Factors and The Property Equation
By Ross MacKay.
As a longstanding member of the Law Society Property Law Committee, I recently attended a joint Law Society/Scottish Government meeting to discuss changes to the property factors’ code of conduct. The property factors’ code of conduct, which aims to protect homeowners by ensuring a standard for property factors, is currently undergoing a review by government – change may be ahead. So, why should you be aware of the property factors’ review?
Many homeowners are unaware of the importance of factors, otherwise known as managing agents, in the legal process. Property factors are increasingly involved in the management and ongoing maintenance of common properties – particularly modern tenement blocks. If you’re planning to buy in a tenement building, it’s essential to be aware of these factoring costs and include them in your budgeting process.
Understanding factoring costs is key to deciding the affordability of a property, yet, this information is not always easily accessible. Although some information can be obtained from the Property Questionnaire within the Home Report, a prudent purchaser should always ask a vendor for more information to understand and anticipate the ongoing costs of their property. Better yet, a style letter I put in place some years ago is now used by selling agents to obtain information from factors, making it easier for buyers to more accurately understand the costs of their purchase.
However, there is a wider structural issue at play. While modern blocks are maintained and managed by factors, this is not the case for “traditional” tenements. There is an increasing trend that tenement owners are unwilling to pay for common repairs to maintain their building, which has unfortunately resulted in a decline of quality of the overall housing stock in Scotland.
Luckily, there are proposals now being floated for reforming this area. Suggestions include ideas such as compulsory five-yearly building surveys available to all; creation of sinking funds to be held for co-owners, which co-owners have to contribute a sum to annually; and compulsory appointment of factors to all co-owned buildings. Long-term strategies such as these will ensure that Edinburgh’s Victorian tenements, which contribute so much to the unique character of the city, will be protected and improved.