According to a recent investigation by newsbeat, many letting agents are taking thousands of pounds from tenants as a holding fee for their properties – then keeping the money without letting them move in. Many tenants have reported depositing money for down payments, then having the rental cancelled and the payment never returned to them. This fraudulent behaviour has many tenants concerned about being ripped off by these unscrupulous agents.
According to the Trading Standards Authorities in England, 487 of these fraudulent down payment cases were reported from the year January 2011 to September 2013. Also, a Freedom of Information request discovered that 71 of the 200 trading standards teams in England had received at least one complaint about this issue. In some of these cases, the landlords never actually existed and in other cases the agents were also stealing money from the landlords
Also, the Trading Standards Institute claims that due to the way that the information was recorded – the real number of victims could possibly be a lot higher. Based on past surveys, they know that many of the people who are ripped off will not bother reporting it, because they know that nothing is going to be resolved even if they try.
For example, according to a story by the BBC, a 22 year old woman named Rachael Kennedy paid a letting agent £1,800 as a deposit on a home that she wanted to rent. On the day before she was supposed to move into the house, the letting agent cancelled the rental and told her she could no longer move in. He promised that he would pay back the deposit, but he didn’t. It was later discovered that the particular agency was being investigated since last summer about other cases that dated back to 2009.
It is thought that letting agents should have stronger regulation in order to stop them from ripping off tenants in this way. In Scotland it is illegal for letting agents to charge holding fees and the Welsh government is planning to instil new laws that will crack down on agents ripping off their clients. At the moment, there is no regulation in Northern Ireland.
The issue at the moment is that just about anyone can set up a letting agency. With the lack of supervision and regulation, this opens up the possibility of letting agents being dishonest with the proposed changes that the coalition government wants to instil will require all letting agents in England to sign up to an independent scheme. This means that they would be forced to pay compensation if anything went wrong. Adding more regulations to letting agents will help to stop had behaviour and will make it clear that fraudulently taking money from tenants is not acceptable.
If anyone has experienced this themselves, they should report the incident to the trading standards department of their council. The council will have the power to prosecute this illegal theft of funds.
Our advice is always to do your homework before handing over money and always to use a reputable landlord or letting agent.