Landlord rents and other monies are not adequately protected by a fifth of letting agents, according to a new report.
The Property Ombudsman has survey 8,000 letting agents to reveal 1,600 had no client money protection in place.
That means in the event of the letting agent going bust or ceasing to trade for any other reason, landlords would be unlikely to get any money back even though tenants would have handed over the rents.
Now, says ombudsman Christopher Hamer, no letting agent has an excuse not to have client money protection insurance that pays out in the event of money going missing, as two new providers are offering the cover.
The insurance fills a gap that allows letting agents who do not belong to an industry trade body buy their own cover.
Gerry Fitzjohn, Chief Operating Officer of TPO said: “We need an even playing field for lettings. All agents are required to hold client money in a separate clients account but there is no current requirement to have those funds insured against unlawful use or fraud, which is why client money protection is crucial for landlords and tenants.
“Money protection is not a duplication of any deposit scheme or professional indemnity cover. It goes beyond that and provides landlord with the peace of mind they need to know that the rent collected by an agent is protected.
“This isn’t news to the thousands of experienced agents that have had comprehensive cover with a trade body.”
The TPO estimates that £23 billion is paid in rent every year, with £6 billion – £10 billion collected by letting agents for landlords.
“We passionately believe that money protection is great for consumers and will ultimately result in a reduction in the number of complaints against lettings agents. We know from surveying our own agents that the vast majority already have cover. For those that don’t, they now have an opportunity to distinguish themselves from any rogue operators by showing landlords and tenants that they have the appropriate cover in place,” said Fitzjohn.