An official review into whether Client Money Protection insurance should be made mandatory for all letting agents is being set up.

It is estimated that letting agents are currently holding up to £2.7bn in deposits, rent payments and money for repairs.

The review is to be chaired by Lib Dem peer Lord Palmer of Childs Hill and Labour’s Baroness Hayter, with the backing of the Government.

Currently CMP is voluntary and Government estimates only 60-80% of letting agents have the insurance.

Baroness Hayter told EYE that the review was agreed in an amendment to the Housing Bill, which potentially allows for regulation to be brought forward to make CMP mandatory.

She said: “This is now what is being set up with CLG acting as secretariat and with ministerial support for this initiative.”

Lib Dem leader Tim Farron said: “Renters deserve peace of mind that money they’ve handed over to an agent will be safe.

“Renting in the private sector is already the most expensive, least secure form of housing, and the last thing they need is to lose out because a rogue letting agent has committed fraud or simply gone bust.”

He called for the Government to support the Renters Rights Bill, a Private Member’s Bill introduced in the Lords by Baroness Grender.

The Bill, which has the support of Labour, calls for the forthcoming ‘blacklist’ of rogue letting agents and landlords to be open to the public, for mandatory electrical checks and for the abolition of letting agent fees charged to tenants.

In the Lords, during a debate on the Renters Rights Bill, housing spokesperson Viscount Younger of Leckie said: “The Government is clear that the vast majority of letting agents do provide a good service to tenants and landlords and that most fees charged do reflect genuine business costs.

“. . . I do not believe a blanket ban on letting agent fees is the answer to tackling the small minority of rogue letting agents who exploit their customers by imposing inflated fees for their service.”

Separately, EYE has asked online letting agent Upad about its claims, publicised in a press release, that the Government “is planning to scrap tenant fees”. It says that 54% of landlords are unaware of this, and describes this as shocking. It describes Baroness Grender’s Bill as a “government led initiative”.