Letting agent regulation is imminent – are you prepared?
A new Code of Practice is being introduced in January 2018, regulating the way letting agents deliver their services in Scotland
On 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. The Code has been designed to follow the lettings process from start to finish and regulates the activities of an agent, from signing up landlords to taking instructions and managing the agreement to ensuring adequate protection of clients’ money and holding appropriate insurance.
Who is affected by the new rules?
The new rules apply to “every person who carries out letting agency work”, meaning it could impact on a number of organisations and businesses which may not generally be considered as letting agents.
In the Act, letting agency work is defined 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.
This definition is wide and it may not be obvious whether or not your activities could be considered ‘letting agency work’, and in unusual cases the determining factor will be the circumstances of the arrangement you have in place. Sometimes scenarios involving rural estates and multi-function organisations could fall into this category.
When do I need to register by?
It will also be mandatory for individuals and organisations undertaking letting agency work in Scotland to be registered by 31 September 2018. All those applying to be on the register will 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 will be 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.
How do I get ready?
If you work in the private letting sector you should be familiar with the Code of Practice and consider revising your Terms of Business, internal policies and procedures in preparation for the Code coming into force. It is likely the register will start accepting applications in early 2018, so applications should be made as soon as possible to avoid unforeseen delays.