From 31 January 2018 anyone who undertakes residential letting agency work in Scotland must ensure their service delivery is fully compliant with The Letting Agent Code of Practice (Scotland) Regulations 2016. Compliance includes letting agents being registered which became mandatory on 30th of September 2018 to avoid substantial penalties.
The Code has been structured to follow the lettings process from start to finish and regulates the activities of the agent, from engaging a landlord to taking instructions and managing the agreement to ensuring adequate protection of clients’ money and holding appropriate insurance.
Who does the Code apply to?
The new rules apply to "every person who carries out letting agency work", meaning impacts a number of organisations and businesses which may not generally be considered as letting agents.
The Housing (Scotland) Act 2014 defines “letting agency work” as work which is:
- undertaken on behalf of a private landlord who wants to let their property out to a tenant; or
- undertaken to manage a property (including collecting rent, inspecting the property and arranging for repairs and maintenance) which is either currently or is intended to be rented out to a tenant.
Given the scope of this definition it may not be immediately obvious whether or not your activities could be considered to be ‘letting agency work’, and in complex or unusual cases the determining factor will be the exact circumstances of the arrangement you have in place. In particular we are aware that scenarios involving rural estates and multi-faceted organisations could fall into this category.
Mandatory registration for letting agents
In addition to the new Code of Practice it is now mandatory for individuals and organisations undertaking letting agency work in Scotland to be registered. All those applying to be on the register need to meet standards as laid out in a ‘fit and proper person test’ and comply with the necessary training requirements in order to be accepted.
Failure to comply and operating as a non-registered letting agent is a criminal offence and the courts could impose a maximum fine of up to £50,000 and prison sentences of up to 6 months for those convicted.
Advice and assistance
Our Private Housing and Letting team have produced Code compliant Terms of Business to assist agents in complying with the regulations and we are happy to discuss these documents on request.
If you would like more information, please contact a member of our Private Housing and Letting team, who would be happy to help.
More information, including a copy of the Code of Practice can also be found on the Scottish government’s website by clicking here.