What happens if your letting agent isn't covered by Client Money Protection?

Posted 23/01/2019 by: Reeds Rains

Blue door to a property

Would you book a holiday that wasn’t protected? Would you refuse an extended warranty on an expensive appliance? Would you ignore the opportunity to insure your pet?

In the same way, landlords should definitely consider whether their letting agent is protecting their money (through Client Money Protection schemes) – whether this is their tenant’s rent, deposit or any other funds. You might have heard horror stories about people being scammed through fake holiday sites, well the same has happened to many landlords across the UK.

In this article in Landlord Today  it’s noted that tenancy deposit theft hit £1.3m last year (December 2018), and in 2017, there was an average theft of £38,585 per conviction of a rogue letting agent who stole client funds.

Here’s a more specific case from PropertyIndustryEye where the leader of a letting agency was charged with fraud, false accounting and theft totalling around £450,000. Following complaints from landlords and tenants, the agent was arrested in December 2016 and was only charged in January 2018. Not only is your money unprotected with a letting agent who does not have Client Money Protection, but it also takes a long time for these cases to come to justice.

It’s been estimated that 40% of letting agents in England and Wales are not members of Client Money Protection schemes (EstateAgentToday). Reeds Rains landlords choose to go with a risk adverse agent who leaves them confident that their money is protected. 

So really, what’s the difference between having an agent who offers this protection, through a provider such as ARLA:Propertymark, and one who doesn't? This is how it works: 

Using a letting agent without Client Money Protection 

1. You're renting a property out to tenants                                Dewsbury

2. Your letting agent isn't registered and does not have CMP cover 

3. Your letting agent 'runs off' or misappropriates your moneyMoney 2

4. You, and your tenants, have lost your money and there's no getting it back

Using a letting agent WITH Client Money Protection 

1. You're renting a property out to tenants Final one

2. Your letting agent is registered and has CMP cover

3. Your letting agent goes out of business or 'runs off' with your money

4. You make a claim to ARLA and provide evidence that you
haven't received your Relaxingmoney

5. ARLA reimburse* you with the money you could have lost so you can relax

Not only does Reeds Rains give their landlords peace of mind that their money is protected but we tailor our service to your needs. By offering three service levels, we can be as hands on (or off) as you need. Plus, we offer professional photography, a video tour and premium listings on Rightmove and Zoopla meaning we can find you high quality tenants quickly.

If you find your letting agent isn't covered by Client Money Protection, talk to our experts today. With over 150 years of expertise, we'll be happy to help.

Book your rental valuation today

* subject to CMP scheme limits