The liquidation of a letting agency can obviously have serious consequences. There are some very important things which tenants AND landlords should do in order to protect themselves.
If a letting agency goes “bust” and the deposit is held BY the letting agency BUT is registered in a 3rd party Government Approved Deposit Protection Scheme, such as The Dispute Service (TDS) then the deposit is in jeopardy of being lost (it is completely legal and above board for the agency to hold the deposit). If this is the case the Tenant will have to claim back their deposit on their insurance. The insurance company will then attempt to collect the money from Landlord so the Landlord will have to foot the bill for returning the deposit out of his own pocket. If the deposit is held BY the 3rd party government approved deposit protection scheme, such as the Deposit Protection Service (the DPS) then it will be safer and the Landlord or Tenant may be able to claim it back from the scheme.
It is recommended that all tenants check where their deposits are currently held. Not only is the DPS a much safer option for landlords to ensure their tenant’s deposits are protected, it is also free to sign up and anyone can create themselves an account so landlords may wish to sign up themselves and hold their tenants deposits in their own accounts with the scheme even if they have an agency.
Landlords who are owed rent should submit their losses to the liquidators, unfortunately it is unlikely they will receive much if any of the funds back. Tenants will NOT be liable for the loss of rent they have paid to the agency if the agency fails to pay the landlord.
A VERY similar instance of this, along with useful advice for tenants can be found on this forum: http://www.ukbusinessforums.co.uk/forums/archive/index.php/t-74616.html
A useful article can be found here:
http://www.estateagenttoday.co.uk/News/Story/?storyid=2709&type=news_feed
And also here:
http://property.timesonline.co.uk/tol/life_and_style/property/investment/article6333703.ece
There is plenty of information and advice (after consulting your solicitor) to both tenants and landlords simply by googling “letting agency liquidation”. It is the landlords who are most at risk at this time and who should be taking severe action to ensure they receive some of their losses from the liquidators. Tenants generally do not have much to worry about (apart from if the landlord has been left in so much debt they are no longer able to pay their mortgage payments). It would be a good idea for landlords to contact their tenants and keep them up to date with what is going on between them and the agency. If possible they may wish to arrange for the tenants to pay them directly with immediate effect. Under sections 47 and 48 of the Landlord and Tenant Act 1987 Tenants MUST be provided with Landlord contact details if they request them (and they should be supplied within your tenancy agreement) so if a tenant is feeling quite concerned about what is going on with their home it may be a good idea for them to write their landlord a nice letter to ensure the landlord is actually aware of the current situation. There may be landlords who manage their property themselves but who have their deposit secured with the agent who advertised the property to rent, and so may not be aware of the problem and may lose the tenant’s deposit during liquidation without even knowing it.
just thought I'd say FYI...
