Under new rules, anyone undertaking letting agency work in Scotland will now be required by law to comply with a Letting Agent Code of Practice and to join a Register of Letting Agents.
The Register of Letting Agents is a list run by Scottish Ministers that makes sure every letting agent is suitable to do the job and has met minimum training requirements. Agents must have submitted an application by 1 October 2018 – anyone undertaking letting agency work after that date without registering will commit a criminal offence and could face a fine of up to £50,000.
Under the new move, Agents will need to have written policies on a number of topics, including fees, terms of business, complaints, rent collection and end of tenancies, as well as having written processes for identity checks, referencing, tenancy agreements, property management and must have professional indemnity insurance, Client Money Protection and a separate client funds account.
“The majority of agents will already have these processes and policies in place, but the new system requires them to have everything fully in order and in writing,” says Neil Cobbold, chief operating officer of PayProp in the UK.
The register opened for registration today, and many within the English property industry have welcomed the move.
David Cox, Chief Executive, ARLA Propertymark said:
“This is a watershed moment for the industry. We have long campaigned for the regulation of letting agents both north and south of the border and are pleased the Scottish Government has picked up the mantle and introduced minimum standards. The requirements, mirroring ARLA Propertymark’s membership criteria, will hopefully drive up standards in the industry, improve the quality of property management for tenants, and eliminate those rogue and criminal agents who bring the industry into disrepute.”
Many believe that the move will precursor a similar registration process in England – after all, the ban on letting fees was first introduced in Scotland in 2012 and is now set to be introduced into England, perhaps as early as Spring 2019 – and those within the property market think registering letting agents in England is a positive move.
“If this new system is successful in Scotland, there’s no reason why similar rules can’t be introduced in other parts of the UK,” says Cobbold.
“It’s unlikely these changes will trickle down for a while yet, but it’ll still be beneficial for agents in England to monitor their progress.”
Cobbold points out that the new Scottish system is similar to a number of proposals put forward by Sajid Javid at the Conservative Party Conference in October. These included agents complying with minimum training requirements and an industry code of conduct.
“It’s clear the English government is also looking to regulate letting agents more closely, and it’s surprising that there’s been no further mention of these specific proposals since they were put forward several months ago,” he concludes.
Gareth John, Managing Director of letting agency software, AgentPro, believes reform is inevitable, but should be done in a supportive way:
“Wales has already brought in compulsory registration for landlords, and we’re now seeing the first landlords penalised for failing to register. Most landlords and letting agents are honest and professional and it’s only right and proper that those who aren’t are prevented from trading. However, in Wales the costs to qualify for registration can be high, and in low rent areas, can make it difficult to make a profit. English landlords are already being hit with high stamp duty, increased regulation and now the threat of a tenant fee ban. I hope that England watches what happens in Wales and Scotland and delivers a system that truly supports the industry going forward.”