Solicitors subject to new letting agent regulations
Solicitors regulated by the Law Society of Scotland will not have to duplicate work to meet requirements set by a new code of conduct for letting agents.
The new code of practice, to be introduced in accordance with the Housing (Scotland) Act 2014, will see Scottish ministers establish and maintain a register of letting agents. The regulations will also allow Scottish ministers to remove a letting agent from the register if they are no longer ‘fit and proper’.
The regulations, which were laid before The Scottish Parliament on Monday, 18 January, will go before the Infrastructure and Capital Investment Committee to consider. The Society has actively engaged with the Scottish Government over the past 12 months to help ensure that they will improve letting agency standards.
Kaira Massie, solicitor in the Law Society of Scotland’s professional practice team, said: “The regulations aim to improve standards within the lettings industry. There has been very little scrutiny of letting agents until now and having a new, statutory code of conduct will improve the situation for both landlords and tenants.
“We also want to ensure that solicitors who undertake letting agency work can avoid any unnecessary duplication under a system of dual regulation.
“Solicitors in Scotland are already subject to stringent rules of admission and detailed practice rules covering professional ethics and conduct and many other aspects of practice. While solicitors will still be subject to the new letting agency scheme, there will be less duplication than was in the original proposals.
“We’re pleased that the Scottish Government has considered many of the points we raised. The regulations now take into account that solicitors are required to have indemnity to practice and will not be required to take out additional cover. They have also been amended to take into account that solicitors are already required to take anti money-laundering measures and conduct checks.
“We remain concerned however that there is still a potential for conflict of interest if solicitors are subject to two different regulatory regimes.
“Additionally, while we are pleased the regulations require letting agents to consider conflict of interest between clients and/ or the letting agent’s personal interests, we don’t believe they go far enough. We would like to see these further developed to direct letting agents as to a course of action when conflict arises. This is still under discussion with the Scottish Government.”
The Law Society has also raised issues around confidentiality and considers the requirement for solicitors to advise a local authority when a landlord is failing to meet his obligations to be at odds with their duties of confidentiality. The Society is continuing to press for this obligation to be restricted to only having to pass on information if a client indicates they will commit a crime so solicitors can maintain their professional duties of confidentiality.
Massie said: “Issues around confidentiality are still under discussion with the government. We are also discussing the fit and proper test for letting agents as we are keen to see a pass-porting for solicitors, who already have to satisfy such a test to be able to practice.
“Another concern is around resolving complaints in relation to letting agency work. We are disappointed that solicitors may remain subject to the first-tier tribunal following disposal of a complaint related to letting agent work by the Scottish Legal Complaints Commission.
“Training requirements are also yet to be determined and we will continue to work with the Scottish Government to ensure that letting agents meet the standards required and the overarching aims of the regulations can be met.”
The new code of practice, set out within the Letting Agent Code of Practice (Scotland) Regulations 2016 is to be introduced in accordance with section 46 of the Housing (Scotland) Act 2014 and will come into force on 31 January 2018.
Note to editors
In addition to concerns around dual regulation, the Law Society raised a number of points about the draft regulations which it believed should be addressed and which were amended in light of its comments. These included:
Protected groups: The draft regulations were ambiguous as to the meaning of ‘protected groups’, this has now been changed to reflect those with protected characteristics.
Retention of records: The draft suggested six years. The Society suggested records should be retained for five years, reflecting the limitation period for actions. This was taken on board and changed.
Property Access: The Society suggested that account must be taken of the Housing (Scotland) Act 2006 in setting out the notice to be given to tenants. This has now been included in the regulations.
Declined applications: The Society considered the requirement to advise landlords why an application had been declined to be unnecessary. The Scottish Government has removed this requirement.
Written confirmation: The Society suggested that a requirement for the letting agent to obtain written confirmation from a landlord, where the property is let against the letting agents’ advice, would be contrary to the principles of agency. This requirement has now been removed.
Commission: The Society questioned the reason behind a requirement for commission to be disclosed. This has now been amended to providing this information only if required, in line with the Financial Service act.