The Compliance of Landlords and Letting Agents in Scotland

10/03/2016 By Mark Long

In 2012 the law was changed to prevent letting agents and landlords charging additional fees to private tenants. Since then there have been various claims about what impact this change has had on the industry, landlords and Scotland’s renters. This research conducted for Shelter sought to establish the level of compliance and whether letting agencies are continuing to charge fees to renters.

BVA BDRC worked alongside property experts Rettie to deliver a wide ranging study comprising mystery shopping, telephone interviews with sector experts and letting agency managers, and a full review of previous quantitative research undertaken by YouGov.

The consensus among sector experts and letting agency managers was that the vast majority of agents and landlords in Scotland are now complying with the law and not charging fees, with only a minority continuing to break the law.

Some reported that some agencies are exploiting loopholes to comply with the letter, but not the spirit of the law. It was not possible to be conclusive about the number who do not comply but the research points to it being around 10% of the market.

  • One in twelve agencies in the mystery shopping exercise were clearly acting in breach of the law and charging fees.
  • 12% of landlords said they had experienced or heard of tenants being charged fees since 2012, and 8% were making such charges themselves.
  • Renters in Scotland were far less likely to be charged fees than in other areas of the UK. None the less, 17% of renters moving in Scotland in the last two years said they had been charged fees on top of their rent and deposit (26% among those moving with a letting agency).

Lack of enforcement was considered to be one of the main reasons for non-compliance. Fewer than 1 in 5 letting agency managers said that the enforcement or penalty measures for non-compliance were robust enough. Some sector experts felt that, in common with other recent changes (e.g. registration of landlords), the lack of visible regulatory enforcement was limiting full compliance.

Lack of awareness was also considered to be contributing to the lack of compliance. Under a third (32%) of renters in Scotland clearly understood that there was a law banning fees, with only half of these recalling the clarification in the law in late 2012. Despite the fact landlords are also impacted by the clarification, and not allowed to charge fees to renters, only a small majority (55%) of landlords were aware of the law being in existence.

Unsurprisingly, support for the law was strong among renters in Scotland, with 56% agreeing that it improves the rental sector compared to only 5% that disagree. Even among letting agency managers, the majority view (54%) was that the clarification of the ban on fees was positive for the sector.

BVA BDRC’s findings make up a significant part of the Shelter report published in 2014, which is available here:

You can download our research report here. If you have any questions relating to this or any more of our Compliance or Private Rental Sector research please get in touch with Mark Long or Bethan Cooke.