A property millionaire has obtained written confirmation from Trading Standards and the Property Ombudsman that deal sourcers and rent-to-rent operators are not legally required to register with redress schemes, contradicting advice being sold to thousands of would-be investors across the UK. Thous ands of people attempting to get into property investment are spending money they do not need to spend, according to official written guidance obtained by Samuel Leeds, one of the UK’s most prominent property educators. Leeds, who has been investing in property since he bought his first house at 17 and has since built a career generating over £100 million in revenue, has published correspondence from two official bodies confirming that people running rent-to-rent businesses and deal sourcing operations are not legally required to register with property redress schemes, a requirement widely promoted across the property training industry as essential and non-negotiable. The first letter, from Buckinghamshire and Surrey Trading Standards, dated January 2023, states, “I have sought the advice of the National Trading Standards Team for Estate Agents and Letting Agents.” Based on the information you have provided, we are all of the opinion that you do not need to belong to a redress scheme for your rent-to-rent and deal-sourcing operations. The second, from the Property Ombudsman’s own Membership Compliance team, confirms, “You are not legally required to have membership for rent to rent.” Both are written on official letterheads. Neither contains caveats that would support the blanket compliance requirements being taught across the industry.  What Is Being Sold and What Is Actually Required The UK property training industry has grown significantly over the past decade, with dozens of educators offering courses on rent-to-rent, a strategy where an investor rents a property from a landlord and sublets it at a profit, and deal sourcing, where an investor finds and packages below-market property opportunities for sale to other investors. Alongside this growth, a parallel compliance industry has emerged. Aspiring investors are routinely advised, and in some cases required by their mentors, to register with the Property Redress Scheme or the Proper ty Ombudsman, obtain anti-money laundering registration, take out public indemnity insurance, and register with the Information Commissioner’s Office before making a single pound. The total cost of these registrations can run to several thousand pounds. Anti-money laundering registration alone costs approximately £450 per year and requires passing a formal test. Indemnity insurance can add several hundred pounds more. Redress scheme membership carries its own ongoing subscription fees. Leeds argues that for the majority of rent-to-rent operators and deal sourcers operating within a specific legal framework, where the investor is a tenant rather than an agent, and where deals are sold as packaged documents rather than brokered transactions, none of this is required. The official correspondence he has obtained supports that position directly. The Legal Distinction That Changes Everything The question of whether a rent-to-rent operator needs redress scheme membership turns on a single legal distinction: are they acting as a letting agent or as a tenant? Leeds argues—and Trading Standards has confirmed—that when a rent-to-rent operator takes on a property under their own name or company, pays rent to the landlord directly, and then sublets the property, they are functioning as a tenant and sub-landlord. They are not managing property on behalf of someone else. They are not collecting rent as an agent. The legislative requirements that apply to letting agents, including mandatory redress scheme membership under the Enterprise and Regulatory Reform Act 2013, do not apply. Similarly, for deal sourcing, the distinction turns on whether the sourcer is acting as an estate agent, inserting themselves between buyer and seller, handling funds, or negotiating contracts or simply selling a packaged document of research and opportunity to an investor for a fee. The former triggers estate agency legislation. The latter, Trading Standards has confirmed, does not. “The law is about what you actually do, not what you call yourself,” Leeds said. “If you’re doing rent-to-rent the way I teach, where you are the tenant, not an agent, you are simply not subject to the legislation that requires redress scheme membership. This is not a grey area. I went to the official bodies and asked them directly.” The Scale of the Problem  Leeds has been making this argument to his own academy members for several years, saving them what he estimates are thousands of pounds in unnecessary registrations. He decided to go public following a conversation with a 17-year-old would-be investor whose mother had been setting aside £150 a month for six months and was considering taking out a loan to fund compliance costs she had been told were mandatory. “She was struggling to make ends meet, saving up to spend money on registrations her son doesn’t need, on advice from people who either don’t know the law or have a financial interest in selling compliance products,” Leeds said. “That is the real scandal here.” The issue, Leeds argues, is compounded by the nature of online information. Blogs written by insurance brokers and compliance consultants, some with commercial interests in the products they recommend, rank highly in search results and are absorbed uncritically by AI tools, which then repeat the same inaccurate advice to users who treat it as authoritative. “ChatGPT will tell you that you need anti-money laundering registration and redress scheme membership to do rent-to-rent,” Leeds said. “It is not lying intentionally. It is repeating what is on the internet. And what is on the internet is largely wrong because it was written by people who either do not understand the legal distinction or benefit from keeping it obscure.” What Leeds Says People Actually Need  Leeds is clear that he is not arguing against compliance in general. He distinguishes between what the law requires and what may be prudent as a business grows. For those operating rent-to-rent businesses or deal sourcing operations within the specific legal framework he describes, he says the actual compliance requirements are minimal and free. The ICO offers a free online self-assessment tool that takes approximately five minutes and determines whether a business needs to register , and for most home-based operators with no customer database, the answer is no. Anti-money laundering registration applies to estate agents, letting agents, solicitors, and accountants , not to rent-to-rent operators functioning as tenants or deal sourcers selling packaged documents. He also flags a common and costly mistake: registering a company under the wrong SIC code. Businesses that register under property management or estate agency codes may inadvertently opt into regulatory requirements that would not otherwise apply. “Get the SIC code right, use the right contracts, and operate within the correct legal framework, and most people starting in this space have zero compliance spend,” Leeds said. “Start making money first. Structure properly as you grow. That is the order of things. A Wider Question for the Industry The implications of Leeds’ position, if correct, and the official correspondence suggests it is, extend well beyond his own academy. Property training is a largely unregulated industry. There are no standards bodies governing what mentors can teach, no licensing requirements for property educators, and no redress mechanism for students who receive inaccurate advice. In that environment, misinformation about compliance requirements, whether born of ignorance, excessive caution, or commercial interest, has spread largely unchallenged. Leeds is calling on anyone who has paid for mentorship that included mandatory compliance requirements for rent-to-rent or deal sourcing, and who then paid for those registrations, to consider requesting a refund from their mentor. He says the official confirmation he has obtained provides grounds for such a claim. The Trading Standards letter and Property Ombudsman correspondence have been published publicly by Leeds and are available for independent verification. Samuel Leeds is the founder of the Samuel Leeds Academy and Samuel Leeds Finance. He holds property across the United Kingdom, the UAE, Africa, and the United States. The original correspondence from Trading Standards and the Property Ombudsman is available on request. The post Aspiring Property Investors Are Spending Thousands on Compliance They Don’t Need. Official Bodies Confirm It.   appeared first on LA Weekly. ...read more read less