Property Ombudsman warnings
Web address: http://www.tpos.co.uk/
Growing concern has been expressed about the activities of ‘fly by night’ letting agents who run off with landlords’ and tenants’ money.
The Property Ombudsman, Christopher Hamer, said of one case, where his investigation had revealed systematic misappropriation of client funds affecting at least 64 landlords, that Trading Standards and police had to be put under pressure to take action.
Hamer has made a fresh call for more control over the actions of residential lettings agents, saying there is appetite in the industry for formal regulation.
“Many agents conduct their business by following the TPO Code of Practice, but there are still too many who are operating without that commitment to standards and without any external controls over what they do with client money,” Hamer said.
He also revealed that the Code of Practice for letting agents has still not been approved by the Office of Fair Trading despite his submitting it three years ago.
It means that, unlike estate agents, letting agents cannot display the OFT logo.
From this summer, the Code of Practice will include a requirement for lettings agencies to hold a separately designated client account to protect money the agencies receive.
Hamer said: “There can be no excuse for client money not being held in separate and properly audited client accounts, so that it is less easy for unscrupulous agents to misappropriate it. Furthermore, there needs to be an obligation that such monies are protected by suitable client money insurance.
“An appropriate regulatory regime could ensure that the necessary separation of client and business money is enforced.
“An agent who uses client money because they are operating on the edge of viability and needs to bolster the business, or more worrying still is using the money for personal enjoyment, is entirely unacceptable and against the law.”
Last year, Hamer investigated 1,338 new referrals – 646 sales and 672 lettings, with the remainder related to HIPs and residential leasehold management.
It was a record number of complaints – the highest ever recorded in the 20 years of the scheme’s existence and 28% above the previous peak in 2008 of 1,043. They arose from a total of 11,794 enquiries, compared with 11,165 during 2009 and 11,201 during 2008.
The largest single cause of complaint was communication failure between the agent and consumer (214) followed by complaints handling by agents (163) and sales details / advertising / marketing (138).
South-East England was the source of most complaints (26%), followed by South-West England (13%) and the eastern region (12%). Wales generated only 3% of the total, a figure matched by Northern Ireland and Scotland combined.