The Property Ombudsman is actively looking at the twin issues of lettings agents that are currently not required by law to maintain separate client accounts, and that cannot get client money protection insurance.
Christopher Hamer was speaking after we asked him about the Guardian’s poll on whether the rented sector is working – the poll having not raised the crucial issue of agents and their handling of client money.
Agents who do not subscribe to the TPO or who are not members of trade or professional bodies, have no obligation to keep client money separate. Nor can agents who are outside membership bodies have access to CMP insurance.
Hamer said: “Regardless of whether the letting agent is a member of TPO, the issue which was not specifically highlighted in The Guardian’s poll is the protection of client money if the firm goes bust or the proprietor uses it for his own purposes.
“Tenants in many European countries are protected under law and, in the UK, NALS, ARLA and RICS also require separate client accounts. However, it remains the case that firms not so affiliated are free of that obligation.
“We recognise this is a matter of importance and we are actively considering what opportunities may be available for providing cover to non-affiliated firms.”
Comments
£170? It's actually £228 plus CMP insurance, around £500-£600.
As said, the only way for accreditation to carry any weight is through having just one scheme/governing body.
JS - I hardly think £170 is expensive.
If you receive rents, you hold clients money for whatever period of time. If you dont have a dedicated ringfenced clients account, your customers are exposed.
And the reason not many agents are members of RICS is because they do nothing for lettings whatsoever. Visit their website and try and find the word 'lettings'.
Good luck with the degree
And your retort is the usual babble from those who're happy to buy into something that'll just give you a colourful sticker for the window.
Please explain where in that strategy the risk lies? We don't rely on client money to bankroll the business, i'm guessing your 'strategy' does?
Happy to stand up and be counted, but by who? There are several 'accreditation schemes', surely there should only be one for it to have any effect on the market? Instead i'm investing in a degree and RICS membership, something not many letting agencies have, not in some worthless scheme.
This comment is the usual diatribe from those who do not see any benefit in standing up and being counted.
Of course you hold client money as rent is paid into your account BEFORE it reaches your client, albeit briefly, so your statement is untrue, which is misleading, and a lie.
Would I want to deal with an agent with such a risky strategy? No!
All regulation costs money and for peace of mind landlord will usually recognise this.
Here's an idea Hamer, reduce your 'application' and annual fees significantly and you'd find agents would be far more willing to sign up. I for one would be happy to sign up to TPOS etc but your fees plus CMP fees are ridiculous! All of our deposits are paid in to the DPS and all rent transferred to clients immediately once received, so we do not hold any client money.