The pandemic is driving more letting agents out of business, affecting not only them, but potentially landlords and tenants who aren’t signed up with money protection schemes.
Since the pandemic started (from mid-March to mid-July), there has been a 66% increase in letting agents ending their redress membership because they have ceased trading, compared to eight months before, Property Redress Scheme data shows.
It was made a legal requirement for letting agents to be part of a money protection scheme in the past 18 months. However some landlords and tenants still aren’t covered, putting them at risk.
Client Money Protect, which runs a membership scheme, said it’s more likely that letting agents will continue to become insolvent than before the pandemic.
Kate Mutter-Bowen, from Client Money Protect, said: “It is now 18 months since it became a legal requirement for all letting agents to have client money protection.
“Most people know when they book a package holiday to check it is Atol protected, meaning if the holiday firm goes bust, they do not get stranded abroad or end up out of pocket.
“However, people often part with far greater sums of money when they let or rent a property and yet they don’t check that this money is protected.
“The lettings industry must work harder at educating consumers on the importance of checking their letting agents will protect their money.”