Following the recent statement by Matthew Pennycook, (Minister of State for Housing and Planning), on further planned reforms to Leasehold and Commonhold legislation in England and Wales, in addition to the subsequent media coverage on some of the challenges this creates, we felt that it was worthwhile considering what protection is offered to households north of the border by virtue of the Property Factors (Scotland) Act 2011.
In Scotland current legislation and a strategic framework (of minimum standards of practice for registered companies) already offers a level of protection for homeowners, with companies required to provide a fair and transparent service with recourse for the homeowners if a company fails to meet these standards.
Ministers currently hold the power to enter a person or company onto the Property Factors Register and can also remove them (meaning they are unable to practice), if they fail to meet the requirements set out in the Property Factors (Scotland) 2011 Act and the Code of Conduct. Some of the main minimum standards are summarised under the following headings: –
Transparency – The Code sets out minimum standards of practice for registered property factors, encouraging transparency in the way that a factor conducts their business in connection with the management of common property or maintenance of land as detailed in the homeowner’s Title Deed. The Overarching Standard of Practice requires registered factors to be honest, open, transparent, and fair in their dealings with homeowners. Information issued to homeowners must be clear and easily accessible.
Cost-reflective/Accountability – Under the Code, a property factor must provide each homeowner with a comprehensible written statement of services (WSS), setting out in a simple structured way, the arrangements in place between the factor and the homeowner. The factor must also take reasonable steps to ensure that this document is provided to homeowners within a 4-week period and where there are substantial changes to this document at the earliest opportunity, not exceeding three months. The WSS must include information on Authority to Act, Details of Services Provided, Financial and Charging Arrangements, Communication and Consultation, Declaration of Interest, Information about the 2011 Act and the duties it places on a property factor and information on How to End the Arrangement.
Liability – A property factor must have and maintain adequate professional indemnity insurance to ensure that it is appropriate for the level of income and type of service offered. Where Public Liability Insurance is placed by the factor through their broker (on behalf of the collective homeowners), clear details of the cost, how the homeowners share of the cost is calculated, the terms of the policy and the name of the provider must be provided.
Onward sale – in October 2018, the Scottish standard conveyancing clauses were updated to include the requirements for solicitors to use the ‘Property Standardisation Group’s Letter to Factors’, an 11-point request for information. With conveyancing solicitors adopting this standard approach, it leaves very little room for any relative information not being made available to any incoming purchaser, or to the seller.
Proportionality – Section four of the Code outlines the principles for debt recovery under 11 separate points. A factor is required to inform their customers of any late payment charges along with details of the factor’s debt recovery procedures in the event of non-payment by the customer. This section makes provision for fair, reasonable, and proportionate action to be taken in the event of non-payment which can affect the factor’s ability to settle contractor’s invoices on behalf of the homeowners.
Redress – Section seven of the Code outlines the minimum requirements for a factor when considering Complaint Resolution. The Code also requires the factor to manage complaints from homeowners against contractors or third parties appointed by the factor on behalf of the homeowner.
Matthew Pennycook also announced that to strengthen regulation (England and Wales) and to drive up standards of service, mandatory professional qualifications should be introduced for which managing agents will be required to meet. Although this is not currently a legislative requirement in Scotland, at Hacking and Paterson Management Services we are committed to the development and progression for our people. Our staff already have access to professional qualifications, including the Professional Diploma in Property Factoring, which is designed for individuals working in the Factoring industry to help them deliver a professional and competent service to homeowners. We are delighted and proud that many of our people have already obtained this qualification.
We recognise that our customers’ property is very often their most valuable asset and the importance a factoring service plays in assisting homeowners maintain their common property. We support our people to ensure that they have an in depth knowledge of the property factoring industry, current legislative requirements and, most importantly, the ability to meet the needs and expectations of our customers within the parameters of our core factoring arrangement.
