Property Sourcing Complient Help

[MichelleRigg]

I wonder if there might be any property sourcers here who might be able to assist me with my start up set up.

I am new to running a business but I have many years in property and this is a venture I am confident in but I wanted to ensure I am filling out the details correctly.

If there are any forums or Facebook groups that could be beneficial for beginners, that would be amazing.

Insurance
I have seen seen many UK insurances do not have "Property Sourcer" as a job title but appear to call it "Property Search- just making sure this OK to select or if there might be an alternative insurer to use.

Also, it asks If I will be dealing with clients outside UK, at present, I am mainly focusing on inside UK but wondered what happens if I do do business with an outside client.

Also unsure exactly how much to take out for Public and Professional Liability. If three is any help for this.


PRS - Property Redress Scheme - I can't seem to work out which membership I will fall under - Enhanced or Entry Level - I will only be doing the sourcing and no other additional tasks.

Ltd or Sole Trader - as mentioned above, while I have years of experience in estates, I am new to business - this venture is goi g to take some time to gain traction but unsure if I should become a LTD company or stay sole trader for now.

Any guidance would be extremely appreciated

 

[MBE2017]

Gaining insurance for property sourcing is becoming much harder since the inland revenue has begun to realise the amount of people doing it, the monies involved and how they consider it falling under estate agency rules. Whatever you do, do not source or offer property without being fully compliant.

This is the part most property trainers forget to explain, how after paying for over priced courses, you will then need to spend £1-1.5k minimum on becoming compliant, future annual renewals will be cheaper.

You need a few things, professional indemnity insurance, bank account, register for ICO, register anti money laundering, plus take the minimum required training for these, and put in place your own policies etc.

Clients outside the UK present a higher potential anti money laundering check, with other things needed to be checked, which would be covered in any training.

Best to talk to the PRS for guidance, it tends to fall more into how many addresses/offices/staff.

Personally, I would recommend operating through a Ltd co due to the potential legal issues, you could be looking at serious amounts of money being sought if someone believes you have not conducted true due diligence, or as so many property sources do, exaggerate figures in their favour.

Best of luck, at least you are looking to be compliant, I recon 85% or more are not at present.

 

[WaveJumper]

@MichelleRigg welcome to the UKBF some great tips above from @MBE2017 and maybe our forum member @Frank the Insurance guy will be along later to give you a steer on the insurance side of things, best of luck

 

[MichelleRigg]

Gaining insurance for property sourcing is becoming much harder since the inland revenue has begun to realise the amount of people doing it, the monies involved and how they consider it falling under estate agency rules. Whatever you do, do not source or offer property without being fully compliant.

This is the part most property trainers forget to explain, how after paying for over priced courses, you will then need to spend £1-1.5k minimum on becoming compliant, future annual renewals will be cheaper.

You need a few things, professional indemnity insurance, bank account, register for ICO, register anti money laundering, plus take the minimum required training for these, and put in place your own policies etc.

Clients outside the UK present a higher potential anti money laundering check, with other things needed to be checked, which would be covered in any training.

Best to talk to the PRS for guidance, it tends to fall more into how many addresses/offices/staff.

Personally, I would recommend operating through a Ltd co due to the potential legal issues, you could be looking at serious amounts of money being sought if someone believes you have not conducted true due diligence, or as so many property sources do, exaggerate figures in their favour.

Best of luck, at least you are looking to be compliant, I recon 85% or more are not at present.

Thank you so much for the information, it definitely makes me see the other areas I need to consider.
I've been very lucky as I had been employed by an estates agent in the past where I trained up and began doing sourcing work for them which I've done for a few years now and decided to pursue this as a business.
But I have been sheltered in terms of knowing who and what to do with regards to the business set up side of things so it has been a lot of research for many months trying to ensure I have all my bases covered.

I'll definitely reconsider stretching our to nonUK investors at this time - probably best to stick to UK investors until I have things running and know exactly how everything works in the business while also keep studying Areas I need more experience in.

It has been a big shock to see the costs involved in setting up - I am still pursuing this opportunity but will make sure I have enough funds to set this up as I had just seen setting up on companies House as a LTD company and not setting up AML at the same time apparently incurs a penalty due to the gap between setting these two up, so definitely something I need to ensure I have all funds available when starting up.
I will definitely take your advice on setting up at LTD, while sole trader seems simpler, I do want to ensure my assets etc are protected should the worst situation happens. ?

A bit more research into the set up I think before I take the leap ?

 

[MBE2017]

Thank you so much for the information, it definitely makes me see the other areas I need to consider.


It has been a big shock to see the costs involved in setting up - I am still pursuing this opportunity but will make sure I have enough funds to set this up as I had just seen setting up on companies House as a LTD company and not setting up AML at the same time apparently incurs a penalty due to the gap between setting these two up, so definitely something I need to ensure I have all funds available when starting up.
I will definitely take your advice on setting up at LTD, while sole trader seems simpler, I do want to ensure my assets etc are protected should the worst situation happens. ?

A bit more research into the set up I think before I take the leap ?

A lot of so called Sourcers will, and a few already have been fined for exactly that simple mistake, it doesn’t help when many trainers claim they will co source for your first few deals, either you are compliant or you are not, no one else can put your deals through legally, except for a single type of sourcing, which will limit you greatly.

 

[Frank the Insurance guy]

Insurance
I have seen seen many UK insurances do not have "Property Sourcer" as a job title but appear to call it "Property Search- just making sure this OK to select or if there might be an alternative insurer to use.

Also, it asks If I will be dealing with clients outside UK, at present, I am mainly focusing on inside UK but wondered what happens if I do do business with an outside client.

Also unsure exactly how much to take out for Public and Professional Liability. If three is any help for this.

Hi @MichelleRigg,

As @MBE2017 mentioned your business is connected to the "Estate Agency" industry. When looking for Insurance, choose the estate agency category and you should be fine. With regards to Professional Indemnity, they will then usually drill down into what part of estate agency you are working in and there should be a category for property sourcing or similar.

For Professional Indemnity, this covers you for financial loss of your client due to failings in the services you provide. Look for a limit that you are comfortable with - it should be the most a client could sue you for if you get something wrong.

For Public Liability - Insurers minimum is £1m (Some start at £2m), which should be sufficient - this covers you for physical loss or damage to others and their property.

Having UK Client's is fine for Insurance purposes. For Professional Indemnity, things get more tricky if you have overseas cliants (Particularly from the USA).

Speak to an independent Insurance Broker and they should be able to carry out a quotation exercise and let you know the most competitive option that meets your needs.

 

[MBE2017]

If there is one bit of advice worth taking, do not spend anything, until you have the funds in place to be fully compliant. Ignore the “training gurus” who never ever seem to mention this.

The one exception I know of is a lady called Tina Walsh, who is setting the right standards and is championing the compliance requirement. A quick google search and you will find her easily.

I have been in property for just a couple of years so this is just my opinion, but I am also not trying to sell you anything.