May 2026.