Thirdfort analysis: 25% of agents not registered with HMRC
It is a legal requirement if you are an estate agent or deal in property that you register every year with HMRC to comply with the anti-money laundering (AML) policy and pay an annual fee. In a new analysis, Thirdfort discovered that over 5,000 agents have not registered for 2022, from a total of 22,000 agents.
There will also be a number of property-adjacent businesses on top of this that also need to comply and register with the HMRC, like property sourcers, etc. The telling thing is that if almost 25% of companies are not paying their subscriptions this year, have they ever? Would they be subject to back paying these fines, too?
Also for the online models, would the LPEs who were self-employed (a moot point) have been paying into HMRC?
Connected to all of this is the fact that to be a part of the Property Ombudsman Scheme, as per section 11, agents must “understand your legal obligations to register with HMRC for Anti Money Laundering (residential sale agents)”
So does that mean that almost 25% of agents are not only in possible breach of the AML code, they also are not fit to be part of the Ombudsman scheme? And if so, are they now not allowed to trade until they legally register with such a scheme?
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As a proptech and real estate analyst, with a day job helping proptech and fintech founders grow their businesses and sell them, it is with great delight that software, great coding and great minds are at last showing the huge gaps in real estate, shining a glaring spotlight on all that is wrong with the analogue, paper-based world of estate agents.
Don’t get me wrong, I was that estate agent in the trenches once, both in the corporate agency model and with my own business. Dealing with red tape to ensure we were compliant would make me rant and rave, as I was always too busy doing the day job of getting sales teams to transact business.
So what Thirdfort have highlighted is not “let’s fine all the agents.”
No, what it is saying is “let’s digitise all the agents.” Enable compliance matters to be done with software so that agency owners and other businesses are compliant, the businesses are risk-free and the general public knows they are dealing with good businesses.
For years I have been preaching, not screaming, that the digital transformation of real estate is the same as the fintech revolution in banking. Consumers want to do things in a click; press a button and it arrives in a smiling cardboard box the next day supplied by a $1.7 trillion valued company.
If you are an analogue agent who cannot even fill out a form for HMRC once a year, digitally, and make a payment, also digitally, then what hope have you got to beat the digitally-agile agent opening up in your town or city?
Proptech and fintech companies are not the enemies of agents, they are your best allies. Agents are not losing market share to other agents, it is just digital evolution. Agents that are tech-enabled can see how it scales their business to beat other paper shuffling businesses, the kind run by people with business models from twenty years ago.
Thirdfort It‘s a great company doing great things, and I’m not the only one who truly sees what they have to offer. Alex Chesterman in The Times said: “Another example of a business solving a real problem is Thirdfort. The process of buying or selling a home hasn’t changed for decades and carries increasing risks for lawyers around compliance and for consumers around fraud. Thirdfort tackles this with a mobile app, empowering lawyers to carry out checks with no need for physical documents. With a photo of the required documents and a selfie, Thirdfort carries out identity and anti-money laundering checks.”
Andrew Stanton is the founder of Proptech-PR, a consultancy for Founders of Proptechs looking to grow and exit, using his influence from decades of industry experience. Separately he is a consultant to some of the biggest names in global real estate, advising on sales and acquisitions, market positioning, and operations. He is also the founder of Proptech-X Proptech & Property News, where his insights, connections and detailed analysis and commentary on proptech and real estate are second to none.