Landlord Lack of Knowledge ‘Worrying’ – warns DB Roberts
Four out of ten respondents in a recent survey had no idea whether their agent operates a Client Money Protection (CMP) Scheme, underlining the need for on going publicity among consumers.
The property Academy, a well-known body in the estate agency industry, conducted some large scale independent research ahead of next Lettings Live Awards. The survey asked if landlords were aware of their agent being a member of various professional bodies, such as RICS, The Property Ombudsman and ARLA.
Agents who are members of these bodies must keep clients’ money, such as rent and tenancy security deposits, in a separate ring-fenced client account, rather than in the firm’s own bank account, where it can be used to pay overheads such as staff wages etc.
38% of landlords did not know if their agent belonged to any of them. The surveys also revealed that 18% of tenants do not know who holds their deposit. The surveys also revealed that 18% of tenants do not know who holds their deposit. There were of 5,500 responses in total, with the surveys promoted to landlords and tenants by different agents throughout the country during April and May.
Commenting on these findings, Jo Culley, Sales Director for leading agents D B Roberts said:
‘These findings confirm our own experience and underline yet again – that hundreds of thousands of pounds of clients’ money is potentially at risk because landlords are using agents who have no CMP in place.
‘In the current economic client, rogue firms who experience cash flow problems may be tempted to use clients’ money to fund their business and unprotected client money. The first the client would know about it, is when the firm actually goes out of business taking thousands of pounds of clients’ money with it.
‘Our advice is to only use a reputable RICS, ARLA or NALS agent’.
‘Hardly a week goes by without yet another news item about a firm disappearing with clients’ money, yet there is still no legislation to prevent this, despite pressure from within the lettings industry. The latest case, in Cambridgeshire, involved about £400,000.
‘We have all read about a firm of Solicitors in the West Midlands which has gone out of business, apparently still owing thousands of pounds to clients. Those people should ultimately get their money back via the Solicitors Regulatory Authority, but clients of agents who do not have a CMP will not be so lucky.