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Is your security deposit REALLY being kept in a safe place?

December 2, 2009

The number of letting agencies going bust lately has prompted many commentors to argue further for agency regulation and licensing.

Currently, ARLA [The Association of Residential Letting Agents] is the key organisation which claims to regulate it’s members.  ARLA membership is achieved only by agents who demonstrate that they have a thorough knowledge of their profession. Moreover, ARLA claim “All members are required to have professional indemnity insurance cover. In addition they are covered by a bonding scheme which provides financial protection for client monies which have been misappropriated”.

However, several high profile agency ‘bumps’ [the 5 Martin & Co franchisees spring to mind where one of them went bust owing over 200k] make me wonder if landlords and their tenants are actually covered if the deposit has not been fully protected in the correct scheme.

Landlords – you have an obligation to ensure that your agency has lodged the tenant deposit in the correct scheme. Given the number of ‘bumps’ lately it is advisable to ask for proof of the deposit being lodged in the correct scheme. If the tenancy deposit has not been correctly lodged and the agency goes under YOU are still liable to pay the tenant their deposit back!

Tenants – you need to make sure that the agency is protecting your deposit in the correct manner. Like landlords, I would urge you to get proof of where the deposit is being held.

While many agencies abide by the deposit scheme rules, the latest high profile ARLA member agencies going bust owing hundreds of thousands of pounds in rent and deposits has got to be a concern. The key way you can protect yourself as a landlord and tenant is to get proof of where the deposit is being held. Only when you have this documentation can you be sure that your money is being kept in a safe place.

www.VirtualLetz.com – Bringing people & property together

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