Consultation on a draft statutory code of practice and training requirements for letting agents in Scotland: analysis of consultation responses

Executive Summary

About this Report

This report provides an analysis of written responses to the Scottish Government consultation on a draft statutory Code of practice and training requirement for letting agents in Scotland. Eighty-one respondents gave permission for their response to be published and can be viewed at: https://consult.scotland.gov.uk/better-homes-division/lettingagentconsultation

Overview of Responses

A total of 92 responses were received to the consultation. This included 26 individual respondents and 66 organisational respondents. Responses were split into six broad respondent categories: letting agents (29%), members of the public (22%), professional or representative bodies (15%), others (13%), local authorities (12%) and tenant/ community groups (9%).

Part 1 - Draft Code of Practice

Introduction

Seventy-two percent of respondents said that the introduction was comprehensive enough. Many said that it was 'clear', 'thorough' and 'easy to understand', and provided sufficient information about the wider regulatory framework. In contrast, twenty-three percent of respondents didn't agree with this. One of the main reasons was that it was not clear who the Code applied to. Many of these respondents felt that the Code should apply to all people involved in letting agency work, regardless of the size of the portfolio that they managed, or whether this was on a formal or informal basis.

Overarching standards

Overall, eighty-eight percent of respondents agreed with the proposed overarching standards. Many said that they were 'transparent', 'reasonable', 'clear' and 'appropriate'. Some respondents noted that the proposed standards covered the standards that some letting agents already adhered to. Whereas, eleven percent of respondents did not agree with the overarching standards, as they were too 'vague' and 'non-specific'. Respondents also provided suggestions of other overarching standards that the Code could include, for example, in relation to:

• Handling client money;
• Staff recruitment and training;
• Record keeping; and
• Repairs standard.

Engaging landlords

Over three quarters of respondents (76%) agreed that the standards of practice proposed for engaging landlords were appropriate. Many of these felt that the standards were 'reasonable' and 'clearly defined'. Others felt that it would help enhance current standards, and also promote greater consistency in terms of practice and procedures. For those who disagreed, one respondent highlighted that there might be conflicts of interest where solicitors were acting as letting agents, and another proposed that standards needed to comply with all relevant housing legislation. Respondents also provided suggestions of other standards that this section of the Code could include, for example, in relation to:

• Terms of business;
• Conflicts of interest;
• Handling client money; and
• Dispute resolution.

Lettings

Seventy-two percent of respondents were in agreement with the proposed standards of practice on lettings. Many of these stated that the standards were 'clear' and 'comprehensive', providing an excellent basis for developing letting agents' procedures. Respondents also provided suggestions of other standards that this section of the Code could include, for example, in relation to:

• References and checks to reflect upcoming legislation on immigration;
• Tenant information;
• Handling rent payments and deposits; and
• Moving out standard.

Management and maintenance

Overall, three quarters (75%) of respondents agreed that the proposed standards of practice for management and maintenance reflected what should be expected of letting agents. Some respondents highlighted particular issues of concern, for example, dealing with houses in multiple occupation (HMO) properties; the 'bureaucracy' likely to be associated with new standards, and the impact on timescales and costs. One respondent felt that this section of the Code was over specific, and this could create loopholes. Respondents also provided suggestions of other standards that this section of the Code could include, for example, in relation to:

• dealing with urgent repairs and common repairs; and
• public liability checks.

Ending the tenancy

Eighty-two percent of respondents agreed with the proposed standards of practice for ending the tenancy. Although some suggested that clear guidance should be provided to ensure consistency of practice across Scotland. Respondents also provided suggestions of other standards that this section of the Code could include, for example, in relation to:

• tenancy termination; and
• dealing with tenancy deposits, including dispute resolution.

Communications and complaints

Seventy-six percent of respondents agreed with the proposed standards of practice for communications and complaints. Respondents also provided suggestions relating to this section of the Code which could include, for example:

• Complaints handling procedures;
• Clear signposting for different types of dispute resolution;
• Encouraging membership of professional bodies; and
• Impact on smaller businesses.

Money and insurance

Seventy-four percent of respondents were content with the standards of practice for handling money. Although some respondents queried how the standards would relate to existing codes and regulations that letting agents already comply with, and whether some form of 'passporting' should be considered for these organisations.

Similarly, seventy-four percent of respondents agreed with the proposed standards of practice for insurance. Although some respondents felt that the proposals were excessive, and would increase letting agents' costs.

Seventy-seven percent of respondents agreed with the proposal that letting agents should be required to have client money protection (CMP) insurance. Some respondents said that they already had this type of insurance, whereas others said that they were not clear on the benefits of this type of insurance.

General comments

In addition to the specific comments made about the individual sections of the Code, respondents also made a number of general suggestions, as summarised below:

• Active promotion of the Code once finalised;
• Need for supporting guidance to ensure consistency in application;
• Consider developing an accreditation scheme for letting agents;
• Consideration of automatic 'passporting' for some professional organisations;
• More information on monitoring arrangements; and
• Consider the impact on smaller letting agents.

Part 2 - Training Requirement

Proposal 1: Matters on which training must be undertaken

Seventy-three percent of respondents were in agreement with Proposal 1 and the proposed training matters. Some said that they were already doing this through industry approved bodies. It was also suggested that the training matters would need to be reviewed regularly.

Proposal 2: Persons who must have undertaken the training

Sixty-two percent of respondents agreed with the suggestions outlined in Proposal 2 regarding who should be trained. Although some suggested that there should be exemptions for people who already held qualifications, or who were already members of relevant professional bodies. Others who disagreed with the proposal said that it would be important for the training requirement to be extended to all front-line staff.

In addition, sixty-four percent of respondents agreed that there should be at least one person trained per office. Some felt this would provide cover for holidays and sick leave, and would also help to ensure consistency in implementing the Code. Some of those who disagreed with the proposal said that consideration would need to be given to the size and organisation of individual businesses.

Proposal 3: Qualifications which must be held by the applicant or other persons

Seventy-one percent of respondents agreed that there should be a mandatory qualification. Many felt that this was reasonable, and it made sense to have a minimum standard. A number of concerns were expressed by those who disagreed with the proposal including: the need to recognise experience in addition to any formal qualifications, and the costs of meeting the training requirement.

Just over half (52%) of respondents agreed with proposed three-year timeframe for introducing the mandatory qualification. There was consensus across many respondents - who agreed and disagreed - that the timeframe was too long, and many of these suggested that it should be two years.

Fifty-six percent of respondents agreed that the mandatory qualification should be set at Scottish Credit and Qualifications Framework (SCQF) Level 6. However, just over one third (34%) said that they didn't know, and that they needed more information before they could decide.

Proposal 4: Period within which the training must have taken place

Fifty-seven percent of respondents agreed with the proposal that the required period for training for those with an existing relevant qualification (more than three years old) should be 20 hours in the past three years. Many felt that this was in line with the continuous professional development (CPD) requirements of other professional bodies, others suggested that the timescale was too generous. Some who disagreed said that 20 hours was too much, with a few suggesting that 10 hours should be sufficient.

Just over half (51%) of respondents agreed that during the transition period prior to the introduction of the mandatory qualification, those without a qualification should be required to undertake 30 hours of training in the previous three years. In addition, almost two thirds (65%) of respondents agreed that the three-year period was appropriate. There was consensus across a significant number of respondents (who said they agreed and disagreed) that the timeframe should be shorter, say up to two years.

Equality and business impact

Nineteen percent of respondents provided comments on the partial Equality Impact Assessment (EqIA), many of these said that the approach would have 'generally positive impact' on protected groups. A few noted that the EqIA could be developed further, and that more statistical data was required.

Thirty-four percent of respondents commented on the partial Business and Regulatory Impact Assessment (BRIA), many of these provided evidence of training and staff qualifications. Some expressed concerns about the cost of training, and the fact that this could lead to more landlords self-managing. In contrast, some letting agents felt that fears of the costs of additional training were exaggerated, and were clear that the benefits would far outweigh the costs.