Understanding Property Factoring: Your Essential Guide

If you own a flat in Scotland, particularly within a tenement or flatted building, you will almost certainly come across the term property factoring. Despite how common it is, many owners are unclear about what a property factor actually does, what they are responsible for, and what owners are still required to manage themselves.

This guide explains property factoring in simple terms, sets out how it works in Scotland, and helps you understand why professional factoring plays such an important role in maintaining shared buildings.

What Is Property Factoring?

Property factoring is the management of the common parts of a building that are shared by multiple owners. These typically include areas such as stairwells, roofs, external walls, communal doors, bin stores, and shared grounds.

A property factor is appointed to manage these shared responsibilities on behalf of the owners. The factor does not own the building and does not make decisions for personal benefit. They act as a managing and administrative agent, operating in line with title deeds and Scottish legislation.

Is Property Factoring Mandatory in Scotland?

In many cases, yes.

Most flatted properties in Scotland are subject to title deeds or deeds of conditions that require a property factor to be appointed. Even where this is not explicitly stated, the Tenements (Scotland) Act 2004 allows owners to appoint a factor by majority decision.

Property factoring is also a regulated activity. Any professional factor must comply with the Property Factors (Scotland) Act 2011 and the statutory Code of Conduct.

What Does a Property Factor Do?

A professional property factor is responsible for the management, coordination, and administration of shared areas. This typically includes:

• Managing the common parts of the building

• Arranging and coordinating repairs and maintenance

• Organising inspections where required

• Responding to issues affecting shared areas

• Coordinating emergency repairs when necessary

• Issuing invoices and financial statements

• Acting as the main point of contact for owners

  
  

Importantly, a property factor manages and coordinates services. They do not usually carry out physical work themselves. Repairs, cleaning, inspections, and major works are arranged through third-party contractors and charged separately to owners.

What Is Included in the Factoring Fee?

The factoring or management fee generally covers administration and coordination only. This includes:

• Day-to-day management of the building

• Financial administration and invoicing

• Record keeping and reporting

• Owner communication

• Issue logging and coordination

  
  

The management fee does not usually include physical works, cleaning, insurance, or compliance inspections. These are charged separately based on actual costs and are clearly itemised.

How Are Decisions Made?

Decisions about repairs and maintenance are made in line with:

• The title deeds or deed of conditions

• The Tenements (Scotland) Act 2004

• Owner approval thresholds

  
  

For non-emergency works above an agreed cost threshold, owner approval is required. In emergency situations, a property factor has the authority to act immediately to protect safety or prevent further damage, with costs recovered afterwards in line with legislation.

How Are Costs Shared Between Owners?

Costs are apportioned according to the title deeds. Where deeds are silent, statutory rules apply.

Invoices should clearly show:

• The total cost of works or services

• Each owner’s share

• Any disclosed management fee applied

• Supporting information or invoices

  
  

Owners are jointly responsible for shared costs, even if an individual owner disagrees with the work or fails to pay.

What About Complaints?

All professional property factors must operate a formal complaints handling procedure.

If an issue cannot be resolved directly with the factor, owners have the right to refer the matter to the First-tier Tribunal for Scotland (Housing and Property Chamber). This provides independent oversight and ensures factors operate fairly and transparently.

Common Misunderstandings About Property Factoring

Many problems arise from misunderstanding rather than poor management.

Common myths include:

• The factor owns the building

• The factoring fee covers all repairs

• Owners do not need to be consulted

• The factor is responsible for private repairs inside flats

In reality, owners remain responsible for the building. The factor exists to manage shared responsibilities properly and lawfully on their behalf.

Why Good Property Factoring Matters

Effective property factoring protects both the building and the owners. It helps to:

• Prevent deterioration of shared areas

• Reduce disputes between neighbours

• Avoid expensive emergency repairs

• Ensure legal and regulatory compliance

• Protect long-term property value

  
  

Poor or absent management often leads to higher costs, increased conflict, and declining building condition.

Final Thoughts

Property factoring is not just about administration or invoicing. Done properly, it is about stewardship, planning, and protecting a shared asset.

Understanding how property factoring works allows owners to make informed decisions, engage more effectively, and hold their property manager to the right standards.

If you live in a shared building, professional property factoring is one of the most important safeguards you can have in place.