Royal Assent for Property Factors (Scotland) Act 2011

The Property Factors (Scotland) Act 2011 has received Royal Assent this month, marking the end of a four year campaign initiated and led by Govan Law Centre (GLC), and the start of a better deal for Scotland's homeowners.

The genesis of the Bill was grassroots. At GLC's fortnightly casework meetings our solicitors would repeatedly flag up the growing number of instances of homeowner exploitation by property factors. GLC's local Board of Trustees were equally troubled with the ability of Glasgow's citizens to be ripped-off with impunity. It was apparent something had to be done to redress the imbalance between the rights of unregulated companies and the rights of Scottish homeowners, many of whom were financially or otherwise vulnerable.

A Bill proposal and consultation paper drafted by GLC was first introduced in the Scottish Parliament by the then Govan MSP Gordon Jackson QC in March 2007, but had insufficient time to progress. The reins were quickly picked up by Maryhill MSP Patricia Ferguson and in October 2007 a fresh proposal and consultation paper was published by the Scottish Parliament. High profile support came from a series of BBC tv and radio investigations and a campaign for law reform sponsored by Glasgow's Evening Times newspaper.

Constant publicity led to the OFT launching a market investigation into Scotland's property factor industry, which had the effect of kicking Patricia Ferguson's Bill proposal into the long grass. Despite the OFT recommending the Scottish Government's favoured solution of 'voluntary accreditation', Patrica Ferguson and GLC ploughed on, gathering support and finally making a winning case for major law reform to protect Scottish homeowners.

GLC's Mike Dailly and draftperson of the Bill said: "We're very proud of the Property Factors (Scotland) Act 2011 because its a victory for common sense, and will help prevent homeowners in Scotland being exploited, while providing a new accessible tribunal remedy with 'legal teeth' if they do get stung.  It's also an example and case in point of the importance of local community law centres. Law centres are being threatened in England and Wales, but we need more of them in the UK, not less".

"Without Patricia Ferguson's tireless dedication and hardwork the Bill would not have seen the light of day. We would acknowledge the tremendous support from Patricia's researcher Chris Kelly, the Parliament's excellent Legislation Team, the Local Government Committee and various civil servants at the Scottish Government who all helped to make this progressive piece of legislation possible".

Royal Assent for Property Factors (Scotland) Act 2011

Final hurdle for Property Factors (Scotland) Bill next week

The Scottish Parliament will debate the Property Factors (Scotland) Bill at Stage 3 on the afternoon of Thursday, 3 March 2011. This is the final hurdle for the Bill. The Bill, drafted by Govan Law Centre's Parliamentary Unit for Glasgow MSP Patricia Ferguson, has now secured the backing of the Scottish Government, the Parliament's Local Government and Communities Committee, and also has wide public support across Scotland. However, the Bill now needs to secure the support of MSPs in the full Chamber next Thursday in order for it to become law.

Final hurdle for Property Factors (Scotland) Bill next week

Property Factors Bill debated before full Scottish Parliament on Wednesday

The Scottish Parliament will debate the Property Factors (Scotland) Bill at Stage 1 on  the afternoon of Wednesday, 8 December 2010.  This is a make or break moment for the Bill.  The Bill, drafted by Govan Law Centre's Parliamentary Unit for Patricia Ferguson MSP, has secured the backing of the Parliament's Local Government and Communities Committee, and also has wide public support across Scotland.  However, the Bill now needs to secure the support of MSPs in the full Chamber on Wednesday in order for it to progress.

Property Factors Bill debated before full Scottish Parliament on Wednesday

Local Government & Communities Committee backs Property Factors Bill

The Stage 1 Report of the Scottish Parliament's Local Government and Communities Committee has supported the general principles of the Property Factors (Scotland) Bill, which will help pave the way for the Bill's forthcoming Stage 1 debate before the Chamber next month. 

The Committee's report is available here; it makes a number of recommendations to amend the Bill to take on board practical issues which arose during evidence; some of the key conclusions are reproduced below:

"45. The Committee believes that there is clear evidence testifying to the problems encountered by members of the public with property factors and that there is therefore a need to proceed with a statutory framework to regulate property factors. It concurs with those witnesses who stated that a voluntary accreditation scheme would not address the problem of factors that provide a poor service to consumers. While the Committee acknowledges the work already conducted by the Scottish Government’s working group in developing a national voluntary accreditation scheme, it does not consider that there is evidence to suggest that this will be ultimately successful in addressing inadequate factoring services. It therefore supports the approach taken by the Member in Charge of the Bill in proposing a statutory framework for the regulation of property factors.

58. The Committee therefore considers that it is appropriate for housing associations and local authorities to be included within the meaning of “property factor” contained in the Bill.

62. The Committee welcomes the meaning given to “property factors” in the Bill. It considers that it is important for the definition to include the ownership and management or maintenance of land that is available for use by the owners of any adjoining or neighbouring residential properties. The Committee considers that consumers should be entitled to a quality service and that a company should not be able to avoid the provision of this service as a land-owning maintenance company ...

110. The Committee recognises that complaints against property factors can often be very technical and concurs that a homeowner housing panel will provide an effective structure for dealing with such complaints.

 122. The Committee considers that difficulties faced by homeowners in switching property factor represents a major issue, particularly in relation to land-owning maintenance companies. While it recognises that there may be less need for homeowners to switch once the provisions in the Bill raise standards in the sector, it nevertheless believes that a simplification of the process would be of benefit to the consumer. The Committee believes this is an important issue that might require legislation. However, the Committee also recognises it is a very complex issue and therefore calls on the Scottish Government to undertake further research".

Local Government & Communities Committee backs Property Factors Bill

Factor cases ‘swamp courts’

The Evening Times reports today: Courts are being “swamped” by cases of property factors taking legal action against home owners, the Scottish Parliament heard. And two Glasgow MSPs revealed they have been inundated with complaints about factor disputes.  Maryhill MSP Patricia Ferguson and lawyer Mike Dailly, of Govan Law Centre, told the Local Government Committee how big a problem disputes with factors had become and that a new law was essential.

Ms Ferguson’s Property Factors Bill would set up a compulsory registration scheme with a set of standards designed to root out rogue factors. It would also provide an independent dispute resolution system to prevent costly court cases. Ms Ferguson said problems with factors has become her biggest caseload, prompting the Bill. She said: “Not a day goes by without someone from across Scotland contacting me for advice. Not one day.”

A series of Evening Times investigations published over the last two years have also uncovered a catalogue of complaints and shocking cases of overcharging and poor work. Our reports were passed to the committee for it to consider. Mr Dailly said that as well as contacting politicians the courts were under pressure and people put into debt, which could be avoided. He said: “The reason Govan Law Centre got involved was because we were seeing what is happening day in, day out. Sheriff courts are swamped with property factors raising actions for payments. “A lot have added on costs, expenses are attached, and I have seen many people sequestrated by factors.”

Glasgow SNP MSP Bob Doris also confirmed the frequency of complaints. He said: “I am not short on the number of these cases I have on a weekly basis from people in factoring disputes.” Ms Ferguson said: There are property factors who threaten court action, but never see it through. Yet the charges are still added to bills.That is not acceptable.” It was the final session of evidence to the committee and it will now consider it before submitting it for the Bill.

GLC's evidence can be seen on the Scottish Parliament's Holyrood TV here (opens as video); and the Bill's Committee Page is here.

Factor cases ‘swamp courts’

Property firm tries to evade new Bill

The Herald reports that a controversial property management firm has tried to exclude itself from a Bill to impose standards on property factors.  Glasgow Labour MSP Patricia Ferguson’s Property Factors Bill began its first parliamentary stage yesterday, with factors giving evidence to the Scottish Local Government Committee.

Glasgow-based Greenbelt Group Ltd, which charges owners for land management in developments, claimed it would not be covered in the bill because it is a landowner. The Bill would introduce a compulsory register of property managers to root out rogue factors, and also set up a dispute resolution process to give homeowners right to redress.

Yesterday, Greenbelt’s managing director Alex Middleton was told by MSPs his company was effectively doing the same job as a property factor, and Ms Ferguson said the Bill would cover Greenbelt.  Mr Middleton said: “The Bill recognised the need for registration, regulation and resolution. Greenbelt is not a property factor so we don’t feel it applies to us.” Greenbelt owns the land around developments and charges the owners a management fee, billing owners for maintenance.

Conservative MSP David McLetchie said Greenbelt served the same purpose s other factors. He said: “Ultimately, it is no different if land was owned in common and they paid a factor. You bill them for the same services. The issue is not about ownership, but services and costs associated with that.” Ms Ferguson said the Bill was drafted to ensure it also included Greenbelt.

The Property Factors (Scotland) Bill, drafted by Govan Law Centre, expressly includes companies, such as Greenbelt, as the definition of 'property factor' in section 2(1)(c) includes: "a person who owns and manages or maintains land which is available for use by the owners of any adjoining or neighbouring residential properties (but only where the owners of those properties are required by the terms of the title deeds relating to the properties to pay for the cost of the management or maintenance of that land)".

Property firm tries to evade new Bill

Dodgy figures and poor service: Govanhill evidence to Property Factors bill

Govanhill Law Centre (GhLC) has submitted evidence to the Scottish Parliament's Local Government Committee on the Property Factors (Scotland) Bill. 

The evidence compiled by GhLC's Lindsay Paterson is available here, and includes an example of alleged overcharging, mismanagement and misapplication of VAT by a large Glasgow property factor, as well as a survey of local property factors, carried out jointly with the local Govanhill Residents Group. 

85% of those surveyed supported the statutory regulation of property factors in Scotland, while over two-thirds of respondents said that they did not believe their factoring service was good value for money.

Dodgy figures and poor service: Govanhill evidence to Property Factors bill

Regulation of property factors in Scotland

The Local Government Committee of the Scottish Parliament has made a call for evidence on the Property Factors (Scotland) Bill (the Bill and accompanying documents were drafted with assistance from GLC's Parliamentary and Policy Unit); for further details please see here.  The Scottish Parliament's Information Centre (SPICe) has published a new research briefing on the Bill, which is available here (opens as a PDF).

The SPICe briefing includes experience from the Republic of Ireland, where the Property Services Regulatory Authority (PRSA) has recently been established on an administrative basis. Legislation, currently before the Oireachtas, is intended to establish the PRSA on a statutory basis and will apply to all Property Services Providers (PSPs). PSPs are defined to include all those involved in the purchase, sale and letting of any land or property as well as those involved in the provision of property management services.

Under the proposed legislation, the functions of the PRSA will include operating a licening system covering all providers of property services; setting and enforcing standards for the grant of licences and provision of services; establishing a system of investigation and adjudication of complaints; promoting increased consumer protection and public awareness; and establishing a compensation fund to compensate parties who lose money as a consequence of the dishonesty of a licensee

The PSRA will have power to sanction a licensee up to and including the revocation of a licence and may also impose fines of up to €250,000 where a PSP is found to have engaged in "improper conduct". The Authority may bring a prosecution against a PSP for failing to comply with his or her statutory obligations or against any person providing a property service without a licence which may result in either a large fine or imprisonment or both. Under the new regulatory regime all PSPs are required to contribute to the "Property Services Compensation Fund". Where a person suffers a loss due to the dishonesty of a PSP the Authority may award compensation from the "Fund".

Regulation of property factors in Scotland

Regulation of property factors on the horizon after centuries of imbalance in Scotland

A Bill to require Property Factors to comply with a statutory code of conduct and be registered has been published by Patricia Ferguson MSP. The Property Factors (Scotland) Bill, which has attracted cross-party support, will make it an offence for a property factor to operate without being registered, and will introduce an accessible form of alternative dispute resolution.

The legislation will lead to the establishment of a code of conduct setting minimum standards of practice expected of registered property factors, and will afford greater protection for homeowners from rogue factors.

The publication of the Bill follows several years of campaigning by Mike Dailly, Principal Solicitor at the Govan Law Centre, who has worked alongside the Maryhill MSP pushing for legislation to clean-up property factoring in Scotland. 

Commenting on the publication of the Bill Patricia Ferguson MSP said: "This is a milestone in the campaign to regulate property factors, and to protect homeowners from the unscrupulous practices of those factors that have brought the whole industry into disrepute".

"It is two and half years since I launched a consultation on my proposal to require the registration of factors, which showed overwhelming support for legislation. Hopes were raised when the Office of Fair Trading carried out a study into Scottish Property Factors, but then dashed when they only recommended a voluntary scheme despite concluding that the system is not working well".

"There was disappointment when the Scottish Government refused to legislate, favouring an industry-led voluntary accreditation scheme similar to that which has already failed homeowners. But the campaign was boosted when my proposal received the support of 45 MSPs from across the political divide to allow a Bill to be introduced, and when the whole Parliament supported a motion welcoming the progress towards legislation".

"The publication of my Bill is yet further progress towards legislation that will ensure better accountability of property managers for their standards and the services that they provide and I hope that it will continue to receive the support of my colleagues in the Scottish Parliament."

GLC's Mike Dailly said: "Property factors must be the only industry in Scotland who are virtually unlicensed and unregulated. When one third of your customers are unhappy with the service you provide it's time for a statutory solution. The Scottish Government are consulting on a voluntary accreditation scheme, but we've had self-regulation for centuries and it hasn't worked. The people of Scotland need a solution with legal teeth, and the Bill provides that solution in a fair and measured way".

"By introducing a formal requirement on all factors to be registered in a national register of property factors, the Bill would ensure that minimum standards of practice were adhered to across Scotland. Individual homeowners would be able to rely on those minimum standards in their day to day dealings with their property factor, and in an extreme case a bad factor could be de-registered to prevent them causing ongoing consumer detriment".

"Where a property factor failed to meet their contractual duty, or failed to reasonably adhere to the minimum standards, a homeowner would be entitled to take their dispute to a new tribunal called the 'homeowner housing committee'. There would be no need for a lawyer, and no legal expenses to worry about. The Bill gives the homeowner housing committee the power to ensure compliance with the contract and minimum standards, and where appropriate, require the factor to made a compensatory award or refund to the homeowner".

Full details of the Bill are available on the Scottish Parliament's website here.

Regulation of property factors on the horizon after centuries of imbalance in Scotland

GLC's parliamentary unit assists with 2 new Bills

GLC's Parliamentary & Social Policy Unit has assisted with the policy work and drafting of two Bills introduced in the Scottish Parliament today. 

First, the Protection of Workers (Scotland) Bill (SP Bill 47), sponsored by Hugh Henry MSP, a Bill for an Act of the Scottish Parliament to make it an offence to assault certain persons in the course of or by reason of their employment; and for connected purposes.

Second, the Property Factors (Scotland) Bill (SP Bill 51), sponsored by Patricia Ferguson MSP, a Bill for an Act of the Scottish Parliament to establish a register of property factors and require property factors to be registered; to make provision in relation to the resolution of disputes between homeowners and property factors; and for connected purposes.

The Bills, together with accompanying documents (Explanatory Notes & Financial Memorandum, and Policy Memorandum) are available from the Scottish Parliament's website:

• Property Factors (Scotland) Bill
• Protection of Workers (Scotland) Bill  

GLC's parliamentary unit assists with 2 new Bills

Days of 'debt farmers' numbered as Parliamentary consensus emerges

A strong consensus emerged in the Scottish Parliament yesterday, for the statutory regulation of property factors, in a debate led by Patricia Ferguson MSP, sponsor of the Property Factors (Scotland) Bill. The Official Report of the debate can be read here. You can watch the debate here.

The bill is assisted by GLC's Parliamentary Unit, and in our experience there is a dire need to protect homeowners from rogue factors, poor practice, and in many cases, financial exploitation. Housing Minister, Alex Neil MSP, said he wanted to sit down with Ms Ferguson, and MSPs from other parties, and would give serious consideration to supporting her bill. The Minister advised that resolving the problems around property factors was a 'priority issue' for the Scottish Government.

In opening the debate Ms Ferguson gave examples of the practices of one factor, whom she described as a 'debt farmer':

"Mr and Mrs A are being sued by their factor for almost £3,000. They have been sued several times over the last few years by the company, each time for several hundred pounds that is, ostensibly, due for administration charges, compound interest and legal fees. Their factors are, in my view, nothing more than debt farmers who grow vulnerable customer's debts on a weekly basis by applying excessive administration charges, compound interest and expenses".

"In this case, decrees prevent the family from opening a bank account. Their elderly and frail parents were sued by the same company and were made bankrupt. The family had to find £5,000 to pay the factor, even though the bulk of the sums that were due were for not the original debt but for administration charges, compound interest and legal fees".

Ms Ferguson's motion, as amended, was agreed to by the Parliament:

That the Parliament notes that the Office of Fair Trading market study into the property management market found that the market is not working well for consumers in Scotland; welcomes the recent cross-party support for proposals to require property factors to register and to make provision for an accessible form of dispute resolution between homeowners and property factors; further welcomes this positive progress toward the introduction of legislation to ensure better accountability of property managers for their standards and the services that they provide; seeks to ensure that the appropriate authorities are given the powers necessary for effective enforcement of any new legislation, and calls on the Scottish Government to give consideration to the introduction of a mandatory accreditation scheme to cover private, public and voluntary sector property managers.

GLC believes we are now considerably much closer to securing statutory protection for Scottish homeowners against bad and exploitative factoring practices.

Days of 'debt farmers' numbered as Parliamentary consensus emerges

Bill to regulate property factors gets cross party support

Both the Herald, and the Evening Times, report that a bill to curb the power of rogue property factors and strengthen the hand of homeowners has taken a huge step forward by achieving strong cross-party support at Holyrood.

The proposed Property Factors (Scotland) Bill, introduced by the Labour MSP for Glasgow Maryhill, Patricia Ferguson, had to go out to consultation and then pass the normal first hurdle for a Member’s Bill of attracting the support of at least 18 MSPs. In fact, when the deadline passed 45 had signed up and although the bulk were fellow Labour members, the fact that 11 were from other parties indicates a broad enough consensus to suggest the Bill has a real chance of success.

Four MSPs each from the SNP and Liberal Democrats signed up, plus both the Parliament’s Green MSPs and Elizabeth Smith, the Conservative MSP. GLC's Parliamentary Unit has been engaged to draft the Bill. The Herald story is here, and the Evening Times here.

Bill to regulate property factors gets cross party support

Final Bill proposal published for Property Factors (Scotland) Bill

The final proposal for a Bill which would introduce enforceable statutory 'minimum standards' for property managers in Scotland, and provide for an inexpensive dispute resolution process, has been published today by Patricia Ferguson MSP. Govan Law Centre has long since campaigned for progressive law reform in this area, and we've agreed to draft the Bill and accompanying documents in the public interest.

In order to introduce the proposed Bill it is necessary to gain support from at least 18 MSPs, drawn from half of the parties or groups represented on the Bureau (which in this Parliamentary session means at least two of the four main political parties represented in the Parliament), within one month from today. An extract from today's Parliamentary Business Bulletin is reproduced below.

Patricia Ferguson: Proposed Property Factors (Scotland) Bill - Proposal for a Bill to create a system of registration for property factors, to provide for dispute resolution between homeowners and property factors and to make consequential amendments to the law on real burdens and the Tenements (Scotland) Act 2004 (lodged 21 January 2010).

A summary of responses to consultation on the draft proposal together with copies of each response are available in the Scottish Parliament Information Centre (SPICe).

Supported by: Mary Mulligan*, Cathy Jamieson*, Pauline McNeill*, Margaret Curran*, Paul Martin*, Michael McMahon*, Richard Baker*, David Stewart*, James Kelly*, Des McNulty*, Duncan McNeil*, Hugh Henry*, Elaine Smith*, Marlyn Glen*, Rhoda Grant*, Claire Baker*, Patrick Harvie*, Bill Butler*, Helen Eadie*, Malcolm Chisholm*

Final Bill proposal published for Property Factors (Scotland) Bill