Upper Tribunal orders evidential hearing in dispute over whether company carried out letting agent work

About this case:

• Citation:
  2023UT46
• Judgment:
  External link
• Court:
  Upper Tribunal for Scotland
• Judge:
  Sheriff Frances McCartney

The appellant, Factotum (Scotland) Ltd, argued that the Code of Practice for letting agents did not apply to it and the First-tier Tribunal was wrong to conclude that it did. The application was originally raised by Dr Naheed Rashid after issues were raised by a short-term tenant who had occupied her property prior to a long-term tenant entering in September 2022.

The appeal was heard by Sheriff Frances McCartney of the Upper Tribunal.

No jurisdiction

In the summer of 2022, the respondent engaged the appellant to let out her flat for a short period pending long-term tenants moving into the property in the autumn. The appellant arranged for a tenant to stay in the flat from mid-July to the beginning of September 2022, under two separate contracts, one covering the period of the Edinburgh Festival and another for the period after.

A dispute later arose between the parties stemming from issues raised by the tenant in which the respondent sought reimbursement of certain cleaning charges and compensation for losses. She therefore made an application to the FTS relying on a number of provisions from the Letting Agent’s Code of Practice.

Following two case management discussions, at which no evidence was heard by the Tribunal, the FTS asked for submissions on the argument that the Code of Practice was not applicable in this case. Although it did not make a finding as to the type of occupancy arrangement the appellant had arranged for the respondent, the FTS concluded the Code of Practice applied to every entity carrying out letting agency work in Scotland, irrespective of the type of let.

It was the appellant’s position that the Code of Practice did not apply to holiday or short-term lets and the FTS had erred in deciding that it did. Accordingly, the Tribunal did not have jurisdiction to determine the respondent’s application.

Full circle

In her decision, Sheriff McCartney began by noting: “The starting point is to determine whether the appellant was engaged in letting agency work when acting on behalf of the respondent. That requires an examination of whether the end result, i.e. the agreement ultimately entered into, falls within the definition of a lease or occupancy agreement (and that no other exclusions apply).”

She continued: “Whether there was a lease or occupancy arrangement, the person must have been using the property as a dwelling. If not, the letting agent was not engaged in letting agency work within the meaning of the Housing (Scotland) Act 2014.”

Assessing the decision of the FTS, the sheriff said: “In paragraph 25 the FTS concluded that, because s48 of the 2014 Act does not refer to any restrictions as to who is entitled to make an application to it for determination of a breach of the Landlord’s Code, the FTS had ‘a duty to make a decision on the application.’ At that point the FTS fell into error.”

She explained further: “The FTS thought that because the words ‘letting agency work’ do not appear in s48(2)(b) that it meant any application by a landlord could be considered by the FTS. It is true that s48(2)(b) refers to a relevant letting agent, insofar as a complaint by a landlord is concerned, is ‘a letting agent appointed by the landlord’. However, by s62 of the 2014 Act, a letting agent is defined as ‘a person who carries out letting agency work’. Accordingly, matters come full circle.”

Sheriff McCartney concluded: “The FTS is required to find the facts, and then apply the relevant law to those facts. The facts that require to be found are those to determine the basis on which Dr Rashid’s flat was let. Thereafter the FTS requires to apply the statutory framework to those facts to determine if the work by the Appellant on Dr Rashid’s behalf fell within the scope of the 2014 Act and the Letting Agent Code of Practice therefore applies.”

The matter was accordingly remitted to the FTS for an evidential hearing on the nature of the contractual arrangement that was in place.