Renters’ money will be safer following Government announcement

Citizens Advice played a key part in making this happen

There is good news today for private renters in England as the Government confirms it intends to introduce a new safeguard to protect money held by letting agents. This is something Citizens Advice has been calling for and that will ensure all tenants and landlords have basic consumer protection when renting.

The introduction of compulsory Client Money Protection (CMP) will mean that when you pay a deposit or rent to a letting agent, you can be sure it won’t be lost if the letting agent goes out of business or an unscrupulous agent simply makes off with the cash.

If you’re thinking that this sounds like a fairly basic protection, you’d be right, and other consumer markets agree. When you book a holiday your money is protected, and for some time Citizens Advice has argued that renting or letting a home should be no different.

Recent Citizens Advice research found that 1 in 20 renters (5%) have lost money because of letting agent bankruptcy or fraud, rising to a worrying 1 in 9 (11%) of those with a health problem or disability. So while the problem’s not widespread, it is far from rare.

And the stories of Citizens Advice’s clients show the huge emotional and financial impact the problem has on both tenants and landlords. We helped a tenant who had lost her deposit of one month’s rent — £1,375 — because the letting agent had stopped operating.

In another instance, a landlord was told by their letting agent that the tenant hadn’t paid rent for several months. The landlord was advised to write off the rent due — more than £3,000. The landlord made contact with the tenant, who could prove by way of bank statements that they had been paying the letting agent all along. It transpired that the letting agent had withheld the rent payments.

Becky (Advocacy and Campaigns), Anne (adviser at Citizens Advice Hackney), Sarah (East London landlord), Linda and Alan (Eastbourne private tenants) outside the DCLG building after the working group meeting. (Rebecca Chan from the Expert Advice Team also attended and was the photographer)

Last November, Citizens Advice brought an adviser, as well as two tenants and a landlord who had each been affected by the lack of CMP, to speak with Housing Minister Gavin Barwell at a meeting of the CMP working group. This followed our written response to the Department for Communities and Local Government consultation in October, which included case studies from our network of local offices.

We worked closely with Baroness Hayter and Lord Palmer, who carried out research into whether or not introducing compulsory CMP would make a difference. The peers found that bringing in CMP would be a major step forward, and we’re confident that it will be too.

Citizens Advice is a strong advocate for improving the rental market. We help solve more than 100,000 problems to do with private renting every year. A sizeable chunk of these problems involve people losing money or having difficulties with letting agents, so we welcome Government action on CMP.

Introducing compulsory CMP will give tenants and landlords peace of mind over money they place in the care of letting agents, but it is only one small step in making this market work better for renters. We know that the problems in the private rented sector go much further and that progress is needed on security of tenure and the quality of rented homes — as we set out in a previous blog.

You can read the full report from the CMP Working Group here.