Starting a property sourcing business: the registrations it needs, and the one that must come before the first fee
Most people starting out in property sourcing register for tax and assume that is the paperwork done. The registration that matters most is a different one, with HMRC for money laundering supervision, and it must be in place before the first deal, because trading without it is a criminal offence. Here are the steps in the order they bite, with the fees, the deadlines and the VAT question that arrives with success.
Why the order matters more than the list
Every list of what a new business must register for looks roughly the same, and the tax registrations dominate it. For a property sourcing business the list is not the difficulty. The order is. The tax registrations all carry a period of grace: a sole trader has until 5 October after the end of the first tax year, a company has three months from starting to do business, and VAT waits for a turnover threshold. The money laundering registration has no grace at all. HMRC's guidance is that an estate agency business must register before carrying on any activity as one, and that trading without registration is a criminal offence. A sourcer who registers for tax in the first month and for supervision in the sixth has done the easy part promptly and the serious part five months late.
Step one: work out whether what you do is estate agency work
The test comes from section 1 of the Estate Agents Act 1979, which the Money Laundering Regulations 2017 adopt. In broad terms, it is estate agency work to act, in the course of a business, on instructions from a client who wishes to buy or sell an interest in land, in order to introduce that client to someone on the other side or to secure the purchase or sale. HMRC's Economic Crime Supervision Handbook addresses sourcing directly. It asks whether introducing businesses are in scope and answers yes, if they meet the definition, naming property sourcers, deal packagers and property investment consultants, and adding that the specific activities have to be looked at. Handling enquiries from buyers and sellers, sending out property details and arranging viewings all point towards scope. A portal that simply lets a buyer contact an agent usually falls within an exemption for advertising providers. The practical question is short: are you paid, by someone who wants to buy or sell, for finding the other side of the deal? If the answer is yes, proceed on the footing that you are an estate agency business.
Step two: settle the legal form before you register anything
Supervision is registered in the name of the business, so the choice between trading alone and trading through a company comes first. Registering as a sole trader and then incorporating means updating the registration and repeating steps. If a company is the answer, note a change that many formation guides still omit. Since 18 November 2025, identity verification has been a compulsory part of incorporating a company and of appointing new directors and people with significant control. It is free through GOV.UK One Login and usually quick, but it is a step, and it sits at the front of the queue.
Step three: register for money laundering supervision
The application goes to HMRC, which supervises estate agency businesses under the regulations. On HMRC's current fee guidance the charge is GBP 400 for each premises, paid on application and again each year as an annual declaration fee when HMRC invites the business to renew. Each beneficial owner, officer and manager must also pass an approval check, at a non-refundable GBP 40 a person. Registration is not a formality that ends at payment. It commits the business to a written assessment of the money laundering risks it faces, to policies and controls that match that assessment, and to customer due diligence, meaning verifying who you are dealing with and, where relevant, where their money comes from. One point catches sourcers in particular. The regulations treat an estate agent as entering into a business relationship with the purchaser, as well as with the seller, once the purchaser's offer is accepted. Due diligence therefore reaches both sides of the deal, not only the client paying your fee.
Step four: join a redress body if the work touches homes
Section 23A of the Estate Agents Act 1979 and the Estate Agents (Redress Scheme) Order 2008 require every person who engages in estate agency work in relation to residential property to belong to an approved redress body. There are two: The Property Ombudsman and the Property Redress Scheme. Failing to belong can lead to a penalty notice from the local trading standards authority. A sourcer who deals only in commercial property is outside this requirement, but most sourcing is residential, and membership costs little beside the penalty.
Step five: the data protection fee
A sourcing business holds names, addresses, telephone numbers and identity documents. Under data protection law, most organisations that process personal information must pay an annual fee to the Information Commissioner's Office unless an exemption applies. For a micro business it is a modest sum, and it is best paid at the same time as the supervision registration, because the identity documents collected for due diligence are exactly the kind of information the regime exists to protect.
Step six: the tax registrations, which can follow but should not drift
A sole trader must tell HMRC by 5 October after the end of the tax year in which trading began, so a business that starts in November 2026 must be registered for Self Assessment by 5 October 2027. A company must register for Corporation Tax within three months of starting to do business, and HMRC read that widely: buying, selling, advertising and renting a property all count. Sourcing fees are the income of a trade, so a sole trader pays income tax and Class 4 National Insurance on the profit, and a company pays corporation tax on it.
Step seven: watch the VAT threshold from the first invoice
Sourcing fees are a charge for services, not a supply of land, so the exemption that covers most property transactions does not reach them, and they are ordinarily standard-rated at 20 per cent. The registration threshold is GBP 90,000 of taxable turnover, with two tests. Looking back, if turnover over the last twelve months exceeds the threshold, you must register within 30 days of the end of the month in which it was exceeded. Looking forward, if you expect to exceed it in the next 30 days alone, you must register by the end of that period. The figures that follow are illustrative. A sourcer charging GBP 4,000 a deal crosses the threshold with the twenty-third completion in a rolling year. From then on, a client who is a private investor and not registered for VAT cannot reclaim the GBP 800 of VAT on each fee. Either the price rises to GBP 4,800, or the sourcer keeps GBP 3,333 of a GBP 4,000 fee, a sixth less. That decision belongs in the business plan, not in the month the threshold is crossed.
The order, in one paragraph
Decide whether the work is estate agency work. Choose the legal form and, if it is a company, verify identities and incorporate. Register with HMRC for money laundering supervision, and have the risk assessment, policies and due diligence procedures written before the first introduction. Join an approved redress body if any of the work concerns homes. Pay the data protection fee. Register for Self Assessment or Corporation Tax within the time allowed. Then make the VAT threshold a monthly check. The first four belong before the first fee is earned. The rest follow within weeks, not years.
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This article is general information only and does not constitute tax advice. Figures and dates are current as at the date of writing; any worked example is illustrative. Always consult a qualified adviser before acting.