New regulatory requirements


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 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 registration of letting agents.

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. 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 report an agent if they believe they have failed to comply with the code. If 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; applying procedures consistently and reasonably; dealing with complaints; ensuring compliance by employees and subcontractors; handling private information sensitively; not to unlawfully discriminate; and carrying out services in a timely fashion and with due skill and care.

Further, 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 and to 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.The training requirements will apply to the most senior person in a letting agency business and all persons directly concerned with managing and supervising of a business’ letting agency work. There must also be at least one person per office who has met the training requirements.

The required level is the Scottish Credit Quali cation Framework (SCQF) Level 6 or above. Where the quali cation was obtained more than 3 years ago, persons will be required to have undergone 20 hours of speci ed training over the previous 3 years.

Although agreed in principle, it will be for any new administration after the forthcoming May election to con rm and bring forward legislation to put the proposals into effect. It is expected that the register will begin accepting applications in early 2018 and relevant quali cations will be required prior to rst registration.