The Letting Agent Code of Practice (Scotland) Regulations 2016

Made: 25th February 2016

Coming into force: 31st January 2018

In accordance with section 101(2)(d) of that Act, a draft of this instrument has been laid before and approved by resolution of the Scottish Parliament.

Citation and commencement

1

These Regulations may be cited as the Letting Agent Code of Practice (Scotland) Regulations 2016 and come into force on 31st January 2018.

Letting Agent Code of Practice

2

The Letting Agent Code of Practice, which is set out in the Schedule, has effect.

SCHEDULE — Letting Agent Code of Practice

CONTENTS	CONTENTS
1.	Introduction
	Background
	Who does the Code apply to?
	What if a letting agent does not comply with the Code?
	How do the requirements of professional bodies and other legislation relate to the Code?
	Using the Code
2.	Overarching standards of practice
3.	Engaging landlords
	Before taking instructions
	Terms of business
	Ending the agreement
4.	Lettings
	Marketing and advertising
	Giving correct information to prospective tenants
	Charging fees
	Viewings
	Applications
	References and checks
	Tenancy agreement
	Tenancy deposits
	Moving in (inventory/check-in)
5.	Management and maintenance
	Rent collection
	Property access and visits
	Carrying out repairs and maintenance
	Contractors and third parties
6.	Ending the tenancy
	Bringing the tenancy to an end
	Inventory/check-out
	Tenancy deposits
7.	Communications and resolving complaintsCommunicationsComplaints resolution
8.	Handling landlords’ and tenants’ money, and insurance arrangements
	Client accounts
	Debt recovery
	Professional indemnity arrangements
	Provision of insurance productsCriminal activity

SECTION 1 — Introduction

Background

1

This Letting Agent Code of Practice (the “Code”) sets out the standards expected of letting agents operating in Scotland in how they manage their business and provide their services.

2

Section 46 of the Housing (Scotland) Act 2014 (“the 2014 Act”) allows Scottish Ministers to set out a code of practice that all letting agents must comply with that covers:

• the standards of practice for those carrying out letting agency work;

• the handling of tenants’ and landlords’ money; and

• the professional indemnity arrangements to be kept in place.

3

The Code forms part of a broader regulatory framework for letting agents, which the 2014 Act also introduced. The framework’s main features are:

• a mandatory register for letting agents with an associated ‘fit and proper’ person test;

• powers for Scottish Ministers to set training requirements that must be met before an applicant can be accepted on to the register;

• a means of redress for breaches of the Code to the First-tier Tribunal for landlords and tenants; and

• powers for Scottish Ministers to obtain information, and powers of inspection to help them monitor compliance.

4

These measures strengthen regulation of the letting-agent industry in Scotland. Letting agents are important in ensuring the private rented sector is professional and well managed, and they help to provide the good-quality homes our communities need. The Code reflects much of the existing good practice in the industry. It will help raise standards (where this is needed), and help build a more effective private rented sector that meets the needs of tenants, landlords and letting agents.

Who does the Code apply to?

5

The Code applies to every person who carries out letting agency work in Scotland, which is defined in section 61(1) of the 2014 Act as:

things done by a person in the course of that person’s business in response to relevant instructions which are— (a) carried out with a view to a landlord who is a relevant person entering into, or seeking to enter into a lease or occupancy agreement by virtue of which an unconnected person may use the landlord’s house as a dwelling, or (b) for the purposes of managing a house (including in particular collecting rent, inspecting the house and making arrangements for the repair, maintenance, improvement or insurance of the house) which is, or is to be, subject to a lease or arrangement mentioned in paragraph (a).

6

The Code will also help landlords and tenants understand the standards of practice they can expect from a letting agent; whether these standards have been met; and, where necessary, help to resolve problems through the First-tier tribunal if they believe a letting agent has failed to comply with the Code.

What if a letting agent does not comply with the Code?

7

If a landlord or tenant (including former landlord or tenant) believes that a letting agent they have let a property through or from has failed to comply with the Code, they must notify the letting agent of this in writing (this includes electronic communications), so the letting agent can take action to resolve the issue. Some letting agents may also offer access to an independent alternative dispute resolution (ADR) service if they cannot resolve a complaint internally. If the landlord or tenant remains dissatisfied after raising their complaint with the agent, they can apply to the First-tier Tribunal (the “Tribunal”). In addition, Scottish Ministers may also apply to the Tribunal where they have concerns that a letting agent has failed to comply with the Code.

8

The 2014 Act enables the Tribunal to decide whether a letting agent has failed to comply with the Code. To help with this, the Tribunal will consider a variety of evidence from, for example, the letting agent, landlord, tenant, Scottish Ministers and other relevant organisations (such as trading standards). Depending on the nature of the complaint, the Tribunal may look at whether the agent’s own terms of business, policies and procedures comply with the Code and whether they have kept to them. A letting agent should therefore keep and maintain appropriate records to help demonstrate how they have complied with the Code.

9

If the Tribunal decides a letting agent has failed to comply with the Code, it must issue an enforcement order setting out the steps the letting agent must take to rectify the problem and by when. These steps may include issuing revised documents and making changes to previously agreed terms of business. An enforcement order may also require a letting agent to pay compensation.

10

If the Tribunal decides that a letting agent has failed to comply with the enforcement order, it must notify Scottish Ministers. Failure to comply with an enforcement order will be taken into account in considering whether a letting agent should be removed from the register. It is a criminal offence for a person who is not a registered letting agent to carry out letting agency work.

How do the requirements of professional bodies and other legislation relate to the Code?

11

There is a range of legislation that letting agents must comply with in how they do business. This includes Scottish, UK and European legislation and covers areas such as housing, consumer protection, financial services, consumer credit licences, contracts, title conditions, health and safety, data protection, immigration and equalities amongst others.

12

All letting agents must comply with the Code but some may also have specific commitments to meet the regulatory requirements of other bodies, such as the Financial Conduct Authority and Law Society of Scotland. In addition, letting agents may also have to comply with other codes if they belong to or are registered with other voluntary or industry bodies.

Using the Code

13

The Code has been structured to follow the lettings process – from taking instructions from a landlord, letting and managing the property to the ending of a tenancy (including any arrangements that follow).

14

Most letting agents offer a wide range of services to their customers. Where a letting agent provides a service set out in this Code they must ensure it is delivered in a way that meets these requirements and those of any other relevant legislation. This Code does not comprise legal advice to any party.

15

In the Code “you” means a letting agent.

SECTION 2 — Section 2: Overarching standards of practice

16

You must conduct your business in a way that complies with all relevant legislation.

17

You must be honest, open, transparent and fair in your dealings with landlords and tenants (including prospective and former landlords and tenants).

18

You must provide information in a clear and easily accessible way.

19

You must not provide information that is deliberately or negligently misleading or false.

20

You must apply your policies and procedures consistently and reasonably.

21

You must carry out the services you provide to landlords or tenants using reasonable care and skill and in a timely way.

22

You must not unlawfully discriminate against a landlord, tenant or prospective tenant on the basis of their age, disability, sex, gender reassignment, marriage or civil partnership, pregnancy or maternity, race, religion or belief or sexual orientation.

23

You must ensure all staff and any sub-contracting agents are aware of, and comply with, the Code and your legal requirements on the letting of residential property.

24

You must maintain appropriate records of your dealings with landlords, tenants and prospective tenants. This is particularly important if you need to demonstrate how you have met the Code’s requirements.

25

You must ensure you handle all private information sensitively and in line with legal requirements.

26

You must respond to enquiries and complaints within reasonable timescales and in line with your written agreement.

27

You must inform the appropriate person, the landlord or tenant (or both) promptly of any important issues or obligations on the use of the property that you become aware of, such as a repair or breach of the tenancy agreement.

28

You must not communicate with landlords or tenants in any way that is abusive, intimidating or threatening.

SECTION 3 — Engaging landlords

Before taking instructions

29

In your dealings with potential landlord clients you must:

Services provided and fee chargesaprovide clear and up-to-date written information about the services you provide and the charges (inclusive of taxes) for them;

Adviceboffer accurate and unbiased advice on the rental valuation and appraisal of the property. You must not knowingly misrepresent the potential rental valuation;cinform the landlord that they need to get consent or delegated authority from all owners, mortgage lenders or other relevant parties before letting the property and the need to ensure relevant insurance cover is in place;dif you become aware in the course of your business that a property does not meet appropriate letting standards (e.g. repairing standard, houses in multiple occupation and health and safety requirements), inform the landlord of this;eif a landlord is not already registered, inform them of the landlord registration requirements under the Antisocial Behaviour etc. (Scotland) Act 2004[^f00002] and, where necessary, the requirements under the Housing (Scotland) Act 2006[^f00003] relating to houses in multiple occupation;

Conflict of interestfif you intend to act for clients who have competing interests or your personal interests conflict, or could potentially conflict, inform the clients as soon as you become aware of it;

Identity checksgtake reasonable steps to check the identity of each landlord to ensure that they are who they say they are and that they are the legal owners of the property or have permission from the owner or power of attorney – for instance, asking for an official form of identification; proof of address; proof of ownership and, where applicable, landlord registration number or company registration number.

Terms of business

30

You must agree with the landlord what services you will provide and any other specific terms of engagement. This should include the minimum service standards they can expect and the target times for taking action in response to requests from them and their tenants.

31

If you know that a client is not meeting their legal obligations as a landlord and is refusing or unreasonably delaying complying with the law, you must not act on their behalf. In these circumstances, you must inform the appropriate authorities, such as the local authority, that the landlord is failing to meet their obligations.

32

Your terms of business must be written in plain language and, alongside any other reasonable terms you wish to include, must clearly set out:

Core servicesathe services you will provide to that landlord and the property they relate to. For example, tenant introduction, lettings service and full management service;

Durationbthe duration of the agreement and the date it commences;

Authority to actca statement about the basis of your authority to act on the landlord’s behalf;dwhere applicable, a statement of any level of delegated authority, for example financial thresholds for instructing repairs to the property and the purchase of replacement goods;esituations in which you may act without checking with the landlord first, for example urgent repairs;

Fees, charges and financial arrangementsfyour management fees and charges (including taxes) for your services, and your processes for reviewing and increasing or decreasing this fee;ghow you will collect payment including timescales and methods and any charges for late payment;hthat where applicable, a statement setting out details of any financial interest in providing third-party services (for example, commission for using certain companies, products or services) is available from you on request;

Tenancy depositsiif a tenancy deposit is to be taken, who will lodge the deposit with one of the approved schemes;

Communication and complaintsjthat you are subject to this Code and give your clients a copy on request. This may be provided electronically;khow you will communicate (including the use of electronic communication[^f00004] with landlords and tenants, and the timescales within which you could be reasonably expected to respond to enquiries;lyour procedures for handling complaints and disputes between you and the landlord and tenants and the timescales within which you could be reasonably expected to respond;mhow a landlord and tenant may apply to the Tribunal if they remain dissatisfied after your complaints process has been exhausted, or if you do not process the complaint within a reasonable timescale through your complaints handling procedure;

Conflict of interestna declaration of any conflict or potential conflict of interest;

Professional indemnity insuranceoconfirmation that you hold professional indemnity insurance or equivalent protection through another body or membership organisation and that further details (such as the name of your provider, your policy number and a summary of the policy) are available from you on request;

Handling client moneyp if you hold client money, how you handle clients’ money; confirmation that you hold client money protection insurance or equivalent protection through another body or membership organisation and that further details (such as the name of your provider, your policy number and a summary of the policy) are available from you on request;

How to change or end the terms of businessqclear information on how to change or end the agreement and any fees or charges (inclusive of taxes) that may apply and in what circumstances. Termination charges and related terms must not be unreasonable or excessive.

33

You and the landlord must both sign and date your agreed terms of business and you must give the landlord a copy for their records. If you and the landlord agree, this can be done using electronic communication including an electronic signature[^f00005].

34

In line with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013[^f00006], in most cases you must give landlords 14 calendar days in which to cancel if the agreement is signed away from your premises.

35

Any subsequent changes to your terms of business should be agreed by both parties and confirmed in line with your agreement (see paragraph 32 (q)).

36

If a landlord or tenant (including former landlord and tenant) applies to the Tribunal because they think you have failed to meet your Code obligations, the Tribunal may, depending on the nature of the circumstances, expect you to show how your actions meet your agreed terms of business as part of complying with the Code.

Ending the agreement

37

When either party ends the agreement, you must: