The Letting Code of Practice (Scotland) Regulations 2016 has been structured in eight sections to mirror the lettings process and sets out the standards expected of letting agents operating in Scotland in how they manage their business and provide their services.
It covers key areas such as standards of practice, engaging landlords, lettings, management, maintenance, ending tenancies, communications, complaints, deposits and insurance.
Under the code Scottish ministers will establish and maintain a register of letting agents. The regulations will also allow them to remove a letting agent from the register if they are no longer ‘fit and proper’.
The Association of Residential Lettings Agents (ARLA) welcomed the introduction of a statutory code of practice for letting agents and said that it will help to further professionalism in the industry and drive up standards.
‘We contributed to the Scottish Government’s consultation on the code last year and we are pleased that they have taken on board a number of our recommendations over procedure and wording,’ said ARLA managing director David Cox.
‘It is also very pleasing that the code has a requirement for agents to have professional indemnity insurance and client money protection. These are two requirements of ARLA membership and mandatory CMP is something we are campaigning for in England to provide greater protection for landlords and tenants if things go wrong,’ he explained.
But ARLA believes that there should be more detail about what agents should do if disputes occur around tenancy deposits. This is because an agent may be required to co-operate with any investigation by an independent body if a dispute is raised between either the landlord or tenants and this is not always clear in the relevant scheme’s rules for disputes.
‘On the issue of training and qualification ARLA has long campaigned for greater regulation for letting agents and believe that mandatory qualifications will promote professionalism and basic standards within lettings that will benefit businesses and consumers. We look forward to seeing more detail from the Scottish Government in this area,’ added Cox.
Kaira Massie, solicitor in the Law Society of Scotland’s professional practice team, said that there has been very little scrutiny of letting agents until now and having a new, statutory code of conduct will improve the situation for both landlords and tenants.
‘Solicitors in Scotland are already subject to stringent rules of admission and detailed practice rules covering professional ethics and conduct and many other aspects of practice. While solicitors will still be subject to the new letting agency scheme, there will be less duplication than was in the original proposals,’’ she pointed out.
We’re pleased that the Scottish Government has considered many of the points we raised. The regulations now take into account that solicitors are required to have indemnity to practice and will not be required to take out additional cover. They have also been amended to take into account that solicitors are already required to take anti money-laundering measures and conduct checks,’ she explained.
But there are still concerns, in particular that there is still a potential for conflict of interest if solicitors are subject to two different regulatory regimes. ‘Additionally, while we are pleased the regulations require letting agents to consider conflict of interest between clients and/ or the letting agent’s personal interests, we don’t believe they go far enough. We would like to see these further developed to direct letting agents as to a course of action when conflict arises. This is still under discussion with the Scottish Government,’ said Massie.
The Law Society has also raised issues around confidentiality and considers the requirement for solicitors to advise a local authority when a landlord is failing to meet his obligations to be at odds with their duties of confidentiality. The Society is continuing to press for this obligation to be restricted to only having to pass on information if a client indicates they will commit a crime so solicitors can maintain their professional duties of confidentiality.
‘Issues around confidentiality are still under discussion with the government. We are also discussing the fit and proper test for letting agents as we are keen to see a pass-porting for solicitors, who already have to satisfy such a test to be able to practice,’ Massie explained.
‘Another concern is around resolving complaints in relation to letting agency work. We are disappointed that solicitors may remain subject to the first-tier tribunal following disposal of a complaint related to letting agent work by the Scottish Legal Complaints Commission,’ she added.
‘Training requirements are also yet to be determined and we will continue to work with the Scottish Government to ensure that letting agents meet the standards required and the overarching aims of the regulations can be met,’ she concluded.
