In another step forwards in increasing rights for tenants the Government announced yesterday that it will use its powers to make Client Money Protect (CMP) mandatory for all letting and managing agents.
Yesterday we received some good news as the Government announced it would accept the recommendations of Baroness Hayter and Lord Palmer of Childs Hill’s review into Client Money Protection (CMP). This review called for the Government to use its powers in the Housing and Planning Act to make CMP mandatory.
A CMP scheme will provide compensation to landlords and tenants if an agent misappropriates their rent, deposit or other funds. Such a scheme covers any money held by the letting or managing agent that is not technically theirs, but rather that they are holding on behalf of a client.
Currently it isn’t compulsory for letting agents to be a member of a CMP scheme (although the most reputable are, and you should check if that includes yours) and there is nothing to stop agents from keeping your money in their own bank accounts – meaning that if they collapse it could be taken by creditors.
With the changes announced today tenants and landlords can be sure that their money is safe, even if the letting agent goes bankrupt or commits fraud. Whilst your deposit must already be protected in a tenancy deposit protection scheme, CMP would go beyond this and protect an estimated £2.7 billion of your money, including rent and interim deposit transfers.
CMP is common across many other consumer markets so you’ve probably felt the benefits before, even if you didn’t realise it. Estate agents, travel agents and solicitors all have to have CMP so this change is finally bringing letting agents in line and acknowledging that tenants deserve consumer protections too.
During the passage of the Housing and Planning Bill last year we supported an amendment tabled by Baroness Hayter to make CMP mandatory. This is something we’ve long called for – we were trying as far back as 2013 – and this time we were supporting ARLA as they also hoped to achieve this change.
Still, changing the legislation was just one step in the process and last autumn we contributed both written and oral evidence to the working group considering whether the Government should make use of these shiny new powers offered by the Act.
A staggering 85% of respondents agreed that CMP should be made mandatory and the working group’s recommendations reflected this call to action. Baroness Hayter has been a driving force behind CMP and her work, alongside that of Lord Palmer’s in the working group, led to a well-balanced review that acknowledged the challenges that may be faced in implementing this change whilst also highlighting its importance.
Yesterday’s announcement by the Government shows real changes for private renters. It follows other welcome steps in the Housing and Planning Act, including on banning orders and aligns with the ban on letting fees announced in the Autumn Statement. We’re pleased to see that the pledge to support ordinary working people in Theresa May’s first speech as Prime Minister is translating into a genuine acknowledgement of the consumer rights that private renters deserve.