Letting agents in the UK currently hold over £2.7bn of landlords’ and tenants’ money.
The new calculation, by SAFEagent, is based on the number of private tenancies and the assumption that letting agents will potentially have their tenants’ deposits and one month’s rent in their accounts at any given time.
But new YouGov research undertaken for SAFEagent has found that 61% incorrectly believe that the money handed over to agents is protected by law.
SAFEagent is warning consumers that their finances are at risk if their letting agent does not have client money protection in place.
CMP protects money held by an agent (i.e. rent and tenancy deposits), meaning tenants and landlords can recover their funds if an agent steals the cash or uses it fraudulently.
Despite the sums involved, many consumers still remain in the dark, with the research revealing that only 25% of renters had heard of client money protection schemes.
According to SAFEagent, at the moment at least one in five renters and landlords are not protected by CMP.
It is five years since SAFEagent launched, and SAFEagent Awareness Week starts on Monday with the aim of getting consumers to check their money is safe by using a letting agent who is a member of a CMP scheme.
John Midgley, chair of the SAFEagent steering group, said: “If an agent were to steal landlord or tenant money without CMP in place, there’s little chance of getting their money back.
“Would you use a travel agency who isn’t ABTA protected? Consumers who use agents without CMP in place are taking a massive risk.
“While we are finally getting closer to mandatory CMP, we aren’t there yet.
“It is so important that tenants and landlords understand that the right to redress only goes so far, and they need to choose their agent wisely by asking if they are part of a CMP scheme before signing on the dotted line.”
Agents that belong to SAFEagent are able to use a logo that flags up to the consumer that they are subscribed to a CMP scheme.