Property Factors Act - What and Why!

The Property Factors (Scotland) Act 2011 (The Act) came about through the input of Patricia Ferguson, MSP, assisted by the Govan Law Centre who wanted to see property factoring become regulated.

The Act came into force in October 2012 and a new Code of Conduct became binding on all property factors operating within Scotland. The Act does not just apply to private property factors but also to all local authority and housing associations when responsible for managing communal aspects of any development.

The Act also introduced a central public register of property factors which can be found at www.propertyfactorregister.gov.scot and also provides for a dispute resolution for homeowners through the First Tier Tribunal for Scotland (Housing & Property Chamber), which means that any complaints between factor and homeowner that remain unresolved can be escalated to an independent tribunal.

The Code of Conduct sets out minimum standards for all property factors. The Code of Conduct was subject to a review in 2021 and various amendments were made resulting in a revised Code of Conduct being implemented on 16^th August 2021.

The Code of Conduct is split into seven sections:

Section 1 – Written Statement of Services

Section 2 – Communication and consultation

Section 3 – Financial obligations

Section 4 – Debt recovery

Section 5 – Insurance

Section 6 – Carrying out repairs and maintenance

Section 7 – Complaints resolution

The Code of Conduct describes the details that must be included in the Written Statement of Services, setting out the terms and service delivery standards of the arrangement between the property factor and the homeowner.

The revised Code of Conduct introduced new ‘Overarching Standards of Practice’ which must be followed by property factors in the course of conducting their business and includes a number of common sense measures such as:

• You must provide information in a clear and easily accessible way.
• You must not provide information that is deliberately or negligently misleading or false. 
• You must apply your policies consistently and reasonably.
• You must carry out the services you provide to homeowners using reasonable care and skill and in a timely way, including by making sure that staff have the training and information they need to be effective. 

It is worth noting that the Scottish Government, through the Scottish Parliamentary Working Group on Tenement Maintenance, is currently considering possible future legislation, which is aimed at improving the maintenance of the country’s housing stock. The recommendations of the Working Group were outlined in a report in 2019 and these include:

• Compulsory periodic property inspections (5 yearly).
• Compulsory Building Reserve Funds (Sinking Funds).
• Compulsory Owners Associations.

James Gibb provides residential and commercial customers with advice on legislative and regulatory change and issues of concern or interest within the property management and factoring business sector.

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