Property sourcing compliance: what UK sourcers legally need

The Estate Agents Act 1979 covers anyone who, in the course of business, introduces or negotiates between people wanting to buy and sell interests in land. That is a description of deal packaging. It does not matter that you never list properties, never hold client money, or work only for investors; introducing a buyer to a purchase for a fee puts you inside the Act's scope.

Two things follow from that classification. The Money Laundering Regulations treat estate agency businesses as supervised entities, which is where the HMRC registration comes from. And the Consumers, Estate Agents and Redress Act 2007 requires estate agency businesses to belong to an approved redress scheme so consumers have somewhere to complain. Sourcers who skip these are not operating in a grey area; they are trading illegally, and both HMRC and trading standards have pursued sourcing businesses.

Before trading, an estate agency business must register with HMRC for AML supervision. The registration itself is an online application with a fee per premises, renewed annually, and the people running the business go through an approval check. Trading as an estate agency business without being registered is a criminal offence that can carry unlimited fines, and HMRC publishes the businesses it penalises.

Registration is the visible part; the substance is having an AML process. That means a written risk assessment for your business, customer due diligence on the people you transact with, verifying your investors' identity before money moves, and records of the checks. For a small sourcing operation this is a folder and a routine rather than a department, but it has to exist, and HMRC does inspect.

Do not confuse AML registration with being 'HMRC approved' as a marketing claim; supervision is an obligation, not an endorsement. Its absence, though, is disqualifying, and experienced investors ask for your registration number before paying a fee.

Estate agency businesses must belong to one of the government-approved redress schemes: The Property Ombudsman (TPO) or the Property Redress Scheme (PRS). Membership costs a modest annual fee per office, and both schemes take sourcing businesses. The scheme gives your clients an independent route to complain and, where upheld, an award against you; in exchange, membership signals you operate somewhere accountability can reach.

Both schemes publish codes of practice, and following the code is the practical core of compliance: clear terms of business before any commitment, no misleading claims about deals, declared conflicts of interest, and complaint handling with real timescales. Read your scheme's code once properly; most of it is the professionalism you would want to show anyway, written down.

A sourcing business processes personal data constantly: investor contact details and proof of funds, vendor circumstances, tenant information on tenanted stock. That makes you a data controller, which means paying the ICO's annual data protection fee (a small fixed amount for most small businesses) and handling data lawfully under UK GDPR.

The working rules are simple enough to keep: collect only what you need, tell people what you do with it (a short privacy notice on your site and in your agreement covers most of it), keep it secure, and delete it when the purpose is over. Investor circulation lists deserve particular care; forwarding a vendor's circumstances around a WhatsApp group of buyers is the kind of casual breach that generates complaints.

Professional indemnity insurance covers you when a client says your work cost them money, which in sourcing usually means numbers in a package they relied on. The redress schemes expect members to carry it, some investors ask for the certificate, and defending even a weak claim without cover is expensive. Public liability is worth adding if you accompany viewings.

The sourcing agreement is where most real-world disputes are won or lost. It should state what you are engaged to do, the fee and precisely when it becomes payable, what happens if the purchase falls through at each stage, refund terms, how long the engagement lasts, and any interest you hold in the deal. Written, signed, before money moves. A sourcer with clean paperwork and a registered compliance stack is in a different commercial category from one with a logo and a Stripe link, and investors know it.