Reports in the Guardian at the weekend highlight one of the drawbacks of the Governments Deposit Protection scheme.
Whilst it protect tenants amd their deposit should the landlord go bust it does not protect a landlord who has used a letting agent to protect the tenancy deposit.
A recent
"Under the terms of the protection scheme, there is nothing to stop a landlord keeping a tenant's deposit for the duration of the rental, as long as it is kept in a ring-fenced account and protected via the scheme," Hilton says.
"Landlords need to be aware that the scheme offers them no protection in the event the letting agent disappears with the money. It was a badly worded law and, until the lettings business is properly regulated, these problems will continue to arise."
A spokesman for the Association of Residential Letting Agents (Arla) says that had Tower been a member of Arla, Benn could have claimed from the association's Client Money Protection Scheme. "Landlords choosing an Arla member, or an agent who's part of its sister body, the National Association of Estate Agents, would be covered in the unlikely event that the agent disappeared along with the deposit."
Although 90% of lettings agents are not affiliated to either body, Arla says its members account for about 500,000 of the 800,000 new tenancies signed each year.
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