Are landlords factors?

Are you acting as a factor if you are a private landlord who arranges common repairs in blocks where you own a property?

Section 2 of the  Property Factors (Scotland) Act  2011 defines 'property factors’ as those who, ‘in the course of their business’, manage the common parts of land (including buildings) and used in whole or part for residential purposes.

But does this include private landlords running a property letting business, either as a company or as an individual?

Certainly, landlords are treated differently in terms of the Construction Design Regulations which means they have to take on all the Health & Safety aspects of the building work supervision which an ordinary homeowner can pass on to the builder. Has this led to some confusion about their role as factor?

The definition of “factoring” in the 2011 Act is fairly broad.  It certainly includes those who charge a fee, carry out factoring duties under contract or where there is something in the Title Deeds that makes them the factor. There are other circumstances in which someone might be considered to be acting as a factor.

Questions to ask

If you are trying to work out if you are a “factor”, ask yourself the following questions:

  • Is there is a profit motive or are contributions just to cover costs?
  • Am I getting a fee from homeowners for a providing a managerial service?
  • Am I providing a regular service or just carrying out work as and when required?
  • Is what I do in terms of organising repairs etc conducted on sound and recognised business principles within a commercial structure and employing staff?
  • Is there some form of contract in place – written or just understood or a provision in the title deeds?

Any “yes” answers mean you need to check your position further.

You might also find it helpful to look at this guidance which was issued when the act first came into force.  This contains a useful flowchart to follow through. This also suggests that landlords are not always going to be acting as factors.

So, are you a factor?

So, while a landlord may be acting as a business letting property, if the landlord is just occasionally organising common repairs in a building where they are a co-owner, making no charge (though perhaps recovering costs) and with no contract to carry out repair and management services in place (formal or informal), then they are probably not acting as factors.

However, if you have any doubt, you should get your own independent legal advice as it is an offence under the Act to operate as a property factor whilst unregistered and without reasonable excuse. 

Section 2 of the  Property Factors (Scotland) Act  2011

Property Factors Act FAQ - Scottish Government 2012

Registering as a Factor