A TV expose claims laws to protect tenants' deposits cannot stop what the network calls one rogue letting agent.
In November Channel 4 News found letting agent Daniel Burton - which it called a self-styled property guru who ran seminars for people looking to get rich quick through the rental market - after this company, Unida Place, allegedly disappeared along with tens of thousands of pounds owed to dozens of tenants.
Unida Place was renting from landlords and subletting properties as single rooms, maximising profits by gettting as many tenants in as possible. Burton had complied with the law by registering deposits with one of the approved protection schemes, MyDeposits.
But Channel 4 claims it has now learned that Mr Burton was expelled by MyDeposits for failing to comply with its procedures. However the expulsion could not, of course, do anything to protect tenants' deposits.
MyDeposits wrote to Burton's tenants telling them they had three months before their deposits became "unprotected" and the expelled letting agent was left with £145,000 of unprotected deposits sitting in a bank account.
MyDeposits says that 99 per cent of tenants receive their deposit back at the end of the tenancy either in full or with deductions agreed by them with their landlord or agent; but not in this case.
Burton last year told Channel 4 News: "I have held my hands up. I've gone away from the company and I've said, I will guarantee that everyone's deposit and any monies owed to them whether that's rent in advance as well, will be paid back."
However, former tenants contacted by Channel 4 this month say they have not heard from Burton.
A statement from the Department for Communities and Local Government spokesman says: "We're determined to crack down on landlords who don't obey the law. Landlords are required to protect tenancy deposits and if they don't they're breaking the law.
"Where a deposit has not been properly protected tenants are well within their rights to take court action where a judge could require the landlord to pay up to three times the deposit amount.
"We've given councils £6.7m to tackle rogue landlords in their area, and are changing the rules so letting agents must belong to a redress scheme so landlords and tenants have somewhere to go when they don't get the service they deserve.
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Comments
Agree 100% IO and something Mydeposits & the NLA know full well
This Channel 4 News item created a very interesting and heated debate.
I regard this as very positive for the PRS. There are a scary number of landlords who do not even understand that they have to protect tenants deposits!
Bringing this into the mainstream helps with education and awareness and also addresses wider issues of client money protection in the PRS.
It is certainly a very hot topic on Property Tribes. We have had 81 landlord and letting agent responses the C4 item:
http://www.propertytribes.com/is-mydeposits-the-stupidest-idea-t-10981.html
Very important lesson to be learned here that around 80%+ of all agents and 100% of all tenants do not know - which is that a deposit is not "protected" by TDP compliance.
The deposit itself is only protected as far as there is a dispute and money then has to be paid into the Scheme while ADR or Courtt action takes place. That is the "protection" so the money is only safe if there is a dispute.
If the agent simply runs off with the money, no protection is afforded by TDP Schemes.
Hence why only DPS is needed, Custodial as in Scotland.