16:43 PM, 26th October 2016, About 6 years ago 6
Client money protection (CMP) should be made compulsory four out of five buy-to-let landlords believe.
A majority of landlords feel CMP should be compulsory when they use a letting agent to rent a property out, according to new research.
Of 85% of landlords that use letting agents, a significant 81% believe that CMP should be made compulsory.
If CMP is to be made mandatory, it will be put forward through the Housing and Planning Act 2016.
Currently, hundreds of thousands of pounds of landlord and tenants’ money held by letting agents is at risk because the funds are not protected by CMP, recent research by YouGov revealed.
£2.7 billion of landlord and tenants’ 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 or uses it fraudulently.
This is due to the money not being protected by CMP.
“Landlords and tenants can be left vulnerable when their money is not protected by client money protection. Landlords are speaking out for what they want which is making CMP compulsory and it is important that the government recognises their voices,” said a spokesperson for Property 118’s landlord insurance provider Discount Insurance.
An official review was launched by the government this past summer to assess whether private landlords and tenants’ money is properly protected from letting agents who may be committing fraud or declaring bankruptcy.
Using CMP schemes are currently voluntary and estimates reveal only 60-80% of agents may be using them.
Sean Hooker, head of redress at the Property Redress Scheme, said: “With 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.”