Why Client Money Protection Schemes are SO ImportantPosted by: Katie Piper | Post date: 13.03.19
In 2017, nearly £1,000,000 of client’s money was stolen by crooked landlords and rogue letting agents and this situation keeps hitting the headlines. 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 large figure is probably nowhere near the true one, as so many of these incidents go unreported. However, on the 1st April this year CMP (client money protection) will be mandatory!
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 checks on landlords to make sure they are who they say they are, do actually own the property and will hold onto your deposits and rent 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. A baffling way to run a business!
Client Money Protection Scheme
If a letting agent uses a Client Money Protection scheme (which in 2 weeks, they will all have to!) their offices could literally 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 always had one such scheme in place to make sure all of our tenants’ and landlords’ money is safe no matter what.
Because that’s such a scarily large amount of money to be vulnerable to a letting agent’s lapse in honesty, ARLA have campaigned successfully to 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 resulted in the now mandatory regulation that all letting agents must be part of a CMP scheme by next month. 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 rogue letting agents can’t play fast and loose with people’s money anymore. Being already part of a CMP scheme, proudly registered with ARLA since we began, 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. We are glad that other agents will be forced to follow our example. We urge you to ask your own agents to show you this proof of CMP come April 1st, so we can all work together to make our sector a safe place to operate in. If you’d like to know more about how we look after our landlords and tenants, please call 01273 917791.