The RLA is urging the Government’s to make Client Money Protection (CMP) schemes compulsory for letting and management agents.
The schemes protect the money of landlords and tenants if a letting or property agent goes into administration as well as protecting against theft or misappropriation. The cash in question is usually tenants’ deposits or landlords’ rents – or money for repairs.
The Government and the House of Lords have established a working group to look at how CMP is currently operating and whether to go further by making use of the powers in the Housing and Planning Act 2016 to make it mandatory.
Industry estimates that letting agents currently hold approximately £2.7 billion and currently agents pay a fee of about £300-£500 to join a scheme. That fee forms a central pot of cash for successful landlord and tenant claims. Around 60-80% of agents are currently in a scheme voluntarily.
It has now launched a consultation asking what interested parties think of the idea and how it would be implemented. The consultation ends on October 3rd.
Alan Ward, RLA chairman said: “Landlords should rightly be concerned about agents having control over monies rightly due to them and they should obviously be protected through a formal scheme.”
“It is ironic that estate agents are legally required to be registered yet don’t handle money, yet agents handling tenant and landlord money are at present completely free to do what they like. This why we believe CMP schemes are an essential measure.”
To view the consultation document click here.