Business Bank Accounts for Letting Agents

Getting the banking basics right

Choosing the right business bank accounts is not just a tidy bookkeeping choice for letting agents - it is a legal and reputational safeguard. Since 2021, UK agents must keep client money ring-fenced in a separate account with an FCA-regulated bank. That means rents, deposits and landlord funds cannot sit in your general business current account. In practice, most agencies will need at least two bank relationships: an office account for fees, salaries and bills, and a client account that is segregated from your own funds.

Digital-first banks have made office banking faster and cheaper, but many do not support client money structures. Traditional high-street providers still lead on professional client accounts, albeit with tighter eligibility checks. Understanding where each type of account fits - and how AML supervision affects pooled client accounts - will help you stay compliant, pay people on time and build trust with landlords and tenants.

Treat your banking setup as part of your compliance framework, not an afterthought.

Two accounts, two purposes - one clear line between your money and your clients’.

Who will benefit

This guide is for UK letting and property management firms of any size, including sole traders, limited companies and agencies expanding into full-service management. It is especially relevant if you collect rent, hold deposits or pay contractors on behalf of landlords, or if your bank has declined a client money account and you need a compliant alternative.

What counts as the right account

For letting agents, a compliant setup distinguishes between office money and client money. Client money is any money received or held on behalf of a client, and it must be deposited into a segregated client account. Many agents operate pooled client accounts so they can manage funds for multiple landlords and tenants under one umbrella, often with sub-accounts or tags for each property or client.

Not every business bank offers client money accounts. Some popular digital providers openly state they do not support them. You might therefore run your day-to-day office account with a digital bank for speed and low fees, while placing client funds with a high-street provider that offers professional or client accounts. Where interest is paid, it should be handled in line with your terms of business and relevant rules. FSCS protection typically applies within scheme limits and eligibility.

How to set it up correctly

Start by mapping your money flows. Rents, deposits and landlord floats should land in a ring-fenced client account. Management fees, commissions and company expenses should move to your office account once earned and invoiced. Use clear naming conventions in online banking so staff never confuse the two.

Choose your providers with their product types in mind. For the office account, look for low or no monthly fees, free or low-cost UK transfers, batch payments and integrations with Xero, QuickBooks or FreeAgent. For the client account, focus on eligibility for professional or designated client accounts, the ability to create sub-accounts, and controls that help you segregate and reconcile funds.

If you plan to use a pooled client account, check your AML supervision status and procedures. Banks have historically viewed pooled structures as higher risk and may ask for detailed information on your firm, directors and client base. Planned AML reforms to customer due diligence aim to allow a more risk-based approach, but robust onboarding, records and monitoring will still be required.

Why the structure matters

A ring-fenced client account protects consumers and your business. It shows landlords you handle money professionally, reduces the risk of accidental misuse and supports membership of professional bodies. It also reduces the chance of disruptions if a bank audits your activity, because your processes are easier to evidence.

Using a standard business account for client funds is not compliant and may jeopardise trade body membership. Splitting office and client money also improves bookkeeping and tax reporting. Fee structures differ between providers, but most business banking costs are allowable business expenses, which helps manage the overall cost of compliance. Finally, where client balances are material and held for longer, earning interest and maintaining FSCS coverage can add value beyond simple payment processing.

Upsides and trade-offs

Red flags and fine print

Be wary of assuming that any well-rated small business account will hold client money. Many digital providers focus on operating accounts only and explicitly exclude client money. If you run a pooled client account, anticipate additional customer due diligence on your underlying clients. Be prepared to evidence AML supervision, screening and ongoing monitoring. Where planned regulatory changes allow risk-based simplifications, you will still need documented procedures and accurate records.

Check practical constraints too. Some professional client accounts limit standing orders or Direct Debits, or require minimum opening balances. International payments and multi-currency features vary widely and may matter if you have overseas landlords. Price lists often combine a monthly fee with payment, cash deposit and international transfer charges. Model your typical transaction volumes to estimate total cost. Finally, confirm FSCS eligibility, how interest is treated, and how your bank will support sub-accounts or ledgering so you can report clearly to each landlord.

Other routes you could take

1. Split-banking model - digital bank for the office account and a high-street provider for client money.
2. Single high-street relationship - both office and client accounts with one bank for simplicity.
3. Specialist professional account - bank products marketed for solicitors and property professionals, with sub-accounting features.
4. Building society or challenger offering - where available, for client deposits with competitive interest.
5. Enhanced accounting stack - pair your bank with software that supports rules-based reconciliation and batch landlord payouts.

Common questions

Q: Do I legally need a separate client account? A: Yes. Client money must be held in a segregated, ring-fenced account separate from your office funds with an FCA-regulated bank.

Q: Can I use a pooled client account for multiple landlords? A: Yes, many agents use pooled structures. Expect stronger AML checks. Planned changes aim to make risk-based due diligence more workable for banks and agents.

Q: My digital bank will not open a client money account. What now? A: Keep the digital account for office use and open a professional client account with a high-street bank that supports client funds.

Q: Are business banking fees tax-deductible? A: In most cases, business banking charges are allowable expenses for UK tax, helping offset the cost of compliance.

Q: Is client money covered by FSCS? A: Funds are typically eligible within standard FSCS limits and criteria. Confirm eligibility with your provider and ensure accounts are correctly titled and operated.

How Switcha supports your decision

Switcha will connect you with the best options for what you are looking for. We compare office and client money solutions, highlight eligibility and feature differences, and help you weigh costs against day-to-day needs. Our guidance is transparent and tailored to UK letting agents so you can move forward with confidence.

Next steps

• Map your current money flows and identify any gaps in segregation.
• Confirm AML supervision status and documentation before applying.
• Shortlist providers for office and client accounts, then model total costs.
• Set up clear internal controls and reconciliation routines.

Important information

This article is general guidance, not financial or legal advice. Regulations and bank policies can change. Always confirm eligibility, fees, FSCS coverage and AML requirements with your provider, and consider taking professional advice for your specific circumstances.