The drive to bring much-needed reform into the property sector has put property professionals under more pressure than ever. Chaotic, piecemeal legislation has caused widespread confusion and a general sense of uncertainty.

With turbulent times ahead, we examine the evolving risks faced by property professionals and how best to anticipate and mitigate them.

Claims frequency and new threats

There is no doubt we live in a society where claims culture is increasing.

Social media, chat rooms, blogs, podcasts, webinars and broadcast documentaries are all educating consumers – and making it easier for them to pursue claims against property professionals.

When you add AI, no-win-no-fee law firms and sophisticated marketing by claimant solicitors to the mix, it is hardly surprising the sector is seeing more complaints and a higher frequency of claims. The Property Ombudsman saw a 27% rise in consumer contacts in 2024.

For many years there has been debate around the Regulation of Property Agents (RoPA) and the Renters (Rights) Bill. The latter is proposed to come into force in Q4 2025 and has been the subject of much speculation.

The Renters (Rights) Bill will bring more responsibilities for agents and therefore more opportunities for error.”

Irrespective of opinion, the Renters (Rights) Bill will bring more responsibilities for agents and therefore more opportunities for error. According to a recent poll, 25% of agents are not aware of the changes and only 4% are fully prepared.

Below are common matters that frequently give rise to professional indemnity (PI) claims:

– Anti-money-laundering
– HMO licensing
– Gas safety And Energy Performance certificates
– Late lodging of deposits
– Referencing failures
– Incorrect prescribed information
– Material information omissions
– Breach of confidentiality

Charlie Bending, partner at DAC Beachcroft LLP, who specialises in defending claims against property professionals and their insurers, acknowledged: “We have seen a considerable uptick in claims against property managers and anticipate, with the increase in legislation in this sector, this is only the beginning.

“The Renters Rights Bill is still in draft and continues to evolve, but is anticipated to be passed into law in the not too distant future. It will make widespread changes to the landlord and tenant landscape, but most notably introduce greater rights of security for tenants as well as remove no fault evictions, and we will see a new Ombudsman – the Private Sector Landlord Ombudsman.

“Change brings uncertainty and, therefore, increased risk, in addition to the increase in possession claims that will be brought about by the removal of the Section 21 eviction process. Property managers need to familiarise themselves with these changes to ensure they are advising their clients appropriately.”

Claims data provided by MINT shows that property management claims continue to appear with consistent frequency – notably personal injury claims and failure to lodge deposits on time.

No-win-no-fee law firms are often the driver for these claim types. The courts can award up to three times the value of an unmanaged deposit where it has not been lodged on time, so tenants prompted by specialist firms are increasingly vigilant.

The use of AI is also influencing claims, particularly around material information, referencing and copyright. Tenants can use forged documents to pass referencing, and search engines make it easier to identify intellectual property used without permission. Fraudsters posting fake listings purporting to be genuine agents is another growing problem.

Cyber risks

No firm is immune from the threat of cyber attacks. Years of underinvestment in cyber protection, complacency and growing volumes of data have created a lucrative playground for criminals. Most cyber events are down to human error: the best security can be undermined by a single staff member clicking a malicious link.

Property professionals hold highly sensitive data… the consequences of a breach are severe.”

Property professionals hold highly sensitive data – passports, bank details, referencing information, security codes and proof of funds. The consequences of a breach are severe: investigation costs, potential ICO fines, third-party claims, legal defence costs, notification expenses and business interruption losses. Reputational damage can be long lasting.

Gone are the days of lone hackers. Criminal groups now run highly sophisticated operations using ransomware, phishing and social engineering. Generative AI is playing a part in the next wave of cybercrime: attackers use it to craft convincing phishing emails, mimic employee communications and automate intrusion attempts.

Cyber security is now a fundamental business priority. Business continuity plans with rehearsed incident response and recovery protocols are no longer optional – they can make all the difference when a targeted event occurs.

Basic controls every firm should ensure:

– Regular password updates and password complexity rules
– Multi-factor authentication on all accounts
– Staff training on phishing and social engineering
– Timely software updates and regular patching
– Encryption of sensitive files
– Monitoring of mobile and home-working procedures
– Strict confirmation processes for new bank account payments (verbal confirmation required)
– Dual sign-off for significant payments
– Cyber insurance and tested incident response plans

Adopt a cyber resilience strategy that focuses on reducing risk through prevention, mitigating harm via backups and planning, and insuring the residual risk.

Risk management guidance

Consumer protection is important and should be encouraged. But we are seeing a worrying trend: claimants pursuing agents in the hope that insurers will settle. Many claim values are low (£2,500–£5,000) where court defence costs outweigh the value, so insurers often settle. Meticulous record keeping is a crucial defence.

Examples of insurer guidance and good practice:

Record keeping – Keep up-to-date, accurate records, including dated and timed phone notes. Robert Gibson of Tokio Marine HCC Claims said: “Over 50% of claims notified are capable of being successfully defended, and it is therefore extremely important to maintain and retain good record keeping. Lack of documentation/evidence very often means that claims with a potential for being defended end up being paid.”

Terms of business – Review these with a solicitor. Weak or unclear terms have been the basis for avoidable claims under PI policies. Make sure market appraisals are clearly described as estimates, and clarify landlord responsibilities for property insurance.

Lodging deposits – Maintain written procedures and controls for deposit handling, diaries, internal audits and reconciliation. Consider outsourcing client accounting if appropriate.

Fraud & dishonesty – Simple measures can prevent costly consequences. Verify account details, require dual sign-off on payments, and carry out periodic audits.

Chris Mason of The Letting Partnership warned that “the complexity of client accounting systems, combined with the fast pace of operations and the tens of billions of pounds flowing through the sector, creates plenty of opportunity for genuine error or oversight. Even a simple periodic audit can offer an invaluable line of defence.”

Do’s and don’ts at renewal

Do notify circumstances promptly; disclose full business activities; pay premiums on time; check staff for notifiable circumstances; ensure policy accuracy.

Don’t leave renewals to the last minute; admit liability or settle without insurers’ authority; hide historic claims; leave viewers unattended.

In an increasingly litigious environment and with constant legislative change, property professionals are more exposed to negligence claims.”

Consumers are better protected than ever. But in an increasingly litigious environment and with constant legislative change, property professionals are more exposed to negligence claims.

It is critical firms become conscious of their duty of care and put robust controls in place. While it is impossible to remove risk entirely, sensible measures and good record keeping will mitigate exposure – and may well save a business from financial and reputational damage.

The above information has been provided by Mint for information purposes only. Mint is a division and trading name of James Hallam Ltd. Mint operate in the London and Lloyd’s Insurance market specialising in servicing the needs of Property Professionals.