The developing scandal of misappropriated tenants’ deposits has exposed landlords to millions of pounds of liability.

EstateAgentToday.co.uk – 12 Jan 2010

Landlords bear the legal responsibility, even though it is letting agents that have spent, lost or vanished with tenants’ deposits, a London agent has said.

Eric Walker, managing director of Bushells, says there are massive flaws in the tenancy deposit legislation, which leave innocent landlords breaking the law.

He believes that all letting agents should submit to regular auditing or pay all clients’ money in to a custodial scheme.

He said: “The real time-bomb is where agents hold the money in their own account and register it with a scheme, then for whatever reason cease to be members of that scheme.

“This leaves the landlord with a huge liability in the event that the tenancy is extended or renewed, as the deposit is legally no longer registered.

“A clients’ account may well be ring-fenced, but there is no way of knowing whether the correct amount of money is in it unless it is independently audited. Simply, the amount which should be held is registered with a scheme but is never reconciled with the actual balance of the account.

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