A clause in the new Housing and Planning Bill has been withdrawn after opposition by the Housing Minister. The clause would have required all letting agents to offer Client Money Protection (CMP).
The Housing Minister, Brandon Lewis, believes the clause would bring too much red tape.
The Association of Residential Letting Agents (ARLA) says the withdrawal is “very disappointing” and vows to continue fighting.
Teresa Pearce, the Labour MP for Erith and Thamesmead, proposed the clause. She understood that there was industry support for the measure.
Pearce stated: “The new clause is designed to protect both parties in the unlikely event that an agent goes into administration or misappropriates the client’s funds. Any losses could be recovered through the scheme.
“The bill’s extension of banning orders to letting agents has acknowledged that there are times when letting agents do not act in the best interests of landlords or tenants.”1
Lewis revealed that he was aware of support from the property industry.
He continued: “We want to ensure that we have a strong and thriving private rented sector that is not tied up in excessive regulation.
“Requiring agents to pay to belong to a CMP scheme would force honest agents to buy insurance against the risk that they themselves were fraudulent, when, as the hon. Lady said, the vast majority of agencies are not.”
He insisted: “Introducing a mandatory CMP scheme at this point would be a step too far and would overburden a market that is perfectly capable of self-regulation.
“However, in May 2016 we will review the impact of the transparency measures that were put in place only recently.
“At that stage, I will take due consideration of whether any further action is needed, and obviously I will take into account the comments made this afternoon. I hope that, with those points in mind, the hon. Lady will withdraw the new clause.”1
The clause was then withdrawn.
Managing Director of ARLA, David Cox, responded to the move: “It’s very disappointing the amendment requiring all letting agents to have CMP has not been successful; especially when so many organisations from across the industry were supportive.
“However, we are pleased the minister has agreed to review the issue again in May.
“We should not be disheartened, as it is a positive step that CMP is now firmly on politicians’ radars and being discussed at the highest levels of Government. ARLA will continue to fight for mandatory CMP as a step on the road to a more appropriately regulated lettings industry.”2