Scotland’s property market continues to evolve, with steady demand for city-centre living and a growing reliance on professional factoring services. As urban living intensifies, property factors are expected to deliver efficient, tech-enabled services while navigating a complex regulatory and economic landscape.
Major Trends Shaping the Sector
Urban rental growth and changing expectations
The rental market in Scotland’s cities remains competitive, with increased demand for short-term and furnished lets. This shift has led to more frequent maintenance requests, particularly from landlords who were previously less engaged with their factor. The quality expectations driven by platforms like Airbnb have made common area standards a priority, influencing an increased level of repairs requests and communications with property factors.
Regulatory landscape in flux
The Housing (Scotland) Bill has passed, introducing rent controls and stronger tenant protections. Landlords may struggle to cover rising costs, particularly for repairs and common area maintenance, potentially affecting factoring agreements and service delivery. The Bill also grants Ministers inspection powers over factoring practices and lowers the threshold for owners to dismiss or appoint a manager from two-thirds to a simple majority.
Digital transformation and data security
Digital portals for communication, payments, and maintenance are now standard expectations for tenants and owners. However, with rising cyber threats, property factors must invest in robust data protection measures. The Property Factors (Registration) (Scotland) Regulations 2024 highlight the need for transparency and secure handling of personal data. A breach could severely damage trust between factors and homeowners so investing in securing systems is essential to ensure factors can mitigate any potential threats.
Sustainability and net zero challenges
While the path to Net Zero remains uncertain, energy efficiency is increasingly important. New EPC regulations expected in 2026 will focus on fabric efficiency, emissions, and running costs. Property factors, especially in mixed-tenure developments, will play a key role in advising owners, coordinating communal upgrades, and supporting compliance. Their involvement may extend to managing retrofit projects, navigating ownership splits, and facilitating funding applications.
Key Challenges Facing Property Factors
Rising costs and fee pressures
At a recent Scottish Factoring Network meeting hosted by Share, factors reported contractor cost increases leading to management fee hikes of 10–15%, and in some cases over 30%. Insurance premiums have also surged, with some landlords and factors seeing near 100% increases. These pressures may prompt owners to explore alternative arrangements, such as self-insuring buildings or renegotiating service scopes. The risk of which is potentially a tenement may be under insured. The Scottish Factoring Network invited along Gibbs Laidler, a leading insurance consultancy for Housing Associations across England and Wales to discuss the market conditions, which they described as having shifted from a “soft market” (cheap premiums, little scrutiny) to a “hard market” (high costs, strict criteria). Factors and landlords are encouraged to engage with insurance providers and specialists to ensure they are paying for the right cover.
Communication and tribunal referrals
Communication failures remain a leading cause of referrals to the First-tier Tribunal for Scotland, often resulting in Property Factor Enforcement Orders (PFEOs). These failures may stem from either inadequate processes or poor adherence to existing ones. In some cases, a simple telephone call or a letter to an owner explaining the reason for a delayed response to a repair was all that was needed to prevent a PFEO being issued. Factors must ensure they have proactive, transparent, and well-documented communication strategies in place, aligned with the Property Factors Code of Conduct and importantly they must follow them in ALL cases.
Opportunities for innovation and growth
Digital service delivery is no longer optional. Factors must embrace technology to streamline operations and enhance client engagement. There is also scope for partnership working with contractors, housing associations, and training providers to share best practices and raise sector standards through forums and networks such as the Scottish Factoring Network facilitated by Share.
Conclusion
Adaptability, transparency, and innovation will define successful property factoring in 2026. By working collaboratively, property factors, homeowners, and policymakers can build a more resilient and responsive sector that meets the needs of modern urban living.
