15th July 2021

Property Factors: What are they, do I need one and can I change mine?

Many residential properties, predominantly flats or houses in modern developments, are factored.  It is important for potential buyers to consider the factoring costs as part of the expenditure of the property, as you would with mortgage payments and household bills.  Most factors send out invoices on a quarterly basis and you may also be required to pay an initial float when you purchase a property which is factored.  This will be returned (less any outstanding sums owed) should you sell the property at a later date.

The following blog explains what a property factor is, why you may want to have one and what you can do if you have a complaint.

What is a Property Factor?
A factor (sometimes also referred to as a managing agent) can be a private business, a local authority or a registered social landlord.  Factors manage and maintain the ‘common parts’ (e.g. shared entrances, stairs, landings, roof, gutters, external walls and shared garden areas) of buildings or land that is owned by more than one homeowner (e.g. private roads, footpaths, play parks and landscaped areas).  They can deal with a variety of things such as repairs to a leaking roof, arranging a common insurance policy or the regular cutting of grass on the landscaped areas.

A factor must be registered and follow the code of conduct set out in the Property Factors (Scotland) Act 2011 (the 2011 Act).  If you do not know whether or not a particular building or area of land is factored you can search the register of property factors which is available here.

Why use a Property Factor?
There are several reasons why homeowners may want to use or need to have a property factor. It may be that the appointment of a factor is written into your title deeds or a pre-existing contractual agreement among the homeowners.  Factors take away the stress of dealing with maintenance and repairs to common areas.  Many will collect regular payments from all of the owners so that funds are available when required.  They will have established contacts with many different contractors and may also have a better bargaining position on the cost of works.

Alternatively, homeowners can deal with the maintenance and repair of common areas themselves and many do this very successfully.  This saves the cost of paying someone else to do the job but it can be time consuming to get quotes, arrange meetings, collect payments and supervise contractors.  There is also the risk that one individual may end up stuck in the middle of a dispute between other neighbours about what works are necessary or not.  Furthermore, some contractors may not wish to do work for an individual or group of individuals as they will be concerned about payment.

Complaining about your Factor
If you have a complaint then you should write to your factor in the first instance to make them aware of the issue.  Under the 2011 Act, all factors must have, and adhere to, a code of conduct.  Under section 1 of the Code, factors must provide homeowners with a copy of their in-house complaints procedure. There must be a clear written complaints procedure which sets out a series of steps, with reasonable timescales to follow. The procedure must also include how they will handle complaints against contractors.

Hopefully, any complaint can be resolved directly with the factor but if not homeowners can apply to the First-Tier Tribunal for Scotland (Housing and Property Chamber) under section 17 of the 2011 Act. They will decide if they think that the application can be taken to a tribunal.  An application cannot be made unless the homeowner has notified the property factor in writing as to why the homeowner considers that the property factor has failed to carry out their duties or has refused to resolve, or unreasonably delayed in attempting to resolve, the homeowner’s concern.

In some cases, under the 2011 Act, a factor may be removed from the register which means that any sums owed to them could not be recovered from the homeowners.

Changing Your Property Factor
If a complaint cannot be resolved then, as an alternative to referring the matter to the tribunal, homeowners may want to consider having the factor removed and a different agent appointed.  Before taking this step the title deeds should be checked in case a certain procedure needs to be followed.  If you have a copy of your title sheet at home then you will find the relevant information in Section D (Burdens Section) but it may be prudent to instruct a solicitor to review the title conditions and provide general advice on the best course of action.

If you would like to discuss your factor, or your title conditions in general, please contact a member of the Blackadders’ Residential Property Team working in Aberdeen, Dundee, Edinburgh, Glasgow, Perth, and across Scotland.

Amy Clark, Trainee Solicitor
Residential Conveyancing
Blackadders LLP
@TraineeALC

www.blackadders.co.uk

 

 

The opinions expressed in this blog are of the author only and do not necessarily represent the opinions of Blackadders LLP.

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