From today, private renters will benefit from an extra layer of security. New regulations introduced by the Ministry of Housing, Communities and Local Government (MHCLG) will protect both tenants and landlords’ money – such as deposits and rent payments – from theft or misuse while being held by letting agents.
What was the problem?
Private renters who deal with letting agents rather than directly with their landlord have historically faced an extra level of risk when starting a new tenancy. Letting and managing agents were taking hundreds of pounds in deposits and rent payments, and had no obligation to protect that money.
While exchanging money is a normal part of any business, there was no protection for renters or landlords, leaving them at risk of losing out if a business went bust or committed fraud.
That’s what happened to Ruby, who was renting a house with friends while at university:
‘The house was good, but the letting agents were terrible. I don’t think they protected our deposit and they just stopped contacting us as the end of our tenancy drew nearer.
‘We went to their offices but they were empty and the letting agency had clearly closed down. We tried to contact them for months but got no response. We were in our second year of university and money was obviously incredibly tight, but we were then out of pocket by a really large sum of money.’
Around £2.7 billion is held by letting and managing agents as it passes from tenant to landlord. In the past, this meant that renters’ deposits and rent payments were unprotected before they reached their destination.
While deposits must be protected in official schemes, the same protections were non-existent for other payments, like rent paid in advance and holding deposits. Given that one in four renters moved house in the last year, there was an urgent need to protect that money, and to protect renters from losing out further in the costly moving process.
How will renters benefit from this change?
- all letting agents must have Client Money Protection (CMP) from an approved scheme – there should be a certificate in their office or on their website confirming this
- if you suspect that the agent does not have CMP, you can ask them directly for evidence – if they can’t provide any, you can then ask for your local authority’s Trading Standards team to investigate
- if you think that money owed to you has been stolen, you can go to the relevant CMP scheme
If a letting agent has failed to protect renters’ cash, they could be fined up to £30,000. They could also be fined £5,000 if they don’t show a certificate proving they use a CMP scheme in their office. Weargued for a hefty penalty, so we’re glad that there’s now a genuine deterrent for dodgy agents.
With the introduction of the Fitness for Human Habitation Act in March and the Tenant Fees Bill coming in June, rights for private renters are stronger than before. But private renters still face significant barriers, like a complete lack of security through no-fault evictions, and local housing allowance rates making soaring rents unaffordable for many.
It’s because of this that we’ll be continuing to push the government to ensure that all private renters have the safe, secure and affordable home that they deserve.