A new survey conducted by Total Landlord Insurance has found that, of the 85% of landlords that use a letting agent, 81% believe client money protection should be made compulsory.
This comes as the government conducts an industry-wide consultation to decide whether client money protection will become mandatory.
Steve Barnes, associate director of Total Landlord Insurance parent Hamilton Fraser, said: “Client money protection, like redress scheme membership, should be compulsory for this sector. This change would give the consumer added protection and ultimately raise standards throughout the industry.”
The survey was conducted to assist with a recent government consultation asking organisations to provide a response indicating whether they believe client money protection should be made mandatory through the Housing and Planning Act 2016.
Client money protection schemes are used by letting agents for the benefit of their clients, typically tenants and landlords, in order to safeguard money they hold on their clients’ behalf. In the event that the agents lose any of this money, for example due to theft, misappropriation or their business going into administration, the scheme will recompense the landlord or tenant and seek recovery from the letting agent.
With survey respondents owning on average three properties, industry estimates suggest UK letting agents hold approximately £2.7 billion in client funds. Without client money protection, this money could be at great risk should letting agents lose the money.
Sean Hooker, head of redress at 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.
“These figures clearly show that landlords see this protection as essential to ensure they deal with safe and professional agents that they and their tenants can trust.”