The collapse of yet another letting agency has left landlords and tenants owed thousands of pounds in deposits which seem to have never been place in deposit protection schemes.
The eHomes letting agency in Swaffham Norfolk has suddenly shut up shop with many landlords claiming that deposits were taken from their tenants but never placed in tenancy deposit schemes.
An investigation by the Eastern Daily Press has found that an estimated £10,000 of deposits are currently missing, but with 100 people have joining a Facebook group for those affected by the collapse of eHomes, the true figure could be ten times higher.
And if the agency managed the industry average number of 179 properties and charged deposits equivalent to six weeks at the average Swaffham rate of £724pcm under the government’s forthcoming deposit cap the figure could even be close to £195,000
A spokesperson for TDS, the government-backed deposit protection scheme eHomes claimed to be registered with admitted to the newspaper that there was “little they could do” if a letting agent had gone into liquidation without registering a deposit with them.
It has also emerged that eHomes boss Victoria Steele’s last property business – Prestige Lettings and Management – went into liquidation owing creditors more than £100,000 in July.
Ajay Jagota heads the #ditchthedeposit campaign which is encouraging landlords and letting agents to switch to no deposit renting using deposit replacement insurance, allowing them to find tenants faster and keep them longer with zero deposit renting, but protecting them better with significantly higher levels of protection against property damage, rent arrears and legal fees.
Ajay, who is managing director of deposit free renting firm Dlighted, responded to the news.
He said: “We’re constantly told deposits are the only way to protect landlords but cases like this just prove that that claim is a myth and a fallacy – and remember that the government itself is predicting that many letting agents are likely to go out of business when the tenant fee ban comes in, making this kind of calamity even more likely.
“As part of the #ditchthedeposit campaign we’ve helped landlords who have been left tens of thousands of pounds out of pocket when it has turned out their letting agency has pocketed their deposits rather than protecting them and then done a runner – and let’s not forget that those landlords and legally liable for not protecting those deposits.
“This kind of thing is a lot more common than our industry cares to admit.
“If you’re trying to rent a property out, and someone tells you that a rent deposit is the only way to keep you protected, you need to think seriously about whether you’re going to be protected against several months rent arrears, or serious property damage, or lengthy legal battles, or your letting agent doing a runner with your money.
“With no deposit free renting deposit replacement insurance you know you’re protected – no ifs, no buts, no worry”.