What is happening?
From 31 January 2018 anyone doing residential letting agency work in Scotland must be registered to do so. The register will be publicly available, so anyone seeking to use the services of a letting agent can check it.
Certain conditions must be met before an application to be registered can be successful. Firstly, an applicant must satisfy a “fit and proper person” test, as well as any person controlling or governing the applicant’s letting agency work. Where the applicant is a company or other body with legal personality, the fit and proper person test must also be satisfied by the most senior person in the management structure, and any person owning above a 25% share of the body. Secondly, prescribed training requirements must be met.
Carrying out letting agency work without being registered will be punishable by a fine of up to £50,000, six months imprisonment, or both.
Who will it affect?
In principle, anyone dealing with letting on behalf of another – an agent – in the course of that agent’s business will be affected, although in an organisation not every person will have to register. Letting agent companies are clearly caught. Other examples are less obvious. For example, will a person who organises letting of a small number of residential properties on a rural estate on an ad hoc and unpaid basis be caught? The answer will depend on the precise circumstances. So too for an estate manager.
What will they have to do?
As well as satisfying the fit and proper person test, persons who are required to register must have a relevant qualification at, as a minimum, Scottish Credit and Qualifications Framework, level 6, or equivalent. At present, two programmes are described by the Scottish Government guidance as leading to an acceptable qualification. These are:
- The LETWELL programme, delivered by Landlord Accreditation Scotland and the Chartered Institute of Housing (CIH) Scotland (leading to CIH level 3 certificate in letting and managing residential property).
- Propertymark qualifications (formerly National Federation of Property Professionals) programme (leading to a level 6 technical award in residential letting and property management).
Where a relevant qualification was gained more than three years ago at the time of application, some additional training must be undertaken. In order to meet this ongoing training requirement, twenty hours of letting agency work training must be undertaken within each three-year period. At least fifteen of those hours must be formal training such as attending seminars and conferences, and documented evidence of attendance is required.
Letting agents must also comply with the Letting Agent Code of Practice which covers, amongst other matters, communication with clients, protecting client money using separate client accounts, maintaining client money protection insurance, and maintaining professional indemnity insurance.
Why prepare now?
You may be unclear whether your work falls into the definition of “letting agency work” in the legislation. If so, the Government guidance recommends seeking legal advice.
If you do require to register you should start making arrangements to ensure that you will be able to make a successful application for registration as a letting agent, including meeting the training requirements.
It is anticipated that applications for registration will be able to be made from early 2018. The penalties for carrying out letting agency work without being registered do not come into force until 30 September 2018, giving an eight-month window in which to make an application. This seems generous, but the Scottish Ministers have twelve months in which to reach a decision once they receive an application. Therefore, it makes sense to be ready to apply at the earliest opportunity, paying careful attention to the application requirements in order to avoid delay or rejection.