17 Nov 2016

Letting agent registration

Most of the headlines for the Private Rented Sector (PRS) in Scotland have been grabbed by the Private Housing (Tenancies) (Scotland) Bill, which was passed after the stage 3 debate this month and set to become an Act. However, before we get an entirely new tenancy regime for the PRS, the sector will have to grapple with mandatory letting agent registration and code of conduct.

Part 4 of the Housing (Scotland) Act 2014 makes provision for the registration, regulation and training requirements for letting agents in Scotland. They include a mandatory register of letting agents, a ‘fit and proper’ person test, training requirements, a code of practice to which all letting agents must adhere and enforcement through the new First-Tier Tribunal (which is set to commence from December 2016 for current Private Rented Housing Panel cases with other PRS cases following in December 2017).

On 25 February 2016, The Letting Agent Code of Practice (Scotland) Regulations 2016 were laid before the Scottish Parliament and are set to come into force in January 2018. The code sets out the standard of conduct expected of letting agents.

Once the code is in force, landlords, tenants or the Scottish Government will be able to refer an agent to the First-Tier Tribunal if they believe an agent has failed to comply with the code. If an agent is found to be in breach of the code, the First-Tier Tribunal must issue what will be known as a Letting Agent Enforcement Order (LAEO) setting out why the agent is in breach and what is required to remedy the breach including timescales for doing so. Failure by an agent to comply with a LAEO could lead to deregistration and possible criminal prosecution.

The code itself contains general duties including (amongst others) honesty; complying with relevant legislation; not to provide misleading information; apply procedures consistently and reasonably; dealing with complaints; ensuring compliance by employees and subcontractors; handling private information sensitively; not to unlawfully discriminate; and to carry out services in a timely fashion and with due skill and care. There is further detail provided in relation to some duties within the regulations, the majority of which simply repeat duties already incumbent upon letting agents under, for example, consumer protection legislation.

Letting agents will need to hold not only professional indemnity insurance, but also client money protection insurance. There is also a requirement to have a separate dedicated client account, record and monitor all transactions with minimum monthly reconciliations.

Beyond that, there is an emphasis on the provision of written procedures for rent collection, debt recovery, repairs and maintenance, ending tenancies, complaints handling and handling clients’ money.

If you wish to find out more about the changes or to discuss how you can get ready for them, please contact Rory Cowan.