A nationwide survey carried out by The Property Ombudsman has revealed that 90% of tenants and 89% of landlords fail to ask how their money will be handled by their letting agent.
TPO’s survey suggests that many members of the public simply have no idea that their money could be at risk through rogue agents, but shows that over seven in ten letting agents voluntarily offer Client Money Protection insurace,
The survey also shows many more agents use a custodial scheme to physically ‘bank’ deposit money, rather than an insurance-backed scheme which enables them to hang on to the money themselves.
TPO agreed to undertake the online survey in collaboration with Baroness Hayter of Kentish Town, who is chairing a Government review into Client Money Protection with Lord Palmer of Childs Hill.
The results reflect the views of the 680 letting agents that took part in the survey – with the decided possibility that those who answered already have good practice voluntarily in place. The concern must now be that if so many agents are voluntarily offering CMP, the Government will see no reason to make it compulsory.
TPO has presented its findings to the Government’s working party which is discussing whether CMP should be made mandatory for letting agents.
A summary of TPO’s survey results revealed the following:
• 73% of letting agents confirmed they belong to a Client Money Protection scheme
• 82% of firms said their business complied with the requirements under the Consumer Rights Act 2015
• 20% of TPO member agents said they were encouraged to take out this policy as a result of the transparency requirements. (64% of agents answered ‘No’, while 16% of firms responded ‘not applicable’)
• 92% of respondents said they currently operate a ring-fenced client account for clients’ money
• Agents that said they hold a separate account for clients’ money were asked if they have one single account or multiple accounts for different branches/clients, with 78% confirming they held a single account, while 22% of respondents said they operated shared accounts
• UK letting agents said that only 11% of their landlords routinely asked them about their policies and procedures for handling clients’ money
• UK letting agents confirmed that 10% of their tenants do routinely ask them about their policy and procedures for handling clients’ money
• 39% of survey respondents said they held their tenancy deposits themselves, through an insured deposit scheme, while 61% of firms said their deposits were held by a custodial scheme.
The Government’s review into CMP was announced in August, following the introduction of the Housing and Planning Bill 2016, which included a provision that could allow the housing minister to make CMP cover mandatory for letting agents.
The Government is currently analysing the findings.
In a recent case involving collapsed London agent Jacksons, deposit scheme Mydeposits had registered a charge against the firm. However, the purchase of Jacksons out of administration by Dexters meant that the deposits – understood to be worth a record sum – are safe.