Scotland’s Property Factoring System Under Fire: Why Change Might Be Coming

Scottish Labour has launched a campaign to overhaul the property factoring system across Scotland, calling it a “racket” that leaves homeowners overcharged and underserved. The party is pushing for legislative reform that would make it easier to remove underperforming property factors and open up the market to more accountable, community-led alternatives.

For anyone who owns or manages leasehold properties in Scotland — whether single flats or larger blocks — this could be a major turning point. Property factoring is often seen as a background service, but it plays a huge role in resident satisfaction, building maintenance and long-term asset value.

In this article, we break down what’s being proposed, why it matters, and what steps property professionals should consider next.

What’s the Problem With the Current System?

Property factors, also known as managing agents, are responsible for maintaining shared spaces in blocks of flats or developments — think stairwells, roofs, car parks, green spaces and lifts. In Scotland, factoring arrangements are often tied into title deeds, which can make switching providers incredibly difficult.

This has led to a number of complaints. Homeowners have reported poor service, unclear invoices, inflated charges, and a lack of transparency around how funds are used. More critically, many feel trapped in long-term agreements with factors who are unresponsive or unaccountable.

Scottish Labour argues that the current system, based on the 2011 Property Factors Act, simply doesn’t give homeowners enough control. Under that legislation, factors must be registered and follow a code of conduct, but the process for removing them is still time-consuming and, in many cases, legally complex.

The Woodilee Case and Growing Public Pressure

This push for reform didn’t come out of nowhere. It has been building over time, fuelled by high-profile disputes like the one at Woodilee Village, a large residential development outside Glasgow. There, homeowners attempted to remove their property factor due to years of dissatisfaction. Despite widespread resident support, the legal hurdles involved have dragged out the process, turning it into a cautionary tale for other communities.

The Woodilee Residents Association took their case to court, arguing that the factor had failed to maintain the development to acceptable standards and that costs were poorly justified. While they’ve made some progress, their efforts have exposed how difficult it is to make changes — even when there is strong resident consensus.

Scottish Labour has cited this case and others like it in their argument for reform. The party wants to make it easier for homeowners to switch providers, promote alternative models like co-operatives or community ownership, and strengthen oversight so that poor service can’t continue unchecked.

Why This Matters for Property Business Owners

You may not be a factor yourself, but if you own flats, invest in leasehold properties or manage buy-to-let portfolios within factored developments, this reform could affect you. Here’s how:

1. Resident Experience Directly Impacts Asset Value

Unhappy residents often translate into harder sales, lower rents and more management headaches. Poor maintenance of shared areas can drag down the kerb appeal of entire blocks, which affects resale values and lets. If factoring reform puts pressure on underperforming agents, the overall quality of property management could improve — and that benefits landlords and investors too.

As an owner, you have a vested interest in making sure your factor is performing. Even if you're hands-off, don’t ignore what your tenants or fellow owners are saying about the upkeep of shared spaces.

2. Exit Planning and Sales Could Get Easier (or Harder)

Leasehold properties in Scotland already face challenges when it comes to selling. If factoring becomes a more visible issue — particularly if legal disputes are ongoing — it can complicate transactions. On the flip side, if reform allows for smoother transitions between providers and more transparent reporting, it could make sales less fraught.

Buyers today are savvier about management charges and service standards. Transparent and fair factoring arrangements could become a selling point. Poor ones will increasingly be a red flag.

3. Opportunity to Influence or Innovate

If reform goes ahead, there may be space for new business models. Community-based factoring organisations, hybrid management structures, or technology-led platforms could step in to offer more responsive, lower-cost services.

If you’re an operator with property management experience, this could be an area to watch. Smaller developments in particular are often underserved and could benefit from a more local, tailored approach.

What Should You Do Next?

If you’re a property professional with interests in Scotland, this is a good time to take stock of how factoring plays a role in your business model. Here are some steps to consider:

• Review your current arrangements: Understand who is managing any factored properties you own. Look at service levels, fees and responsiveness. If you’re hearing complaints from tenants or other owners, take them seriously.
• Speak to residents’ associations: If you own multiple units in a block, you may already be part of a collective ownership structure. Engage with those groups to see whether there’s appetite for change or opportunities to improve existing arrangements.
• Keep an eye on legislation: If Scottish Labour’s proposals gain traction, we could see a formal consultation period or pilot schemes. Being informed early can help you respond faster when changes arrive.
• Explore alternative providers: Even under current law, you may be able to petition for a change in factor if there's strong support from fellow owners. It may not be easy, but understanding the process and what’s available in your area is worth the time.

Final Thought

Property factoring has long been the quiet partner in Scotland’s housing market — essential but often overlooked. That may be about to change.

If Scottish Labour’s proposals gain ground, they could trigger a major shake-up in how shared spaces are managed, how accountable factors are, and how much control homeowners and investors have over the services they pay for.

For property business owners, this is more than just a political talking point. It’s a real operational consideration that can affect cash flow, tenant experience and asset performance. As with many areas of regulation, the businesses that stay ahead of the curve will be the ones best placed to benefit.