After the sudden closure of two more letting agents, leaving landlords and tenants out of pocket, the head of one of the deposit protection schemes has said that the only solution is to regulate the industry.
Kevin Firth, of the Deposit Protection Service, was speaking after the collapse of Real Est-8, in Bournemouth, towards the end of last year, and that of Professional Tenant Finders in Portsmouth at the end of January.
In the case of Professional Tenant Finders, police have been called in and the local newspaper said it had been “inundated” with calls from tenants and landlords.
One landlord said she is owed £3,325 by the agent, another told the paper he is owed £2,900, and a tenant said he is owed a £1,000 deposit.
Hampshire police have confirmed that they are looking into allegations about the company.
Ashtons JWD, an insolvency firm, has been appointed, as other agents try to deal with the fall-out.
Leaders’ Portsmouth branch manager Ian Cope said: “We have had visits and calls from a number of very worried landlords and tenants of this agent who don’t know what to do next.
“Unfortunately, over the years we have seen far too many distressing cases like these – of letting agents disappearing suddenly, owing their clients money.
“As the private rented sector grows, more people are using letting agents, unaware that there is no proper regulation governing them, and in particular over how they handle client money. Cases like these highlight the fundamental lack of controls over letting agents, which people need to be aware of so that they can take steps to protect themselves.”
In Bournemouth, the local paper reported that tenants, landlords and maintenance men were all left out of pocket after Real Est-8 closed down.
Both Real Est-8 and Professional Tenant Finders had placed some deposits with DPS. In the case of the former, three deposits appear to be missing, and in the case of the latter, 21 could be missing.
The DPS used to alert tenants whose tenancies had been registered but the money not paid over within the specified timeframe, but dropped the service after complaints from landlords.
Firth said that their complaints arose for several reasons, but chiefly because of the legal uncertainty over what was then a 14-day timeframe.
Could – and should – tenancy deposit protection organisations do more to alert the public when it looks as though an agent might be in trouble?
Firth said: “We have no policing remit. In any case, it would be very difficult for us to do anything about it. The first warning signs we would get would not be until the end of a tenancy when a tenant wanted their deposit back.
“What would, however, be helpful, would be if there was greater communication between all those involved – trading standards, the ombudsmen, trade bodies, and the other tenancy protection bodies. That has been discussed before, but we really need to focus on this again.
“Ultimately, there is only one solution: we need mandatory regulation of letting agents, who should be required to have compulsory client money protection.”
Legally, it is landlords who have to carry the responsibility when agents turn out not to have protected the deposit and/or issued the prescribed information. Landlords have to pay back the deposit to the tenant and may also have to pay penalties.