Property Factors (Scotland) Act 2011: property factors - code of conduct

The Scottish Parliamentary Working Group on Tenement Maintenance (the Working Group), published in June 2019, highlighted the importance of the maintenance of common property and the need to improve the condition of Scottish tenements to ensure that Scotland’s housing stock can continue to provide safe and sustainable homes for the future.  Homeowners and landlords need to fully accept their shared role in the upkeep of their property.  The Scottish Government has made a commitment to take action to implement the recommendations of the Working Group. These recommendations include proposals for new statutory duties on owners in tenements to have owners’ associations, building reserve funds and five-yearly building condition reports.  We will engage with the Scottish Law Commission on these recommendations, with a view to carrying out a law reform project to provide a draft Bill that would implement them.  Whilst legislation is being considered and in development, we will seek to support voluntary and incremental change.  Where land is owned, managed and maintained by a land maintenance company for the benefit of homeowners, this can involve complex management issues, specialist input and is subject to detailed legal regulation.  Property factors play an important role in both supporting homeowners to ensure common property is protected and maintained and in the management, maintenance and sustainability of land.  Factors can help to ensure that owners are aware of applicable house condition standards, this includes the Scottish Housing Quality Standard (SHQS) and the Repairing Standard (RS). Homeowners can find impartial advice on repairs, maintenance, the appointment of a property factor and other useful information at http://www.underoneroof.scot/.

This revised Code applies from 16 August 2021 and replaces the original Code which applied from 1 October 2012.  All registered property factors are required by law to ensure compliance with the Code in terms of section 14(5) of the Property Factors (Scotland) Act 2011 (the 2011 Act). 

This Code is one of three main elements to the 2011 Act.  The two other elements are:

1.     A register of property factors (the Register) operating in Scotland is maintained by the Scottish Ministers. All organisations who meet the definition of a property factor, set out in the 2011 Act, are required to register.  It is an offence to operate as a property factor without being registered.  You can view the Register at: www.propertyfactorregister.gov.scot/PropertyFactorRegister/. 

Property factor registration enquiries, including reports that someone is operating as a ‘property factor’ whilst unregistered, and/or general enquiries on the Code can be sent in writing to the Scottish Government by e-mail to propertyfactorregister@gov.scot or at the following address:

Scottish Government
Property Factor Registration
2-H North, Victoria Quay
Edinburgh EH6 6QQ

2.     A dispute resolution mechanism for homeowners (as defined by section 10(5) of the 2011 Act).  A homeowner (as specified under section 10(5) of the 2011 Act) must, in the first instance, notify their property factor in writing of the reasons why they consider that their property factor has failed to comply with the Code and/or failed to carry out their duties under section 17(5) of the 2011 Act.  A homeowner must allow their property factor a reasonable opportunity to resolve the matter (see Section 7 of the Code: Complaints Resolution).

A homeowner may apply to the First-tier Tribunal for Scotland Housing and Property Chamber (First-tier Tribunal)[1] for a determination of whether the property factor has failed to comply with the 2011 Act.

Part 2 of The First-tier Tribunal for Scotland Housing and Property Chamber (Procedure) Regulations 2017 (the Tribunal rules) sets out the procedures for making an application including an appeals procedure.

While the Scottish Government can comment generally on the requirements of the Code, it is unable to comment on any decisions taken by the Chamber President and/or the First-tier Tribunal which relate to such applications.  Applications and/or related enquiries can be sent to by e-mail to HPCAdmin@scotcourtstribunals.gov.uk or to the following address:

First-tier Tribunal for Scotland (Housing and Property Chamber)
Glasgow Tribunals Centre
20 York Street
GLASGOW, G2 8GT

The website of the First-tier Tribunal can be found at: https://www.housingandpropertychamber.scot/

This is the national portal for up to date information including decisions, annual reports, legislation and their complaints procedure.  It also includes many other useful links to related websites.

What is the purpose of the Code?

The Code sets out minimum standards of practice for registered property factors, encouraging transparency in the way that they conduct their business in connection with the management of common property or the maintenance of land as detailed in the homeowner’s title deeds.

Who does the Code apply to?

This Code applies to all ‘property factors’ as defined by section 2(1)(a)-(d) of the 2011 Act who are entered on the Register under section 1 of the 2011 Act.

Broadly, ‘property factors’ means property and land managers operating in Scotland, whether they are private businesses, local authorities or housing associations (the definition of ‘property factor’ is contained in section 2(1) of the 2011 Act). 

Section 14(5) of the 2011 Act indicates that a registered property factor must ensure compliance with the Code in force at that time.

Section 2(2) of the 2011 Act indicates who is not a property factor.  A person is not acting as property factor if they manage or maintain the common parts of land on behalf of a property factor, where that property factor has been engaged to act in relation to the same common parts of land.  These persons are not subject to the requirements of the Code. Property factors should however consider the requirements of the Code when instructing third parties to undertake business on their behalf and/or or making decisions/undertaking actions which may have consequential implications for homeowners.

The requirements of the Code do not apply to arrangements where homeowners collectively choose to undertake ad-hoc repairs without using a property factor or self-factor the common parts of their properties, for example, owner associations established by the development management scheme (within the meaning of the Title Conditions (Scotland) Act 2003), or any other circumstances provided for under section 2(2) of the 2011 Act.

What may happen if a property factor is found by the First-tier Tribunal not to have complied with the Code or their property factor duties?

If the First-tier Tribunal finds that the property factor has failed to comply with the Code and/or their duties as specified by the 2011 Act, the First-tier Tribunal has the power to make a ‘property factor enforcement order’ (PFEO).  A PFEO is an order requiring a property factor to undertake such action as a First-tier Tribunal considers necessary, and, where appropriate, make payment to a homeowner, as the First-tier Tribunal considers reasonable. Examples include requiring the property factor to take action such as providing information or to make a payment to the homeowner.  A property factor may make a written application to the First-tier Tribunal for permission to appeal a decision on a point of law.  The procedure is set out in the Tribunal rules.

What may happen if a property factor is found by the First-tier Tribunal to have failed to comply with a PFEO?

Failure to comply with a PFEO may have serious consequences for the property factor.  The First-tier Tribunal has a duty under section 23(2) of the 2011 Act to notify Scottish Ministers of the failure to comply.  Scottish Ministers will take this in to account when deciding whether it is satisfied to enter a person on the Register or to remove a registered property factor from it (see sections 4 and 8 of the 2011 Act)[2].  Failure to comply with a PFEO without reasonable excuse is also a criminal offence under section 24 of the 2011 Act.  It is for the First-tier Tribunal to report such matters to the Police and/or the Procurator Fiscal Service to investigate.  It would be for the Procurator Fiscal to decide whether to prosecute and ultimately for a Court to determine the outcome of any prosecution.  Again, a property factor may apply for permission to appeal the decision of the First-tier Tribunal on a point of law.

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

The Code is separate from, and additional to, any other statutory requirements which a property factor may be required to adhere to.

In addition to the 2011 Act and the Code, property factors are ultimately responsible for ensuring that they conduct their business in a manner that complies with all relevant legislation (either in Scots law, the law in the rest of the UK or wider).  

In particular this may cover duties imposed by legislation relating to property and title, to companies, consumer rights, consumer credit licences and protection, contracts and procurement, data protection, equalities, financial services, freedom of information, health and safety, human rights, property and title conditions, and tribunals and court procedures.

Some property factors will also have specific commitments to meet the regulatory requirements of statutory bodies such as the Scottish Housing Regulator, the Financial Conduct Authority, the Prudential Regulation Authority, the Scottish Information Commissioner’s office or have a duty to co-operate with other public bodies.  Some property factors may also have to comply with the rules and codes of practice of other professional bodies for example the Institute of Residential Property Management, the Law Society of Scotland, the Property Managers Association Scotland and the Royal Institution of Chartered Surveyors.

What is not covered within the Code?

The Code does not specifically set requirements on how a property factor should act in circumstances that may arise out-with that business arrangement with homeowners, for example, neighbour disputes about noise or antisocial behaviour or a property factor’s business arrangement with any other third parties.   

Training and Development

It is important for staff to be trained appropriately to be able to implement the Code.  Property factors may wish to consider the benefits of being able to demonstrate that their staff have the required skills and knowledge through accreditation and attendance at associated training that is relevant to the work of a property factor in Scotland.  Encouraging and supporting continued professional development is key to keeping up to date on developments in the sector and attending / participating in factoring networks and online forum is one way to do this.

Useful References for Property Factors:

Data protection

Each factor is responsible for their own compliance with this legislation, and should consider the guidance available from the Information Commissioner’s Office (ICO) to ensure they are meeting all obligations: https://ico.org.uk/

When sharing data with another property factor in relation to land or homeowner information, the property factor who has collected the information will be the data controller. Depending on the situation, there may be a number of bases for sharing information:

• express consent for sharing personal data e.g. by issuing a pro forma to homeowners,
• it may fall under the legitimate interests of all three parties to pass the data between the outgoing and incoming factors or
• it may fall under the contractual obligations. 

Complaints Processes

Property Factors may wish to be aware that the Scottish Public Services Ombudsman’s Valuing Complaints Website contains information to help support improvement in public sector complaints handling, including model complaints handling procedures and other resources which could be adapted for the private sector. https://www.spso.org.uk/for-organisations

Debt Advice

Names of organisations and information on formal debt relief and management products - bankruptcy, protected trust deeds, and the Debt Arrangement Scheme (DAS) - is available on the Accountant in Bankruptcy’s website: www.aib.gov.uk.