Money collected from tenants for landlords is finally safeguarded against theft and misuse as new laws for estate agents have kicked in.
From April 1, 2019, all letting agents in England must belong to a client money protection scheme.
Agents flouting the rules face fines of up to £5,000 for not displaying details of their CMP scheme to customers and penalties of up to £30,000 for trading without CMP cover.
The law is designed to stop property agents from going bust while holding thousands of pounds on behalf of landlords and tenants who cannot recover their money.
Until now, property agents did not have to separate client cash from their own funds.
The new rules demand property agents keep a bank account for client money and take out insurance to cover any losses.
The move should put an end to property agents acting like Clifford Wheatcroft, who ran Real-Est8 Property Solutions in Bournemouth.
His business collapsed in 2013, owing £357,000 collected as rent and deposits for private rented homes which he cannot repay.
At Bournemouth Crown Court, Judge Stephen Climie ordered him to pay £1 under the Proceeds of Crime Act, providing he hands over more cash if he comes into any money.
“He is not getting away with just paying £1 and it’s important that is known at a public hearing. A change of finances could include a chance win, inheritance or also legitimate employment,” said the judge.
“”Should he receive a boost in his financial circumstances it will be allowed for some of the money to be reclaimed to pay off the debt.”
Wheatcroft spent the money that he spent the money which should have gone to landlords on a lavish, luxury lifestyle, including holidays.
His landlord clients were left out-of-pocket to pay mortgages and return deposits to tenants.