The Government on 1 April 2018 announced that it is to introduce a mandatory scheme to protect tenants and landlords from rogue property and lettings agents.
The introduction of the client money protection scheme, similar to the tenants’ deposit scheme, follows a series of recent consultations exploring the enhanced regulation of property and lettings agents.
Tess Saunders, a solicitor specialising in property disputes at law firm Royds Withy King says: “We have come across a number of instances in recent years of rogue lettings agents unlawfully taking clients’ money, sometimes even dissolving the company and setting up a new agency in an attempt to avoid liability.
“A mandatory client money protection scheme is good news for tenants and landlords who will be able to recover money held by agents that could otherwise be lost through misappropriation or insolvency.”
Saunders adds: “Whilst there are a number of schemes already in operation, they are entirely voluntary and only around 60% of agents, typically the larger businesses, have signed up to them. Now, all property and lettings agents who handle client money will be required to be a member of a scheme or face a fine of up to £30,000.”