The History of Property Factoring in Scotland (1900–2026)

Scotland became the first UK nation to regulate property factors in 2011. But to understand why that matters—and what's coming next—you need to understand what came before: a century of informal arrangements, mounting scandals, and an industry where "any cowboy could be a factor."

Before 2011: The "Wild West" Era

To understand Scotland's property factoring industry, you need to understand Scotland's unique built environment. Unlike England's leasehold system—where a freeholder owns the building and leases individual flats—Scottish law is based on common ownership. When you buy a tenement flat in Glasgow or Edinburgh, you own your flat outright and share ownership of the "common parts" (roof, stairs, close) with your neighbours.

This distinction isn't merely legalistic. It's the fundamental driver of the management challenges that plagued Scottish homeowners for a century.

Origins of the "Factor"

Factoring emerged from the tenement building boom of the late 19th and early 20th centuries. During this period, landlords owned entire tenement blocks and employed factors as rent collectors who also managed building upkeep. The factor was the landlord's agent, holding significant power over tenants.

But the mid-20th century transformed this dynamic. As private renting declined and Right to Buy policies accelerated owner-occupation in the 1980s, monolithic ownership fractured. By 2000, a single tenement might contain owner-occupiers, private landlords, and social housing tenants—all with shared responsibility for common repairs but no clear mechanism for collective decision-making.

Consumer Detriment in the Deregulated Era

Before 2011, there was no statutory requirement for factors to be qualified, no mandatory code of practice, and no dedicated tribunal to handle disputes. The barriers to entry were non-existent: anyone could purchase a ladder and a ledger and declare themselves a property factor.

The Office of Fair Trading's landmark February 2009 market study found the sector was "not working well for consumers," with 30% of homeowners dissatisfied with their factor and two-thirds of complainants unhappy with complaint handling.

Common abuses included:

Opaque billing: Homeowners received invoices with vague line items like "general maintenance" without supporting evidence.

"Golden hellos" and hidden commissions: Factors routinely received undisclosed commissions from insurance providers—often 20-40% of premiums—creating perverse incentives that conflicted with their duty to homeowners.

Aggressive debt recovery: Factors placed "Notices of Potential Liability for Costs" on property titles, effectively blocking home sales over disputed debts as small as a few hundred pounds.

The switching trap: Title deeds often required majority or unanimous votes to change factors. In mixed-tenure blocks, private owners felt powerless—locked into services they couldn't influence.

"Those of us who were prepared to give a fair wind to a voluntary accreditation scheme have been badly let down by both the Government and the sector."

— David McLetchie MSP, Scottish Parliament, December 2010

The Property Factors (Scotland) Act 2011

The political impetus for regulation crystallised around Patricia Ferguson MSP (Labour, Glasgow Maryhill)—a constituency dense with tenements and factored properties. Ferguson championed homeowners who felt trapped by rogue operators, with drafting assistance from Mike Dailly, Principal Solicitor at Govan Law Centre.

The voluntary approach had failed. When the Scottish Government launched "Quality in Common" in May 2010—a proposed voluntary accreditation scheme—industry reluctance doomed the initiative. Legislators concluded that self-regulation would never materialise.

The Bill passed unanimously on 3 March 2011, receiving Royal Assent on 7 April and coming into full force on 1 October 2012. Scotland had become the first UK nation with comprehensive property factor regulation.

Three Pillars of Regulation

The Act established three interconnected mechanisms that continue to govern Scottish factoring today:

The three pillars of the Property Factors (Scotland) Act 2011

Industry Growth and Consolidation (2012–2025)

The Property Factor Register went live in October 2012 with 248 registered factors. The trajectory since tells a story of growth, saturation, and aggressive consolidation.

Source: Scottish Government FOI release (February 2025)

The Great Consolidation

The 2015–2025 period saw aggressive mergers and acquisitions as larger firms sought economies of scale. In a low-margin, high-volume industry, size became the only protection against rising compliance costs.

James Gibb / Strathspey Capital: When Strathspey Capital acquired James Gibb in 2012, it managed just 4,000 properties. Through systematic acquisitions—Life Property Management (~18,000 properties) in August 2019, Graham and Sibbald's Dundee division, FG Burnett's Aberdeen factoring (3,000 units), and J Reavley Factoring (1,400 units)—James Gibb grew to over 54,000 properties. The 2023 acquisition of Speirs Gumley (~32,000 properties) created Scotland's largest factoring business with 87,000+ properties under management.

Wheatley Group / Lowther Homes: The October 2020 merger of YourPlace Property Management and Lowther Homes consolidated the Wheatley Group's factoring operations, creating Scotland's second-largest factor with 29,000+ customers.

National players: The entry of UK-wide giants like FirstPort into the Scottish market changed the competitive dynamic, bringing sophisticated systems from the English leasehold sector but often facing criticism for a "remote" management style.

The Code of Conduct: 2012 vs. 2021

The original 2012 Code focused heavily on process—requiring a Written Statement of Services and complaints procedure—but lacked teeth regarding quality of behaviour. Homeowners complained that factors complied with the "letter" of the Code while violating its spirit.

Following consultation, a revised Code came into force on 16 August 2021, shifting focus from procedural compliance to ethical conduct.

The Tribunal System: Access to Justice

The Housing and Property Chamber has processed over 1,300 property factor cases since 2012. Case volumes have exploded—a 19% year-on-year increase in 2023/24 reflects both increased consumer awareness and persistent dissatisfaction.

Halifax v Hacking & Paterson (2025)

The most significant recent precedent came from Halifax v Hacking & Paterson in 2025. The Upper Tribunal ruled on the critical issue of "Authority to Act": where title deeds specify a mechanism for appointment, "custom and practice" is insufficient to establish authority.

This ruling was seismic. It effectively forced factors across Scotland to audit their portfolios—if they couldn't prove appointment according to title deeds, their contracts could be voidable. For homeowners, it created new leverage to challenge factors' legitimacy.

Enforcement Orders and Non-Compliance

When a factor is found in breach, the Tribunal issues a Property Factor Enforcement Order (PFEO), typically requiring specific actions and compensation. Failure to comply is a criminal offence—and the primary ground for removal from the Register.

FOI data reveals a "Hall of Shame" of repeat offenders:

Factors with highest recorded PFEO non-compliance (2012–2025)

Strike-Offs: The Ultimate Sanction

The credibility of regulation rests on Scottish Ministers' power to remove factors from the Register. Removal is a "corporate death sentence"—operating while unregistered is a criminal offence.

The Apex Precedent (2020)

Apex Property Factor Ltd became the first commercial factor struck off for failing the "fit and proper person" test due to systemic non-compliance. Affecting properties across Paisley, Renfrew, Cumbernauld, Motherwell, Dumbarton, and Clydebank, the case demonstrated that government was willing to use its "nuclear option."

Following removal, the Scottish Government wrote to all affected homeowners with guidance on their options. The case highlighted both the regulatory system's capabilities and the chaos that follows when a factor suddenly disappears.

Current Challenges (2025)

Despite regulatory improvements, consumer complaints are rising. Citizens Advice Scotland's 2025 data confirms a 19% year-on-year increase in factoring complaints—billing and charges, particularly excessive or unusual fees, remain the primary dispute category.

The Competition and Markets Authority's 2024 housebuilding market study delivered perhaps the most damning assessment, finding "significant consumer detriment" and concluding that Scottish protections "don't go far enough."

The Insurance Commission Scandal

Insurance commissions remain a flashpoint. The Financial Conduct Authority's 2024 review found commissions were often inflating premiums by 30% or more, with little evidence of fair value to customers. The 2021 Code requires factors to disclose commission amounts if asked, but reformers argue for proactive disclosure or complete bans.

Housing (Scotland) Act 2025

The Housing (Scotland) Act 2025 introduced new powers including:

Inspection powers: Authorised persons can now inspect factors' premises and records to monitor compliance—marking a shift from reactive complaints to proactive regulation.

Easier switching: The threshold for dismissing a developer-appointed manager dropped from two-thirds majority to simple majority, empowering owners in new-build estates.

The Future: Mandatory Owners' Associations (2026)

The most significant development on the horizon is the Scottish Law Commission's December 2025 report proposing mandatory Owners' Associations for all Scottish tenements.

If implemented following the May 2026 Scottish Parliament election, this would give Scotland's tenement owners something they've never had: automatic legal structures for collective decision-making.

For the factoring industry, this represents fundamental transformation. Factors would shift from "managers of buildings" to "executives of associations"—dealing with constituted bodies rather than disengaged individuals.

"Owners' associations will not be a standalone solution, but represent a positive addition to the effort to improve the condition of this vital element in Scotland's housing stock."

— Professor Frankie McCarthy, Scottish Law Commission

Complete Timeline: Key Milestones

Conclusion

Scotland's property factoring industry has undergone genuine transformation since Patricia Ferguson's Bill passed in 2011. The "cowboy" era of unregulated abuse—where £8 disputes could become £1,200 demands and consumers had no accessible recourse—has given way to mandatory registration, enforceable standards, and free tribunal access.

Yet the CMA's assessment that current protections "don't go far enough" resonates with rising complaint volumes and persistent frustration. Market consolidation has created efficiency but also concentration—the top three groups now control roughly a quarter of all factored properties.

The Scottish Law Commission's mandatory Owners' Association proposal represents the next evolutionary step—moving from regulating factors to empowering the homeowners who hire them. If implemented, it would complete a remarkable 25-year journey from consumer exploitation to structural empowerment.

For now, Scottish homeowners have more power than they've ever had: the right to a registered, Code-compliant factor; free tribunal access when things go wrong; and—crucially—the ability to switch factors with a majority vote of owners.