Buying a flat with a factor: fees, sinking funds and warning signs
Many Scottish flats are managed by a property factor. A good factor keeps the building in repair and the costs predictable. A poor one can leave you with surprise bills. A few checks before you offer tell you which you are buying into.
Before you offer, ask for the factor’s name, the annual management fee, what it covers, the float you will pay on entry, whether there is a sinking fund and how much is in it, and whether any common repairs are planned. Large planned works or a building with no reserves can mean big bills soon after you move in.
What a factor does
A property factor manages the shared parts of a building or development on behalf of the owners. Typical services include arranging common repairs, stair cleaning, common buildings insurance, and maintaining shared gardens and lighting.
The costs
- Management fee: the factor's charge for running the building, usually billed quarterly or annually.
- Your share of costs: cleaning, insurance, repairs and services, split between owners as set out in the title deeds.
- Float: a one-off deposit paid when you buy, usually refunded when you sell.
- Sinking fund: regular contributions saved for future major repairs. Not every building has one.
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Questions to ask
- Who is the factor, and are they on the Scottish Property Factor Register?
- What is the annual cost, and what does it include?
- How much is the float?
- Is there a sinking fund? How much is in it?
- Are any common repairs planned or already agreed by owners?
- Are any owners in arrears?
The seller's solicitor will usually provide a factor's letter later in the process, but asking these questions before you offer helps you price the property.
Warning signs
- Large repairs agreed but not yet paid for
- No sinking fund in an old building with roof or stonework issues
- Home Report items in category 2 or 3 for common parts
- Frequent changes of factor, or owners in dispute with the factor
If things go wrong
Registered factors must follow a Code of Conduct. If a complaint isn't resolved with the factor, owners can apply to the First-tier Tribunal for Scotland (Housing and Property Chamber).
Frequently asked questions
What is a factor float?
A one-off deposit paid to the factor when you buy, usually refunded when you sell.
Can owners change their factor?
Often yes, if the required majority of owners agree, depending on the title deeds.
Do property factors have to be registered?
Yes. Factors must be on the Scottish Property Factor Register and follow a Code of Conduct.
Sources
This guide is general information, not legal, tax or financial advice.