One in five landlords unprotected by Client Money Protection (CMP)
Wednesday 15 June 2016
Worrying new figures reveal that at least 20% of tenants and landlords lack one simple but vital, financial safeguard – which is putting huge sums of cash at risk.
Hundreds of thousands of pounds of landlord and tenants’ money are not covered by client money protection (CMP) schemes, according to recent research by YouGov.
The CMP schemes insure tenants or landlords and pay out when rental monies or deposits have been misappropriated by the letting agent, or the agent goes bust.
More than £2.7billion of landlord and tenants’ money - in the form of rent and tenancy deposits – is currently held by letting agents.
Risk losing everything
But landlords and tenants who aren’t covered by a CMP scheme run the risk of losing everything.
The research was conducted on behalf of SAFEagent, a protection scheme set up in 2011 after a number of lettings agencies collapsed, resulting in the loss of clients’ money.
While the scheme doesn’t prevent disputes between renters and landlords, it does ensure that those who use a SAFEagent registered agent will not lose out because of their agent’s actions.
And because more than 60% of renters incorrectly believe their money is protected by law, SAFEagent have launched an awareness campaign to emphasize how important CMP is when letting through an agent.
They are also campaigning for CMP to be full and mandatory as many consumers are still exposed to unnecessary risks.
John Midgley, chair of SAFEagent, said the chances of money being returned without CMP in place are low and warned: “Consumers who use agents without CMP in place are taking a massive risk.”
He added: “Would you use a travel agent who isn’t ABTA protected?”
In January housing minister Brandon Lewis ruled out mandatory CMP on the grounds that it would impose additional red tape on agents
But, an amendment to the Housing and Planning Bill, recently approved in the House of Lords, now bans agents from taking money from tenants unless they hold separate client money accounts, as with solicitors who handle client money.
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