Original Source: Property Eye
Original Author: Rosalind Renshaw.
A lawyer has revealed that her firm has regularly handled cases in recent years where letting agents have stolen client money and then dissolved the company to avoid liability, only to set up again.
Tess Saunders, of law firm Royds Withy King, said that in the last year alone, she personally has handled three such cases on behalf of people wanting their money back.
Saunders said that the total owed ran into hundreds of thousands of pounds. Not one penny has so far been repaid, because of the difficulty of getting money out of businesses either in liquidation or which have de-registered.
All three cases involved rental money not paid to landlords, with the highest single amount owed to one of them standing at £100,000.
She said this claim was taken to the High Court, which ordered payment.
She said: “However, actually enforcing the order would have proved expensive, and the litigation had already been costly.
“Our client did not have the appetite to take it further.”
She said that this was typical among landlords owed substantial sums: “They regard it as throwing good money after bad.”
In one of the three cases, the company has been put into liquidation, and the liquidator has recommended that the agent be disqualified as a director.
She said she understood the other agents had simply de-registered their companies.
In one case, her client regularly goes past the office where the person who duped them can be seen still working as an agent.
She said: “It is shocking. A lot of agents have built up trust with their customers, and landlords aren’t checking their bank accounts as carefully as they should.
“In some cases the agent tells them, ‘You will get your money on X date’. The date comes but they still don’t get their money.
“My office is based in London and all three of these cases have involved London agents. A sum of £100,000 can build up quite quickly in the capital where rents are high, and some of the properties are very expensive to rent.”
She said it was not clear what the agents have done with the money, and whether it was used for personal liabilities or as cashflow for the business.
She said that police tend not to get involved, and added: “For a lawyer, it is extremely frustrating to handle such cases and the agent quite simply gets away with it.”
Saunders said not one of the agents in recent cases has had Client Money Protection insurance, and she welcomed the Government’s announcement that it will make this compulsory.
She said: “It is long overdue. The lettings industry is definitely moving towards better regulation.”