Law News

Could Regulation of Scottish Letting Agents Happen in England?

Rose Jinks - February 2, 2018

This week’s introduction of stricter regulation of Scottish letting agents could be a sign of things to come in England, warns automated rental payment provider PayProp.

Following on from the introduction of the Private Residential Tenancy in December, letting agents operating in Scotland will now be required to join a Register of Letting Agents, which will be maintained by Scottish Government ministers.

In order to qualify for the register, agents will need to comply with a new Code of Practice and meet minimum training requirements.

Code of Practice

As of 31st January 2018, Scottish letting agents are required to comply with a comprehensive industry Code of Practice.

Agents must have written policies on a number of topics, including their fees, terms of business, complaints, rent collection and end of tenancies.

On top of this, they are required to have written processes for identity checks, referencing, tenancy agreements, property management and more.

Other stipulations include: professional indemnity insurance, Client Money Protection (CMP) and a separate client funds account.

Neil Cobbold, the COO of PayProp in the UK, says: “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.

“A Code of Practice ensures every agent is adhering to the same standards, and the sheer depth of requirements should discourage any rogue or criminal agents from starting a new business.”

Could Regulation of Scottish Letting Agents Happen in England?

Could Regulation of Scottish Letting Agents Happen in England?

Minimum training requirements 

Before joining the Register of Letting Agents, firms will also need to make sure that all of the relevant people in their businesses have appropriate training.

Every person directly concerned with managing and supervising day-to-day letting agency work will require training, unless they already have a relevant qualification.

Those registering may also be required to pass a fit and proper persons tests to determine whether they are eligible to carry out letting agency work.

“The provision of additional training where required can be seen as a positive change for the rental sector in Scotland,” suggests Cobbold.

“No matter how experienced, if agents brush up on what is expected of them, this can contribute towards improving the overall customer service experience of tenants and landlords.”

Enforcement 

Once agents have complied with the Code of Practice and met minimum training requirements, they will be eligible for the inclusion on the Register of Letting Agents.

All letting agents must join the register by September 2018. Those that are not on the register and carry out agency work after this date could be fined up to £50,000 and handed a custodial sentence.

“The severity of the punishments for non-compliance shows that the introduction of the register is being taken seriously,” believes Cobbold.

“However, it’s the enforcement of membership before the stated deadline which could determine its success. If membership of the register is low come September, it could lose credibility and potentially undermine the wider regulation framework being introduced.”

England

As has happened before, the new system in Scotland could be a precursor to similar regulations being introduced in England.

The most significant example is a ban on letting agent fees, which was introduced in Scotland in 2012 and set to be introduced in England after spring 2019.

“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 also 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 last year. 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.