Protecting your tenants deposit.
I am sure everyone is aware that the law requires that landlords must put tenants’ deposits into a government back scheme, The law was introduced way back in 2007 and applies to all short hold tenancies.
However, if you use a letting agencies to manage your buy to let property portfolio, what measures do you have in place to ensure that any deposits collected on your behalf are actually paid into a government scheme?
I recently attended a property meet in Ipswich and an interesting situation was discussed. It seems sometime last year one letting agency bought another letting agency and between them over £30k of deposits have gone missing. The letting agency has gone into liquidation and it seems that the deposits have vanished.
If the company has disappeared with substantial outstanding debts, who will be legally responsible for the tenant deposits. The law states that it is the landlord’s responsibility to ensure that any deposit is paid into a scheme. However, if the landlord has engaged the services of a letting agency has the responsibility legally been passed to the letting agency?
What I am a little confused about is that you get notified which deposit scheme has been used. But it seems none of the tenants or landlords followed up the lack of notification. Not that I am trying to protect or condone any of what appears to have happened.
Could the directors of the letting agency be prosecuted for fraud? Would this return the deposits?
In this particular case it seems some of the deposits where paid to one letting agency and then another letting agency took over the management of their properties.
It does appear that one agency is blaming another but this does not help tenants or landlords.