The British Property Federation is warning landlords that even if a
letting agent has signed up with an Ombudsman, their money is not
necessarily protected. So if your letting agent has some of your
money in the form of deposits and rent payments, you could still lose
it all if they go bust.
Why use a letting agent?
For some landlords, a letting agent is a useful intermediary. If you
are an absentee landlord or you don’t have time to manage your
properties, a letting agent can do much of the hard work on your
behalf. They can find you tenants and manage the everyday business of
running a rental property. All you have to do is pay their fees and
pocket the rental income. Unfortunately, not all letting agents are
scrupulous—some dip into clients money for their own use and others
simply mismanage their finances and end up going out of business as a
result.
How can landlords protect their interests?
Dealing with letting agents who are registered with an industry
ombudsman means you have an avenue for complaint if things go wrong,
but it won’t necessarily protect your money. Before signing up with a
letting agent, it is a good idea to check whether they are registered
with a client money protection scheme. If they are, your rights are
protected and if the agent subsequently goes out of business, your
money is safe. But even if they say they are registered with a
protection scheme, you should still check them out to make sure they
actually are registered.
