Why Client Money Protection Schemes are SO ImportantPosted by: Katie Piper | Post date: 04.07.18
In 2017, nearly £1,000,000 of client’s money was stolen by crooked landlords and rogue letting agents. The idea of letting agents stealing people’s deposits and even their rent payments, makes us feel hugely angry. It’s particularly disturbing when you consider the fact that this already huge figure is probably nowhere near the true one, as so many of these incidents go unreported. Although recent changes in legislation have made it slightly more difficult to get away with this despicable behaviour, it isn’t enough and we whole-heartedly support ARLA’s (Association of Residential Letting Agents) campaign to make Client Money Protection (CMP) schemes mandatory for letting agents.
What Criminals Are Up To
Recent cases showed that tenants’ and landlords’ money is being stolen in a number of ways, sadly. One of them is by unscrupulous people pretending to be landlords and collecting deposits on properties they don’t even own. That’s why it’s so important to only hand over money to legitimate agents who have done all the due diligence on landlords to make sure they are who they say they are, do actually own the property and will hold onto your deposits in a safe and legal way. Another, horribly common occurrence is scoundrel letting agents who have been stealing people’s deposits and even their rent to line their own pockets. A man was jailed last year for using deposits and rent payments to pay for his gambling habit. He was caught when landlords started complaining that they weren’t receiving their rent. We’re horrified that people can do this so are very glad to make sure nothing can happen to our tenant’s money by using a Client Money Protection scheme.
Client Money Protection Scheme
If a letting agent uses a Client Money Protection scheme, they could literally go bust, their offices could burn down and their directors run off with every penny they’d been paid by tenants or landlords and everyone would still get their money back. Although we have absolutely no intention of running off with anyone’s money, we have one such scheme in place to make sure all of our tenants’ and landlords’ money is safe no matter what. All ARLA members are required to have one of these schemes in place and, as ARLA members who are all for regulation and holding letting agents to high standards, we are very pleased to learn that 60% of letting agents already have this scheme voluntarily but are a bit worried to learn that around £700 million of tenants’ and landlords’ money is being held by letting agents and not protected in any way.
Because that’s such a scarily large amount of money to be vulnerable to a letting agent’s lapse in honesty, ARLA are currently running a campaign to make having a Client Money Protection scheme compulsory for any agents trading and letting out property. Since May 2015, letting agents have been required to display if they have a CMP scheme in place so landlords can choose agents who have this in place. Sadly, tenants do not get this choice if they want to rent a particular property. As ARLA considered this to be inadequate, they presented a report to Parliament which, after a lot of toing and froing, has led to a draft regulation now going through Parliament which will require all letting agents to be part of a CMP scheme by April 2019. Agents who don’t comply could be faced with a £30,000 fine!
Excellent! We can’t wait for these regulations to come into force so these dastardly rogue letting agents can’t play fast and loose with people’s money anymore. Being already part of a CMP scheme, registered with ARLA and generally pretty hot on ways to protect our landlords’ and tenant’s money, rights and property, we’re feeling rather happy about all this but are glad that other agents will be forced to follow our example. If you’d like to know more about how we look after our landlords and tenants, please call 01273 917791.