As of the 31st January 2018, all letting agents in Scotland will be subject to The Letting Agent Code of Practice (Scotland) Regulations 2016.
The Code requires the Letting Agent’s clients (landlords) to act in concord with the agent, in terms of probity in their business and personal dealings. Section 31 compels the agent to enforce this in their Terms of Business with all their landlord clients, and indeed report the landlord to local authorities for non-compliance.
Letting agents are also obliged under the code to take reasonable steps to check a landlord’s identity and ownership of their property portfolio.
The Code of Practice fundamentally embraces the ‘laws of agency’, while being careful not to explain as much in words. Instead, it concentrates on the requirement of agents to set out (as clearly as possible) the delimitations of the service they provide and the level of authority they have to act on the landlords’ behalf. The bulk of the Code is concerned with clarity and best practice – treated as a science rather than an art – it guides the user in prescriptive fashion.
Complaints against an agent, from the public (including Scottish Ministers) may be escalated to the First-tier Tribunal, which has been constituted to replace the jurisdiction of the Sheriffs’ Courts.
The Letting Agent Registration (Scotland) Act 2016 also comes into force on the 31st January 2018. Any person who undertakes letting agency work will have to prove:
- They are fit and proper persons
- Have relevant qualifications and undertake formal training
- In complying with the code of conduct, they will have to have robust client accounting procedures, PI and PL insurance and Client Money Protection (CMP) insurance
- They are required to renew their registration every three years
It will be a criminal offence for a person who is not a Registered Letting Agent to carry out letting agency work. Offenders can face up to a £50,000 fine and / or up to 6 months’ imprisonment.
The Code of Practice and Registration is mostly welcome and a long time in coming. It will represent a significant additional cost to agents, but it remains to be seen if it will bring to heel the rogue element within the Private Rented Sector.