The cost of protection for landlords' rents and clients' deposits is set to fall by an average of 35% from the start of April for subscribers to the Association of Residential Letting Agents Bonding Scheme.
The ARLA Bond provides cover of up to £2m, with no individual limits for either the public or member letting firms. Other schemes operated in the lettings industry limit the compensation available to individuals to only £10,000. The total cover for individual letting agents belonging to these other schemes is only £100,000 or less.
ARLA claims its scheme is wider in scope and more responsive than any other bonding scheme available to landlords and tenants in the private rented sector.
Adrian Turner, chief executive of ARLA, says he will be lobbying the other two professional organisations to bring their bonding schemes into line with ARLA.
He says: “Otherwise there will be confusion and the public will be not understand quickly and easily to what extent they are covered. This is dangerous as there are still letting agents operating in the market who offer minimal or no safeguards to the public and so have the ability to bring the industry into disrepute.”
The ARLA Bond is a Bond of First Resort. Uniquely in the property industry, this allows for direct restitution from the association to any member of the public who can show that their money has been misappropriated.
Unlike any other bonding scheme, with ARLA there is no need for landlords and tenants who believe they have lost money in this way to go to court and prove theft or fraud before the Association makes reimbursement.
John Hornsey of Thomas Winter, the honorary insurance advisers to ARLA, says: “In today's insurance climate, it is a remarkable achievement by ARLA and its member letting firms that they can demonstrate such professionalism and control over their client accounts and that their premiums for such large amounts of cover for the public can be reduced, and reduced so substantially.”