Professional Practice Updates - July 2017

As of 31 January 2018, anyone doing residential letting agency work in Scotland must be registered to do so.

The new regulations aim to raise standards in the industry and offer greater protection and assurances for those in the rented housing sector. The register will be publicly available, so anyone seeking to use the services of a letting agent will be able to check that their provider is suitably qualified and registered.

You can find the legal definition of ‘letting agency work’ in section 61 of the Housing (Scotland) Act 2014, but for the purposes of the regulations, letting agency work generally refers to:

• work carried out for a private landlord who wants to let their property out to a tenant, OR
• management of a property (collecting rent, inspecting the property and arranging for repairs and maintenance) which is rented out or planned to be rented out to a tenant.

The registration process has not yet been finalised but it is likely to be an online system and Registers of Scotland are currently working with potential users and the Scottish Government to develop an online system which will meet with user and regulatory requirements. Further information on this will follow in due course, but before you can submit an application, certain conditions must be met.

There are a number of conditions which must be met before an application to be registered can be submitted.

• The applicant must have passed a ‘fit and proper person’ test.
• Persons who are required to register must have a relevant qualification at the time of applying.
• Your business and staff must meet the requirements of the code of practice and your staff must understand and follow the code of practice.
• You must hold client money in a separate and dedicated client bank account and you must hold client money protection.
• You must hold professional indemnity assurance.

As a minimum, people required to register must have Scottish Credit and Qualifications Framework, level 6, or equivalent.

At present, three 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).
• National Approved Letting Scheme – NALS Foundation Lettings Course (Scotland)

No, the Scottish Government has stipulated that the qualification requirements must be met prior to an application being submitted.

Scottish solicitors are not ‘exempt’ from any of the conditions as such, but as a Scottish solicitor, you have necessarily met the requirements of some of the conditions and therefore you will not have to take any further action in terms of the following:

• The ‘fit and proper person’ test
• Client account
• Professional indemnity insurance

No, the Scottish Government has stipulated that Scottish solicitors who carry out ‘letting agency work’ will be required to acquire the relevant qualification for this very specific area of work.

Twenty hours of letting agency work training must be undertaken within each three-year period. At least 15 of those hours must be formal training such as attending seminars and conferences, and documented evidence of attendance is required.

This requirement applies to everyone who carries out letting agent work – for Scottish solicitors, there is no additional requirement in terms of hours but 15 of the 60-hour CPD requirement (within a three-year period) must be in a subject that relates to their letting agent work.

Yes, the requirement also applies to the following:

• Any person controlling or governing the applicant’s letting agency work.
• Where the applicant is a company or other body with legal personality, the test must also be satisfied by the most senior person in the management structure.
• The test must also be satisfied by any person owning above a 25% share of the body.

Carrying out letting agency work without being registered will be punishable by a fine of up to £50,000, up to six months imprisonment, or both.

There will be inevitable financial implications associated with the new regulations, with the key costs around training expenses and registrations fees.

The training costs will vary depending on the number of people in your organisation who need to qualify and whether you have already made financial provision for your CPD.

For information about costs and other details on the Letwell programme, you can contact the Landlord Accreditation Association and the Association of Residential Letting Agents in connection with the Propertymark qualifications.

The registration fee has not yet been agreed, but it is the Scottish Government’s intention to deliver a cost-neutral system.

There are multiple reasons to kick start your preparations sooner rather than later.

• If you do need to register, you will need to ensure that you and your business meet the requirements before you even submit your application – training in particular might prove a lengthy process with only two providers currently approved. It’s in your best interests to get your training arrangements organised as soon as possible.
• It is likely that applications will be accepted from early 2018 and the penalties for carrying out letting agency work without being registered do not come into force until 30 September 2018. This gives an eight-month window in which to apply. However, Scottish Ministers have a maximum 12-month period in which to reach a decision on an application. So, it makes good sense to have everything in place ready to apply at the earliest opportunity.
• If you are unsure whether the work you or your business do falls in to the category of ‘letting agency work’, you may need to seek clarification and possibly even legal advice.