Now is not the time to introduce compulsory Client Money Protection for letting agents, the housing minister has said, virtually killing off the chances of legislation that many believe would protect the public.
Speaking at yesterday’s Association of Residential Letting Agents conference, Brandon Lewis said there needs to be time for recent changes such as fee disclosure to bed in.
He told a packed conference at the ExCel Centre in London: “I understand strength of feeling and sympathy but I am also mindful of the possible additional burden this requirement would produce.
“We need enough time for transparency issues to bed in and show how they work.”
He said the Government has committed to review rules on letting agent fees disclosure later this year at which point he said it would consider any further regulation.
It comes as the Housing and Planning Bill hits report stage in the House of Lords this week ahead of a third reading by the peers.
Two Labour peers have tabled an amendment to the Bill which would ban letting agents from taking money from tenants unless they have CMP insurance.
Agents would also have to issue a certificate certifying that they do have CMP.
Baroness Hayter and Lord Kennedy are behind the amendment, which has the full support of Labour.
Baroness Hayter, a later speaker at the ARLA conference, arrived to be told by ARLA managing director David Cox that the housing minister had all but killed off mandatory Client Money Protection.
She told EYE: “At committee stage (of the housing and planning bill) he seemed interested and promised a meeting, which never materialised.
‘This would be good for tenants and landlords and costs the government nothing so I don’t understand why they won’t do it.”
She said the amendment pushing for CMP would still be raised during the report stage of the Bill in the House of Lords this week.
The Bill proposes a register of rogue landlords and letting agents, but this would only be available to central and local government and not to prospective tenants or agents.
‘ … I am also mindful off the additional burden this would possibly produce’. What additioal burden exactly Mr Lewis? Nothing compared to the burden shouldered by distraught clients whose hard earned savings have been plundered by an fly-by-night letting agent/landlord!
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I agree Eltell but I think he may be referring to the audited accounts required which some companies will find quite expensive. On another note can I also share some research I did with you?
Earlier this year I did some research and after half an hour I found only 3 or 4 criminal cases going back to 2013 – Now we need to know how many agents there are and according to Rightmove/TPO, there are 20,000 agency offices in Britain, the vast majority of which do both sales and lettings.
Lets be generous and say there are 20 agents that have closed down and taken money with them over 2 years and there are 10,000 letting agents. According to my sums that is 0.2% (Zero point 2 percent for those that struggle with their sight due to age 🙂 )
If you say there are 20,000 agents and only 4 went bust/stole money from their landlord/tenants that is 0.02 (Zero point zero two percent)
See where I’m going with this? The percentage of agents stealing money is so minuscule that I believe it would be a disproportionate response to a problem and it is only being created by those who want to increase their membership. I could understand it if the percentage was closer to 25% or even 10% but come on!
By the way, the total money that had gone in the cases I found is not even £200,000 (from memory)
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Interesting stats pierce, but I know of two cases of fraudulent agents within 10 miles of my office since 2013, the latest with over 400k missing from their client account! Is it no bad thing that agents have their client account audited independently annually? In my view it is shameful that it is not even a legal requirement to operate a ring-fenced client account. I am not usually in favour of regulation, but if ever an industry needed it it is ours.
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eltel,
Do you think the two agents within your 10 mile radius would have bought CMP policy if it was required or do you think they would have traded without it anyway?
This is the problem its impossible to police, it will only penalise good agents, Instead of making it compulsory, if you believe in it add it into your ad campaign to highlight why you are more trustworthy (in your opinion) than others.
How about fee regarding lettings, Its law to display these but how many agents do? – Arguably the agents that display this are penalised by this.
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It is a legal requirement it’s just some people don’t understand contract law (agency)
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Did you report the crime to the Police eltel or was it poor business management that lost the money?
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What I cannot see is how the two things are related.
How does knowing what the fees are up front make your money any safer from unscrupulous people?
I’m sure he isn’t suggesting that, by knowing what you are going to have to pay out upfront, you are able to shop around and only pay what you are prepared to lose if something goes awry. So what is the connection?
I agree that having your accounts independently audited is an additional burden both financially and time wise. But, for your own piece of mind at least, why would you not want this to happen?
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“But, for your own piece of mind at least, why would you not want this to happen?”
Because as a small independent it is another layer of bureaucracy and expense we don’t want to invest in.
It has never once crossed my mind to take anyones money to either subsidise my business or steal it, so I would resent this coming in to pay for the few agents that choose to do so. 🙂
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Having had to jump through more and more bureaucratic hoops over the last few years, Client Money Protection is one hoop that all reputable agents I know will embrace. Not making this an immediate legal requirement is a’ criminal act’ in itself by our government.
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Do all reputable agents have CMP? Does not having CMP imply that the agent is not reputable?
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Who’s campaigning for mandatory CMP exactly?
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