Landlords were left £300,000 out of pocket and feeling “ripped off” by the apparent collapse of their letting agent.
Plymouth-based agency Drake Homes closed suddenly just before Christmas 2016, leaving landlords and tenants allegedly owed an estimated £300,000 in deposits and rent.
Directors of the firm were subsequently arrested on suspicion of theft, fraud and money-laundering.
Tenancy deposits held by the firm were supposedly protected in a tenancy deposit scheme run by the government-backed deposit protection service myDeposits, but landlords who have approached myDeposits in an attempt to get their money back were told that Drake Homes was not a member of the scheme.
Individual landlords left “tens of thousands of pounds” out of pocket approached deposits campaigner Ajay Jagota of deposit-free renting solution Dlighted for assistance.
One landlord, who asked not to be named, said: “We feel ripped off and lied to.
“No-one knows what has happened, but a lot of us find it hard to escape the suspicion that deposit monies which should have left untouched has been used for some other purpose.
“This is what gets me though. It’s an unnecessary temptation for agents when they’ve got a bank account full of deposit money just sitting there if they fall on financial difficulties. Why all landlords and agents aren’t compelled by the government to use the custodial schemes is beyond me.
“The whole system is indefensible. This is a Government-backed scheme which is supposed to protect landlords and tenants alike, but it’s fallen over badly on this occasion and although the police are investigating no-one else is taking responsibility. We’ve been in touch with trading standards, the Insolvency Agency, the Property Ombudsman, tenancy deposit schemes and even our local councillors and before we contacted Ajay no-one even seemed interested in our predicament.”
Deposit campaigner Ajay Jagota is supporting landlords affected by the issue.
He said: “This is yet another deposit disaster – a live example of what happens with a system where £2.3 billion of DPS deposits are taken from tenants and held indefinitely by letting agents – with literally no-one keeping an eye on what they do with it.
“Landlords where acting complete good faith and took it on trust that their agent was a member of the tenancy deposit scheme UK they claimed to be part of. As a result they weren’t meeting their legal responsibilities through no fault of their own and where relying on a so-called insurance scheme which didn’t actually insure them.
“I cannot fathom how anyone could see this rent deposit scheme system and worthwhile or sustainable, especially when replacing tenancy deposits with a genuine deposit replacement insurance scheme would solve the problems inherent in this system at a stroke.”