The Register of Letting Agents opened to applications on 31 January 2018, and those who carry out letting agency work in Scotland (whether or not the person carrying out the work is actually based in Scotland) must apply to register by 1 October 2018. The Letting Agent Code of Practice also came into force on 31 January 2018. Compliance with the Code is now mandatory, and a pre-requisite of registration.
For those dealing with the letting of residential property, including in the rural sector, it is important to take action to assess whether registration is required. If the deadline for registration of 1 October 2018 is not met, not only will the cost of registering thereafter be more expensive, from that date it will be a criminal offence to carry out letting agency work if not registered.
Who must register?
There is no definitive list of who does and does not need to register (and comply with the Code of Practice). Instead, it is for each individual or business involved in the letting of residential property to consider whether, in the course of their business, they are carrying out ‘letting agency work’ (which in this context has a statutory definition). Anyone carrying out such work must both comply with the Code of Practice, and be registered as a letting agent.
Letting agency work falls within the statutory definition where the work is carried out in the course of the person’s business and involves arranging the letting of residential property for a landlord, or involves managing residential lets (including, specifically but not only, collecting rent, inspecting the properties, and arranging repairs, maintenance, improvements or insurance). The preparation of leases alone is not considered to be letting agency work.
Therefore, a land manager or factor who is self-employed or works for a company which is engaged by an estate-owning landlord, and who deals with some or all aspects of the setting up and management of residential lets on behalf of that landlord will likely be carrying out ‘letting agency work’ for the purposes of the Register and Code of Practice. On the other hand, if someone owns and manages their own residential properties, or is employed by the same entity or person that owns those residential properties, there is no requirement to register.
Criteria for registration
Although there is still some time before the deadline, it is important to consider the registration requirements now, and assess whether any action needs to be taken in order to comply.
In particular, registration requires certain persons carrying out letting agency work – primarily sole traders and those with supervisory or managerial roles in relation to letting agency work – to have relevant qualifications. There are currently four recognised qualifications for this purpose, listed on the Scottish Government’s website. If a person already has a qualification but it was obtained more than 3 years previously, they will need to demonstrate that additional training relevant to letting agency work has been undertaken within the previous 3 years.
It is also necessary, as part of the application for registration, to show compliance with the Code of Practice. The Code sets out expected standards for letting agents and covers matters such as the handling of rent and deposits, and the requirement to obtain professional indemnity insurance. The Code is available to view and download here.
Just as with the now familiar landlord registration process, letting agent registration must be renewed every three years, to ensure ongoing compliance. The fee payable for initial registration covers the first three year period.
In summary, those who carry out work in relation to residential lettings in Scotland as part of their business should consider whether they fall within the scope of the registration requirements, and, if so, check whether they need to obtain a relevant qualification and/or take steps to ensure they are complying with the Code of Practice.