Landlords are currently risking hundreds of thousands of pounds because the funds are not protected by Client Money Protection (CMP) insurance and are being held by the letting agents in their main bank account.
Recent research by YouGov revealed that £2.7 billion of landlord and tenantsâ€™ money is held by letting agents in the UK in the form of rent and tenancy deposits. However, it is believed that approximately one in five landlords and tenants will not be able to recover their funds if an agent steals the money, uses it fraudulently, or declares bankruptcy, because it is not being protected by Client Money Protection insurance.
Many landlords feel that this sort of protection should be made compulsory and want the government to support them, as at present the use of CMP is entirely voluntary. It’s estimated that only 60 – 80% of letting agents actually offer Client Money Protection insurance.
Sean Hooker, head of redress at the Property Redress Scheme, said: â€œWith 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.â€
The Right Place holds all client money in a separate protected client account and we are covered by Client Money Protection insurance.