Following ARPM’s sudden cessation in trading, landlords and agents who relied on the popular outsourced rental management company’s services have been left out of pocket.
The alarm was first raised when September rent payments didn’t arrive, and many who tried to contact ARPM couldn’t get through. Insolvency practitioners working with the company have since confirmed that it has stopped trading and is expected to go into liquidation.
ARPM handled rent collection and deposit protection for letting agencies across the UK, meaning that large sums of client money could be at risk. Industry insiders estimate that more than 70 letting agencies could be exposed, along with over 8,000 landlords.
ARPM’s clients have been urged to contact mydeposits or Client Money Protect, the two client money protection schemes that ARPM was registered with, to ensure that their tenancy deposits are safe. Agencies may also face client money protection claims from landlords for rent not received, and some are considering proactively reimbursing their clients. Agencies that used ARPM’s rent collection service will further need to contact tenants to arrange new rent payment destinations.
If the liquidation process goes ahead as expected, ARPM’s assets will be sold to pay off its debts, including rent owed. However, even if there is enough money to go around, clients could face a long wait for their share.
According to industry experts, the relatively unregulated status of the outsourced property management sector meant that ARPM’s collapse was a disaster waiting to happen. Accounting rules for client funds are less stringent than for a company’s own revenue and expenses as the money doesn’t belong to them. If companies do not voluntarily go beyond what the law requires, it can be difficult to determine who is owed what if it collapses.
However, better models already exist. Industry bodies such as Propertymark, UKALA and safeagent require members to adhere to codes of conduct aimed at protecting, controlling and reporting on their client money handling. Enforcing compliance with these requirements across the industry would protect landlords and agents and reduce the need for client money protection schemes to step in.
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