22nd
Aug 2013
An incensed group of landlords, who have between them have losses of more than £60,000, blame a letting agent who had acted on their behalf had used an insured tenancy scheme, are backing a Freedom of Information request. T
The information they hoped to receive from the request is about agents who do not currently have Client Money Protection Insurance and are using deposit schemes. The DCLG (Department of Communities and Local Government) received the request by a leading industry consultant.
-
Under the 2004 Housing Act, landlords are responsible for deposit funds and that is even if they have left the Letting Agent do it on their behalf, this means that they will have to repay the tenants’ deposits if the agent fails to return them for any reason.
-
The request asks that if agents undertake insured schemes, without any CMP Insurance, and they vanish with the money, what protection or recourse do the landlords have, and questions the use of such schemes.
-
The industry consultant request pointed out that two of the four tenancy deposit protection schemes, which are licensed by the DCLG and take on unregulated letting agents who are not members of recognised bodies. These agents will not hold any CMP Insurance and consequently hold the deposits in their own bank accounts.
The consultant then went on to ask the DCLG, to supply the number of complaints it had received from Landlords since 2007 who stated that “they had been misled into believing that they were afforded protection” and had now insured the deposit in case their letting agent disappears with the funds.
The consultant also called for those agents who do not have a CMP should be made to use a ‘custodial’ tenancy deposit scheme and to bank the money. The furious landlords that called for the Freedom of Information directed their frustration against one well known deposit scheme.
One angry landlord said that: “Mydeposists has left me robbed of over £2,000 – an absolute shambolic mess”. Another said he had lost over £4,000 of deposit money, and another that he had lost over £3,500. Another landlord could not understand what the company had in place to protect the deposits and branded the service a shambles.
The Mydeposits scheme, which was launched by the National Landlord’s Association, was asked to provide comments.
- Eddie Hooker, CEO of Mydeposits, said: “We understand that it can be a very stressful and costly situation for landlords who have experienced their letting agent default.
“Tenancy Deposit Protection (TDP) is a consumer protection initiative that was introduced to protect the tenant’s deposit money throughout the tenancy. Under the Housing Act 2004 the landlord is deemed ultimately responsible for ensuring they are fully informed about their rights and responsibilities under TDP law. “In order to further safeguard landlords, my|deposits write to every landlord client of our agent members and we issue guidance which explains the risks of enlisting the services of an agent: “The guidance sets out the landlord’s obligations and responsibilities and contains specific information and advice as to how they can protect themselves against the risk of fraudulent, insolvent or defaulting agents.”
There have been other complaints and amongst those was the question, as to why the Government sanctioned such a scheme that was open to abuse and really offered little protection if any ?
The Department for Communities and Local Government’s Paul Martin sent a letter in response. In it he stated that it was the sole responsibility of the landlord to protect the tenancy deposit under a properly insured protection scheme in case the agent disappears with the deposits. It revealed that the Department, since 2007, had received seven complaints form landlords that they had been told that their tenant’s deposits were properly protected and that this was not the case when the agents became bankrupt.
The letter also contained a paragraph that once again stated that it is the landlord’s responsibility to make themselves aware of the potential risks of agents who do not hold CMP Insurance.
Martin also said in reply that Ministers are keen to have an open market where there is choice for the consumer (landlord).
PIMS Related Content
- Some Landlords use Agents on a tenant find basis whilst others opt for Letting and rent collection or full management. Should an Agent fail in their duties the Landlord will always be liable for their actions - see scope of authority
- Should your Agent fail in their duties you as the Landlord will always be liable for their actions - for they are your agent.see Use an agent or not
News Archive »