Landlords and tenants pay money to Letting Agents for a variety of reasons including rent and deposits. It is estimated that these Letting Agents hold approximately £2.7 billion in client funds! So, it is important that those handing this money over feel confident that their money is safe.
It may surprise you to know that there is no legislation currently in place protecting these Client Monies, and there are multiple cases where agents or landlords have closed the doors to their businesses owing both landlords and tenants tens, sometimes hundreds of thousands of pounds in rental or deposit monies
The good news
There are Client Money Protection Schemes available through several providers, and Letting Agents that belong to an industry trade body (such as ARLA, RICS, UKALA and NALS) may be already be covered. Client Money Protection allows landlords and tenants to seek compensation in cases where monies have not been repaid.
Whilst it is not mandatory for agents to be members of a CPM scheme, approximately 60% of Letting Agents have opted to be members of such schemes.
More good news
There is further good news for those entrusting their monies to Letting Agents, in the form of the Draft Tenant Fee Bill published on 1st November 2017, where the Government has confirmed its intention to make Client Money Protection (CMP) mandatory for Letting Agents.
All agents will also have to display CMP membership prominently which will provide both landlords and tenants peace of mind that their money is protected. In the meantime, best advice for landlords and for tenants is to ensure that they use the services of an agent who has Client Money Protection in place.