Support, Advice and Experience within the Property Market

Landlords and Tenants Urged to Check their Money if Protected

From Robert Ulph on December 11, 2020

Mandatory money protection came into force last year and provides landlords and tenants with protection in the event of a letting agent misappropriating funds. The ruling meant that all property agents must be part of an approved Client Money Protection (CMP) scheme or they will be operating illegally and as a long-term supporter of this kind of regulation I welcomed this ruling.

CMP has long been compulsory for licensed members of the industry body, ARLA Propertymark, which Pennington is part of, and I have written before about the large sums of money that letting agents hold for their clients and worryingly how some of this money is managed. For example, with any Assured Shorthold Tenancy the tenant’s deposit should be registered with one of three deposit schemes, within 30 days of the deposit being taken. But previously reports had uncovered evidence of deposits not being placed in deposit protection schemes and when it is considered that letting agents hold approximately £2.7 billion in client funds at any time, this is significant.

The CMP schemes also provide a barometer into the letting industry and it is worrying to hear that one of the government-approved scheme managers report that they have evidence from their figures in the period mid-March to mid-July, that over ten letting agencies a week closed down as they ceased trading.

They are urging landlords and tenants to check their agents offer client money protection of some kind. It says: “Whilst the vast majority of letting agents already have comprehensive cover, some still do not.  This puts landlords and tenants at risk of losing thousands of pounds if the business goes insolvent which, for some, is a greater possibility now than prior to the pandemic.” 

A spokeswoman for CMP says: “It is now 18 months since it became a legal requirement for all letting agents to have client money protection. Most people know when they book a package holiday to check it is Atol protected, meaning if the holiday firm goes bust, they do not get stranded abroad or end up out of pocket. 
“However, people often part with far greater sums of money when they let or rent a property and yet they don’t check that this money is protected. The lettings industry must work harder at educating consumers on the importance of checking their letting agents will protect their money.”

The best advice I can give is to get assistance from a professionally qualified agent, who is ARLA Propertymark licensed. You can check credentials on their website as all members, throughout the country, will be named on the site. By using a licensed agent, consumers have the peace of mind their agent will provide a professional service and adhere to industry standards.

If you have been affected by this and need any advice or would like to discuss any other matters on the local property market, please do not hesitate to contact me.