The Residential Landlords Association is backing an amendment to the Housing and Planning Bill, proposed by ARLA (Association of Residential Letting Agents) to protect money received from clients and held by agents, such as rent due to landlords.
The purpose of the amendment is to require letting agents in England to have a protection system in place for monies received by them in the course of their business from tenants, prospective tenants or any other person who is renting accommodation or seeking accommodation to rent.
It is estimated that letting agents currently hold approximately £2.7 billion in client funds and yet, if a letting agent is not covered by client money protection, both the landlord and tenant could stand to lose their money. The amendment is designed to protect both parties in the event that an agent goes into administration or misappropriates client funds, as any losses incurred through the actions of the letting agent can be covered.
David Cox, Managing Director of ARLA, said
“The Client Money Protection scheme is fundamental for tenants and landlords to ensure that they have peace of mind should an agent go bust or take off with their funds. Last year’s move for all letting agents and property management agents in England to be a member of an approved redress scheme is a welcome step but essentially is worthless without a Client Money Protection scheme in place to ensure that, if necessary, we can cover losses for both the landlord and tenants.”
RLA Chairman, Alan Ward, added
“A clear and recognisable brand will help build confidence with landlords as well as tenants who place large sums of money on trust with professional letting and management agents. It will place the onus on agents operating without CMP to answer the question “why not?”