New research has revealed over four out of five landlords believe that client money protection (CMP) should be made compulsory when using a letting agent to rent out property.
The investigation., conducted by Total Landlord Insurance, asked organisations to provide a response on whether they think CMP should be made mandatory in 2016. Of 85% of landlords who use a letting agent, 81% think it should be made compulsory.
Recent data released by YouGov revealed that hundreds of thousands of pounds of landlord and tenants’ cash are at risk, as they are not protected by CMP.
At present, letting agents in the UK currently hold more than £2.7bn of landlord and tenants’ money in the form of rent and tenancy deposits. However, it is believed that around one in five tenants will not be able to recover funds should their agent steal them, or uses it for fraudulent purposes.
Steve Barnes, associate director at Hamilton Fraser, noted: ‘Client money protection, like redress scheme membership, should be compulsory for this sector. This change would give the consumer added protection and ultimately raise standards throughout the industry.’
Landlords want mandatory client money protection
The Government has moved to establish a working group with colleagues from the House of Lords to assess if CMP schemes should be made mandatory. This is being led by Liberal Democrat Peer Lord Palmer and Labour’s Baroness Hayter.
These schemes, which hold cash independently, are voluntary, with the Government estimating that only 60-80% of agents use them.
Sean Hooker, head of redress at the Property Redress Scheme, said: ‘With an increasingly growing rental sector and the money involved, the risk of serious economic damage that could easily occur without adequate safeguards, is something we cannot be complacent about.’
‘These figures clearly show that landlords see this protection as essential to ensure they deal with safe and professional agents that they and their tenants can trust,’ he added.