A major question mark over tenancy deposit protection has been raised by Channel 4 News.
And an even more serious issue was raised as to the ease with which anyone can operate as a lettings agent – even if they have a failed venture behind them and still allegedly owe money to tenants.
The programme tracked agent Daniel Burton to a second lettings business that he is said to have bought since his rent-to-rent letting agency, Unida Place, collapsed, despite boasting profits of £35,000 a month.
The first was a franchise of Whitegates, in Scunthorpe, Lincs. Part of Legal & General’s Xperience network, the organisation allowed Burton to retain his ownership after the Unida Place scandal became known, and following its own investigation.
However, the website for Whitegates in Scunthorpe no longer shows Burton as being part of the team.
According to C4 News, Burton now owns a second business, David Parkinson Residential Lettings & Estate Agents, some 25 miles away in Cleethorpes. The programme said he had taken over this business which, in online listings such as Home, displays the ARLA logo.
The news item chiefly highlighted a loophole in the law whereby Burton was allowed to hang on to deposits which he had insured with MyDeposits.
In fact, the programme revealed, Burton had been expelled by the scheme.
This had voided the insurance – allowing Burton to take what Eddie Hooker, CEO of MyDeposits, said was £140,000 of tenants’ money.
Burton had been running Unida Place in London, where he not only practised rent to rent but became its poster boy, running seminars.
After his expulsion from MyDeposits, the scheme wrote to Burton’s tenants telling them they had three months before their deposits became “unprotected”.
Hooker told the programme that MyDeposits was simply following the rules laid down by the legislation. The same situation would apply if a landlord or letting agent cancelled their membership with the scheme.
He said that 99% of tenants do receive their deposits back at the end of the tenancy, either in full or with agreed deductions.
The film was followed by a live studio debate with Alex Hilton, of Generation Rent, and Carolyn Uphill, chairman of the National Landlords Association.
Hilton said that the tenancy deposit protecting scheme was not living up to its name.
He said it was a “fiddle” that the system allows landlords and agents to hold on to tenants’ money and suggested that non-custodial schemes should be banned.
Uphill denied that the NLA owns and runs MyDeposits, but did say the organisation was a shareholder in the scheme. She admitted that there was a loophole.
When the Unida Place scandal erupted last year, Burton promised that he would repay all the deposit money.
According to the news programme, some of his former tenants say they had not heard from him.
On the Unida Place website, where Burton made his promise to reimburse all his tenants, his last entry is dated December 7, when he says “repayment plans are progressing well”.
If Burton has acquired the David Parkinson agency in Cleethorpes, it is not clear when. As late as last November, the Legal & General Group confirmed that Burton was still the principal at its business in Scunthorpe. Legal & General said it was “happy” with his conduct in relation to Whitegates.
Meanwhile, the David Parkinson website was down at the weekend, and on Rightmove the firm’s listing says that David and Geraldine Parkinson are the owners, having set up the business nearly 23 years ago.
However, on Twitter, the C4 News reporter Ciaran Jenkins says that David Parkinson, “the former owner who built his reputation over 40 years, now has lawyers involved”.
He also says that Parkinson did ‘google’ Burton “but only after the sale had gone through!”
Meanwhile, Generation Rent says the case highlights the need for a register of landlords and the licensing of all letting agents.
Generation Rent is also calling on the Government to review the deposit protection system, and says that the National Landlords Association should repay all of Burton’s tenants.
The Generation Rent website, which includes a link to the C4 news report, is here:
Comments (12)
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DPS Custodial Service takes away the agent's/ Landlord's ability to syphon off the deposit. I can't see why people trust the schemes that are only "insured" – too much money left in a deposit account is open to abuse / temptation. We transfer money to DPS Custodial scheme the same day as it is received and keep an audit trail so that money can't be "lost".
Once in the custodial set up the tenants have more control over release of funds – as it should be. The other insured schemes should have the requirement of certified annually audited accounts to prove that the deposits are in a separate clients deposits account + some sort of dual key signature system so it is harder for one person to run off with the loot as happens too often.
Trevor – Delighted to see you here making your comments. Welcome aboard Eye!
I took my concerns over statutory deposit protection schemes directly to Eric Pickles just about a year ago at a House of Lords function. No, it was not like looking in a mirror thank you. Frankly I wondered if he knew what I was talking about and looked positively shocked when I insisted on giving him a briefing note. It went into his breast pocket but whether it ever saw the light of day again is anyone's guess. I certainly never heard any more. Even decades after NAEA Presidency I still get complaints from disgruntled landlords who have been sued by the schemes for deposits their agents have run off with. Have a good week one and all – Big T.
Ahhh bless! Mr Kent I have the very highest regard for you but I am sat here chuckling at your post. The governance of our industry is akin to the Emperor’s new clothes. With Ministers briefed by a department that gets its wisdom from the popular press and the BBC you should have given your briefing note the Henry Pryor.
Parkinson did google Burton after the sale went through. Hardly qualifies as Due diligence.
I have just read this post, I know the Parkinson's for 40 years,
And like everyone Who knows them, They have a 30 year good name in our Town……
In their defence, If some you've known for 30 year's and trusted, recommends Burton, who has bought his business and paid him in full.. what would you do……. take the deal as a trusted ( friend )… with Hind- sight, And I am sure they wouldn't have made that mistakes.
When they found out about Burton, Thing changed, They never let Burton get his hands on any Deposits, And have done everything in the power to protect there landlords and tenants, from this man.
They have from the 14th April, legally taken the business back, As Burton defaulted on the contract agreement ,( No Change there then,) And are working hard to undo the damage that has been done by Burton to there good name.
Watch this space, Burton's world is falling apart.
Whitegate's have taken the franchise back.
And anyone who knows David, if there is anything that Burton has done it will be put wright.
Which lets face it, he could have just walked away, That show's how much of a Good guy this man is.
The business has now been sold to Lovelle, Bacon's …….As for Daniel Burton, There is an on going Police investigation into his dealings.
What is the point of a Tenancy Deposit Protection scheme if tenants' money is not 110% guaranteed? Another Government fiasco?