Scottish Government consultation for letting agents’ statutory code

Guest article by Jane Rattray, Solicitor in Lindsays Housing and Private Letting team at Lindsays Solicitors.

Letting agents should be aware of the requirements proposed under the draft statutory code of practice and training requirements published by The Scottish Government last month. The strategy is to create:

a private rented sector that provides good quality homes and high management standards, inspires consumer confidence, and encourages growth through attracting increased investment

Why it matters

Housing Minister, Margaret Burgess commented:

…Letting agents are vital to helping achieve this vision, and this new framework, including the code of practice, will support the industry to improve standards, provide a good service to both landlords and tenants, and empower customers

Who does the consultation apply to?

The Act provides a wide definition of letting agents and therefore the consultation may have an impact on organisations not commonly recognised as letting agents.

Letting agency work is defined in Section 61 of the Housing (Scotland) Act 2014 as covering: any work carried out for a landlord concerning entering into a lease or occupancy agreement where an unconnected person may use the landlord’s house as a dwelling; or managing a property (including in particular collecting rent, inspecting the house and making arrangements for the repair, maintenance, improvement or insurance of the house) which is, or is to be, subject to a lease or arrangement.

What does the consultation cover?

The consultation is divided into two sections:

• Part 1 focuses on the draft Letting Agent Code of Practice.
• Part 2 addresses the training requirement that must be met prior to being included on the Letting Agent Register.

Part 1 – Draft Letting Agent Code of Practice

Key sections to note within the eight sections detailed are:

Section 1.7 proposes a process for landlords and tenants to resolve complaints against letting agents for breaches of the Code.

If a landlord, or tenant, considers that a letting agent has not complied with the Code, they must notify the letting agent in writing. If after submitting a complaint it remains unresolved, a landlord or tenant can apply to the First-tier Tribunal. In assessing whether the letting agent has breached the Code, the Tribunal will review the agents’ written agreements, policies and procedures. Therefore, it will be crucial for letting agents to ensure that all their documents and procedures comply with the relevant legal obligations and that they keep accurate records. This process may require seeking legal advice on procedure contents.

 Section 3 “Engaging landlords” covers contact with potential clients, what should be included in the written agreement and how to end the agreement.

The Scottish Government proposes that letting agents will have a duty to inform the appropriate authorities if a landlord fails to meet their obligations.

 Section 4 covers:

• marketing and advertising
• giving correct advice to applicants
• charging fees, viewings
• offers
• reference checks
• tenancy agreement
• tenancy deposits
• inventory checks
• miscellaneous other points

Section 4.26 also includes that a tenancy agreement “must ensure that it meets all relevant legal requirements and includes all relevant information…and responsibilities on taking care of the property”.

Letting agents may require advice to help ensure that tenancy agreements comply with all legal requirements.

 Section 7 proposes that letting agents will be required to retain all correspondence (electronic or paper) about a complaint by a landlord or tenant for six years. Letting agents must comply with any Tribunal request for information.

Part 2 – Training Requirements for Letting Agents–

There are four points of training proposed:

• What roles and operations require training
  • legal obligations on letting agency work and landlords’ and tenants’ rights and responsibilities
  • handling of tenants’ and landlords’ money
  • arranging and managing a tenancy
  • managing repairs and maintenance
  • customer communications, complaint handling and equality issues
  • training will be required on pre-letting procedure, client and tenancy agreements, antisocial behaviour, health and safety, tenancy deposits, eviction and ending the tenancy

• Who must undertake training

• the most senior person in the organisation, unless they have no input in the day- to- day running
• all persons directly concerned with managing and supervising the letting agency work

• Qualifications which must be held by the applicant or other persons
  • a relevant qualification by the end of three years from the date the Letting Agent Register comes into force in order to be admitted to the Register or to renew registration
  • the mandatory qualification will be equivalent to the level of Scottish Highers qualifications

• Time period
  • applicants for renewal of registration must demonstrate they have undertaken at least 20 hours of training over the previous three years on the mandatory subject matters

The code and training proposals will require that all terms, policies, written agreements and training requirements meet the criteria. Letting agents should work with their solicitors to ensure they fully understand all of their obligations and have everything in place.

Lettingweb is preparing an industry response to this issue. More details to follow.

Guest article by Jane Rattray, Solicitor – Housing and Private Letting at Lindsays Solicitors.