Draft legislation to ensure property factors follow consistent standards has been laid before the Scottish Parliament. Discover what the changes may be for you.
The Code of Conduct for Property Factors came into force in October 2012. The code sets out minimum standards for registered property factors when delivering services to homeowners. Those included on the Property Factor Register must comply with the Code.
Following an informal review of the original Code, the Scottish Government ran a consultation into a draft revised code of conduct in 2017-2018. The findings have inform this new draft revised version.
There are new overarching standards of practice that property factors should apply in carrying out their work. The code is prepared in terms of s.14 of the Property Factors (Scotland) Act 2011.
Read more for a summary of the new code.
This new draft includes clearer wording that explains when a person is acting as a factor.
It clarifies that a person is not acting as property factor if they “manage or maintain the common parts of land on behalf of a property factor, where that property factor has been engaged to act in relation to the same common parts of land.” People carrying this kind of work are not subject to the requirements of the Code.
However, they should still need to consider the code when they instruct third parties and the work or decisions they may have implications for homeowners.
The requirements of the Code do not apply to arrangements where homeowners collectively choose to undertake ad-hoc repairs without using a property factor or self-factor the common parts of their properties. For example, they don’t apply to owner associations established by the development management scheme.
The new code also updates the dispute resolution mechanism with details of the First-tier Tribunal for Scotland Housing and Property Chamber, which replaced the Homeowner Housing Panel in 2016.
This section has been amended to take into account practical difficulties faced by property factors in providing the WSS to homeowners. The new wording no longer obliges a factor to provide the WSS within four weeks. Instead, they “must take all reasonable steps” to reach this four-week deadline. Please see section 1.2 of the draft revised code for details of when the four-week period commences.
Factors now must provide a copy of the WSS to homeowners within four weeks of identifying that they provided “misleading or inaccurate information” at the time they previously issued the WSS.
The period of time within which a property factor must provide a copy of the WSS to homeowners following any substantial changes to the terms is shortened from a maximum of one year to three months. Any changes must now be clearly indicated on the revised WSS issued or separately noted in a ‘summary of changes’ document attached to the revised version.
There are also minor changes to what information should be provided in the WSS. Factors must now state:
The wording on declarations of interest has been strengthened to provide examples of what could constitute a financial or other interest. See section 1.5E of the draft revised code for more details.
Lastly, the factor should now provide more details on how to end the arrangement in the WSS. This includes information on when and how a homeowner should inform the property factor of an upcoming change in ownership. See section 1.5G for the full text in the code.
The draft revised code provides more detailed information on how a factor should communicate with homeowners. The updates include providing paper copies of documentation in response to any reasonable request by a homeowner; providing the property factor registration number on any documents sent to homeowners; and procedures for communication and provision of information when one property factor takes over from another. See Section 2 for full details.
The updates in this section relate to provisions concerning late payments and defaults/arrears.
The requirement that charges imposed for late payments must not be “unreasonable or excessive” remains, with the further requirement that these charges must be clearly identified on any relevant bill or statement issued to the homeowner.
When dealing with customers in default or in arrears difficulties, a property factor should treat its customers “fairly, with forbearance and due consideration to provide reasonable time for them to comply”. The debt recovery process should now include signposting the customer to free and impartial debt advice services, support and information on debt solutions from not-for profit organisations.
The draft revised code also updates the requirement to have systems in place to ensure the regular monitoring of payments due from homeowners, stipulating that payment information held on these systems is updated and maintained on a regular basis.
There are no substantial updates to this section, but the definition of who is required to have a professional indemnity insurance policy is clarified.
The right of a property factor to impose a charge for paper or electronic copies of summary of charges documents, or documents relating to any tendering or selection process, is removed. There is a new obligation to notify homeowners of any substantial change to the cover provided by the policy.
For claims, a property factor “must take reasonable steps to keep homeowners informed of the progress of their claim”. This is a slight change to the original wording.
A new paragraph has been added to confirm that property factors may agree, by contract, to instruct that specific maintenance duties that contribute to fire safety are undertaken by specialist contractors on behalf of homeowners.
The wording that requires factors to keep homeowners updated on the progress of inspections and repairs has been strengthened. Advice has also been added surrounding communications with homeowners when works are cancelled.
Section 6.6 expands on the previous wording on appointing contractors. As well as being able to show why contractors were appointed, a property factor must now also consider a range of repair options and have arrangements in place to ensure this. For any work, the costs should be balanced with the quality of the work and the end result, and the long-term benefits. Where appropriate, they should recommend professional advice.
Lastly, section 6.7 concerning planned property inspections is updated. It adds that where periodic property visits are to be undertaken by suitable qualified / trained staff or contractors, and/or a planned programme of cyclical maintenance is to be created, then a property factor must ensure “people with appropriate professional expertise are involved in the development of the programme of works”.
New detail has been added as to what the complaints handling procedure must include. See section 7.1 for full details.
Section 7.5 adds clarification on procedures when a property factor is taking over the management of property and land owned by homeowners from another property factor. The draft revised code states that the previous property factor must co-operate with the current property factor (and vice versa) to ensure the exchange of all necessary or relevant information. This may include information about outstanding complaints. Additionally, complaints that arose during the appointment of a previous property factor should be dealt with by that property factor.
A glossary of terms used in the code replaces the extracts from the Property Factors (Scotland) Act 2011 that were attached to the original code.
Subject to approval from the Scottish Parliament, the revised Code will come into force on 16 August 2021. For our advice on how to prepare for the new revised draft, contact Louise Gould, Operations Manager in TLT's Commercial Dispute Resolution team in Scotland.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2021. Specific advice should be sought for specific cases. For more information see our terms & conditions.
HR Horizon tracker Spring 2021Read more
TLT forms new partnership to support employee ownership growthRead more
Flexible working beyond the pandemicRead more
TLT expands role on national legal services framework for policeRead more
Automatically unfair dismissal and Covid safety concernsRead more
Failure to enhance Adoption Leave Pay not discriminatoryRead more
Employment Law Focus: TechnologyRead more
TLT appointed to Vodafone's global legal panelRead more
TLT appointed to sports and arts legal services panelRead more
Watch our video series for information on the legal issues that are affecting the real estate sector. Each...Read more
Helping you navigate your business through the risks and opportunities that Brexit will bring.Read more
The way people shop is constantly evolving, from the growth of online and the changing use of stores...Read more
The widespread disruption and closure of businesses caused by the Covid-19 pandemic and the subsequent national and local lockdowns has brought into sharp focus the question of available insurance cover for losses under...Read more
The pandemic has had a deep and long-lasting effect on the leisure, food & drink sector, forcing operators to embrace new ways of attracting and servicing customers.Read more
The pandemic has forced the majority of the workforce into a world of remote working. As a result, our cities are evolving.Read more
There's a growing demand for retailers to do more to attract the Purple Pound – the collective spending power of disabled shoppers, estimated to be worth around £274bn. We look at the opportunities, the legal issues and...Read more
Green finance is gaining speed, driven by global climate change pressures and the recognition of the vital role which sustainability plays in a resilient financial services sector.Read more
Keep on top of the employment law issues that matter most to you and your business with our new podcast.Read more
We advise across the whole spectrum of business and trading arrangements.Read more
With deep expertise, we have dealt with some of the most complex defended cases in recent years.Read more
Providing a comprehensive service from development and investment through to asset management and tax.Read more
Our team regularly deals with the taking and enforcing of security over real estate assets, as well as dealing with debt sales and mortgage book transfers.Read more
We help businesses to develop their property strategy by advising on issues such as statutory regulation, industry codes of practice and legal developments.Read more