The Property Ombudsman has created a controversial deal with a private insurance firm to provide Client Money Protection services for agents following recent high-profile cases where landlords have lost thousands of pounds in rental income.
The move by TPO comes almost a year since the cover became available to the lettings sector from a range of trade bodies and insurance brokers.
In a statement which possibly reflects the increased competition between rental redress schemes – there are now two rival redress operators – Gerry Fitzjohn, chief operating officer of TPO says landlords should select a lettings agent not on the basis of cost but on the basis of whether there is a CMP policy in place to protect their rental income.
“Within the industry, thousands of agents are already CMP protected but there are still a number unaware of the scale of protection it offers. A TPO survey even revealed that some agents wrongly thought CMP duplicated the deposit protection schemes when that simply isn’t the case” says Fitzjohn.
More than £23 billion is paid annually in rent in the UK, of which an estimated £6 billion to £10 billion is collected by agents on behalf of landlords. Some 80 per cent of letting agents in TPO are understood to have CMP cover.
TPO’s statement has been backed up by the Guild of Letting & Management.
Its chief executive, Susie Crolla, says that from October 1 – when compulsory membership of a redress scheme is likely to take effect across the lettings sector – “being registered with TPO and having CMP cover will become a mandatory condition of membership for The Guild.”
But in a move which may earn criticism from some quarters, TPO’s statement was also backed up by a promotion for Lonsdale Insurance Brokers, a private firm offering a CMP deal “exclusively to agents registered with TPO.”
Some traditional sections of the industry were recently critical of the appointment of Property Redress Scheme as a rival ombudsman service for both the lettings and sales sectors of the industry, because PRS is owned by an insurance company.