The principal business of the morning is the final day of evidence taking on the Long Leases (Scotland) Bill.
Good morning to the panel.
I am happy to do so.
We are grateful to you for taking us through the delights, as you put it, of the leasehold mechanism in Scotland. However, could you perhaps address the point that I am trying to get to? What is your problem with the exemption in section 1(4)(a), and why do you think that Professor Gretton and the Law Society of Scotland are wrong about it?
Through the mechanism as drafted, limits have been chosen for reasons that have been explained. The variable element of the lease can often be the substantive receipt to the landlord. Scots law requires only that there is a fixed payment of rent certain, in addition to any other mechanisms that you choose. That could be £1 a year, and it frequently is. The rental sharing mechanism often has regard to the very substantial receipts that derive from the occupational subtenants.
If I understand you correctly, you are saying that the provisions in the bill as introduced are inflexible, lack certainty and could be viewed as being unfair to the landlord. Is that correct?
It might discourage future investment in commercial property by serious investors.
Let us develop some of that background. You have given an expostulation of the advantages of the commercial lease arrangement. I find it difficult to see that there can be much certainty in a transaction that has lasted 175 years—which goes back almost to before the railway age. However, I will leave that to one side.
That probably owes something to the creative ability of lawyers to produce a commercial solution that achieves clients’ objectives. It was not in any way an attempt to subvert the abolition of feudal tenure, which was inevitable. It is simply that parties are free to make commercial arrangements within the law and the arrangements that are now in contemplation seek to cut across that, even for some leases of recent vintage.
People might suggest that ultra-long leases are sometimes entered into for tax advantages, given the way in which they are structured. There is an argument that people who order their tax affairs in such a way do so in the full knowledge—if they are properly advised—that there is a risk of changes to the set-up in the future. Why should the legislature subsequently make special provision to mitigate any problems that might arise from that?
In truth, I cannot think of strong reasons why that would be a driver, other than that investors look for certainty in their long-term investments. We mentioned tax structuring in our submission, which is why we deserve this questioning, but I would not major on that issue.
Accepting the argument that there may be technical issues with the compensation arrangements, would you, in an ideal world, prefer the existing ultra-long leases to continue without the intervention of statute in the form of the bill?
It is my submission that parties who made commercial arrangements in a free environment should not have them unwound against their will. Parliament has made clear its intentions for the future by restricting the length of leases permitted after 9 June 2000. That will be adhered to. Leases were put in place before then for good reasons and often after extensive negotiations with the benefit of commercial advice and knowledge of the law as it then was. Retrospective legislation such as the bill is potentially a disincentive to investment. That is my concern.
The City of Edinburgh Council, supported by Glasgow City Council, pointed out in evidence to the committee that leases in which a large grassum is paid with a low or peppercorn rent are unfairly caught by the bill’s provisions on conversion. The alternative position that the Law Society and the Scottish Law Agents Society advanced to us is that such leases are precisely what the bill is designed to capture, because someone who makes a big payment up front has an interest akin to ownership. What is your view on those two positions?
There is a distinction to be made between situations in which the vendor was a local authority and, possibly, subject to common good restraint and those in which the vendor is a commercial party. If the vendor is a commercial party, receives full value and chooses to receive a peppercorn rent in exchange for a long period, I have every sympathy with the bill’s intent, which will be applied to good effect.
Good morning to you both.
That is extremely difficult. I am not a property valuer, but I fully accept that if the intent is—as I understand it from the policy memorandum—not to capture within qualifying leases those that are granted on commercial terms, a view must be taken on where the level is set.
Thank you for that. We heard from Professor Gretton, who does not support the exemption in principle, that an alternative approach might be to extend the qualifying duration to 225 years rather than 175 years. Would that option find any favour with you?
I am glad that you asked me that; I read Professor Gretton’s evidence with interest. The history of property development in Scotland is an interesting pointer in that regard. As I said, many town centres were redeveloped from the 1960s onwards, through the 1970s, 1980s and 1990s. When we reached the current century, the 175-year lease restriction was put in place.
Would you be concerned that moving to 225 years as opposed to 175 years would lead to a lack of consistency with the requirements in the Abolition of Feudal Tenure etc (Scotland) Act 2000 and so on? That point has been put to us by a number of witnesses, and consistency was the argument that convinced them.
Consistency has its merits, but so does pragmatism. We are dealing with a period of about 50 years in which all the town centres in Scotland have been redeveloped, largely using other people’s money. The pragmatic view is that we retrospectively unwind those arrangements at our peril, in the interests of future investment.
Are there any other questions for Mr Strachan? I see that Nigel Don wants to come in.
Good morning. Have you read the discussion in the Official Report on leases for underground pipelines and the like? I hope that you have followed that debate in your reading. Do you have any wisdom to bring to the discussion? It has been an interesting discussion over the past few weeks, but I am still not sure that we really know where the answer lies.
One of the witnesses thought that they were not leased—is that right?
Yes.
Others said that they were. We are talking about the leases for the pipes and cables.
The certainty is that there are pipes and cables down there; the uncertainty is whether leases exist.
I know that there are leases because I have been involved in that kind of thing. In Scotland, in the law of servitudes, for there to be a benefited property you require to take your pipeline to a benefited property that you own, and that is not always the case. So, pipeline leases are taken. I took one to allow an oil company to bring a pipeline in from the North Sea. That was not an ultra-long lease, but it is an example of a lease being used for a pipeline. I am aware of such leases.
Are you confident that such a lease is a meaningful, legal entity in Scots law?
Yes, and I have taken an opinion on that from another academic. Because of the importance of bringing oil in from the North Sea, it is not something to be done lightly.
I am grateful for your answer. You are the first person to have confirmed on the record that such leases are regarded as legal entities.
I agree.
Is there anything that you would like to add, Mr Strachan?
No. I am grateful for having had the opportunity to address the committee.
Ms Reilly?
No. Not for now, thank you.
It was important for us to have had you here for this session and to have received your written submission. It has been exceptionally helpful that you have come to the committee to answer our questions, and we are most appreciative.
I welcome the final witnesses: Fergus Ewing MSP, the Minister for Community Safety, who will be with us for the bulk of the remainder of the morning to discuss various issues; and Simon Stockwell, the bill team manager, from the Scottish Government. We will take a short statement from Mr Ewing, after which we will move to questions.
Thank you, convener, and good morning to everyone. I will make a few introductory remarks on the background to and principles behind the bill. I promise that I will make it short.
Thank you very much. Robert Brown will open with questions on common good.
Common good has been a thorny issue, partly because it is, for good reason, very difficult to accept that the registers of common good assets are comprehensive. Indeed, in the course of its evidence taking, the committee has heard about bits and pieces of common good land that might be subject to ultra-long leases, including Waverley market, the common good status of which has been a matter of contention. Are you attracted to the suggestion that a number of witnesses have made of having an exemption for common good properties? Notwithstanding whatever situation they find themselves in, the councils also seem to think that it is a reasonable way of getting shot of the problem. What is the Scottish Government’s position on the matter?
I do not consider that an exemption should be made for common good. Let me expand and explain: the number of ultra-long leases of common good land is low. Based on the SLC’s analysis, which is contained in the report and has been painstakingly carried out over a long period, we have estimated that there are around 9,000 ultra-long leases in Scotland. However, the number of such leases relating to common good will be less than 1 per cent of that total. The committee needs to bear that important point in mind.
Mr Ewing is perhaps overstating the case. Could he guide use by telling us how many of the 9,000 ultra-long leases are held by councils—let us forget about the common good aspect for the moment—so that we can have a measure of the significance of the matter?
As far we can ascertain, there are three. I can give details: Aberdeenshire Council reported a 999-year lease in Stonehaven of recreation lands that may be held in the common good. The City of Edinburgh Council—
With respect, I think that you have misunderstood. Forgetting common good for the moment, can you tell us how many ultra-long leases are in the hands of councils?
I am sorry. Three is the number of ultra-long leases of common good land that we found in the survey. Simon Stockwell may be able to help you with the number of ultra-long leases that are granted by councils, or he may not.
I do not have specific information on that. We did a survey of the number of ultra-long leases of common good land let by local authorities. When we did that survey, local authorities also told us how many ultra-long leases they had. The answer seemed to be that they had relatively few. I think from memory that Fife Council said that it had three in total. However, we do not have specific information on how many ultra-long leases are held by local authorities. That was not in the SLC report, and we have not asked specifically for the information that Mr Brown has asked about.
I asked for that information because the minister made great play of the fact that the proposed exemption would cause all sorts of confusion and cost if there were challenges to councils’ dispositions of land. However, the land involved could only be, first, land held on an ultra-long lease and, secondly, land that might be common good land. If the number of such examples is only in single figures or perhaps in the scores at most, it does not seem to me that we are talking about a huge issue here. However, the problem is that we do not know how many examples there are, because of the indeterminate definition of common good and the lack of clear information about how many ultra-long leases councils hold.
Simon Stockwell has just said that we do not have information as to the precise number of ultra-long leases granted by local authorities. However, I agree with Robert Brown that there are relatively few ultra-long leases of common good land—there are only three—and that this is not a huge issue compared with the other 9,000 leases that are the main topic of the bill. I am sure that the committee will be aware that councils have carried out a fair amount of work to compile records of common good land. In February 2010, the Auditor General for Scotland published findings on the progress that local authorities have made in compiling common good asset registers. If the committee wishes to pursue the matter further, it might be worth while having a fresh look at the findings that were made on the topic, which I recall followed a consideration of the common good issue in the previous session by the Local Government and Transport Committee, of which I was a member.
It is a difficult area. I accept that we do not want an exemption for no good reason but, nevertheless, even in the committee’s own inquiries, apart from the dispute about the Waverley market—I do not think that we want to go into the details of individual cases—we came across representations about a property in Fife, it has turned out that a property in Pollok park in Glasgow is held on an ultra-long lease within the common good fund and issues have been raised about the status of a number of other parks, in particular.
That is a fair point, and it might apply to some of the few cases where there have been ultra-long leases of common good land. We are aware of the Glasgow and Fife cases, and possibly one involving the City of Edinburgh Council. However, if there is an argument that there is a sort of inalienability, perhaps because the land was intended for community benefit, such as use as a park, it may well be—this is something that could be further researched if the committee so chose—that the lease itself would contain conditions that would require the land to be used in perpetuity for that purpose. The lease might well impose conditions to which the tenant’s use of the land is subject—in other words, that the land must be used as a park in perpetuity. I have not studied the leases in question, but one would expect to see such provisions where the purpose of the ultra-long lease was to ensure that a park was to remain as a park in perpetuity for the recreation of citizens of whichever part of Scotland it is located in. If that is the case, there are provisions in the bill to protect those conditions.
The minister’s reply is helpful in that context, but does he accept that the big difficulty here is that there is a huge element of uncertainty—I use the word “huge” in the sense in which the minister has used it before—because the registers are not complete? Things have been emerging during the consideration of the bill, but we simply do not know—and the minister has not been able to tell us today—the number of ultra-long leases that are held by councils generally, or even how many might in theory be subject to all of this. Can he suggest any compelling reason why there should not be an exemption? Would that not be the safest way in which to proceed, given the importance of the subject and the emotion that is attached to it?
I do not think so. I do not think that it would be fair to characterise the issue as being marked by huge uncertainty—
I am sorry to interrupt but, with respect, you already said that the measure would cause chaos to councils because of the financial pressures. I based what I said on your earlier comments. You suggested that there was a significant problem. I think that we can perhaps agree that it is a modest problem, but is it not significant, given the uncertainty about this matter? Is it not easier to exclude common good properties? Is there a strong reason why that would cause disaster for the Government’s programme?
We have found only a small number of ultra-long leases of common good land. There is not a huge level of uncertainty as to the incidence and usage of such leases. There are barely any in Scotland. There is not a huge degree of uncertainty.
I have one final question, which relates to the argument that there might be all sorts of cases of people challenging this sort of thing. I think that I am right in saying that we heard evidence that any citizen of the town or city concerned has the right, title and interest to sue where a common good issue is at stake. Against that background, is there not already the potential for people, if they are so minded, to raise actions for declarators to the status of certain land that is alleged to be common good land, regardless of whether any change is made in the bill?
Are you talking about enforcement of real burdens in a common scheme of a ius quaesitum tertio nature?
No. Where there is a question as to whether particular land is common good land, would it not be the case—we have heard evidence to this effect—that any citizen affected, perhaps because they live in the vicinity of the park in question, could bring the matter to court? They could say that because the land is claimed to be common good land, they have a potential interest in the matter. Therefore, there is no increased risk of litigation because of changes that might be made in the bill.
There would be an increase in the risk of litigation, because we would be creating an exemption in property law that would be critical and would deal with common good land differently. I think that that would encourage litigation. As to the prospects or incidence of litigation by a member of the public who can argue that he has a right and an interest, by virtue of being a citizen of Nairn, to the Nairn common good fund, I cannot really comment, but I do not think that the bill will really affect that. We are talking about what Professor Gretton described as “a vanishingly small possibility” that a substantial number of properties will be affected.
The issue still arises. As all of us know, there are people in every community who get a bee in their bonnet about certain issues. Glasgow is the most obvious example, because it is the biggest local authority. The number of people who are likely to make an issue of common good land in Glasgow is considerably greater than the number of those who are likely to do so in places such as Nairn or Aberchirder. That danger exists, does it not? Every one of the 760,000 people who live in Glasgow would have an interest and a title to pursue.
Given that we have been alerted to the fact that there are some ultra-long leases of park land and that some of that may be common good land, it would be sensible to invite Glasgow City Council to provide us with its views on the matter. The door having been opened, the committee may feel that it is sensible to pursue the points that Mr Brown and others have made. If the committee wishes to do that, it is fine; I would not disagree with that approach. I give an undertaking to communicate with Glasgow City Council to seek its views on the matter, given that it has been pursued today, and to report back with the responses that we receive.
I was merely citing Glasgow as an example. In fairness, it is probably the extreme example, because of its population, but the issues could apply just as readily, albeit on a much reduced scale, to any other local authority area.
That leads on to a point that I wanted to make. You will see that there is uncertainty in this area. Our job as a committee is to try to be as certain as we can when we consider legislation. I am sure that you have looked at the evidence that we heard on the issue from Glasgow City Council, but I invite you to look at it in more detail. I understand that, towards the end of 2010, the Scottish Government wrote to all 32 local authorities on the issue and asked them to respond by 21 January. How many did so?
I will need to write to the committee with the exact number, but it was about 21. We have not heard from all local authorities. As the minister mentioned, we found three leases as a result of the survey.
I understand that local authorities are supposed to produce registers or to compile lists of all the properties concerned. Were those included in the responses, or was your question specifically about the detailed point concerning ultra-long leases?
It was specifically about that detailed point. We asked authorities how many ultra-long leases of common good land they had granted. The answer that we received was three.
Cathie Craigie made the point that certainty is important. I would have thought that not having an exemption would give us greater certainty, because making an exemption for common good land would allow any citizen to challenge a case. If there is uncertainty and there are challenges, I imagine that some of those challenges could run on for many years and cause all sorts of problems and expense. Given that local authorities hold few long leases and few of those relate to common good land, would it not be better not to have an exemption for common good land, as that would provide more certainty?
Yes. I have made clear that we broadly support that argument. Notwithstanding that, in view of the questions that Robert Brown, Cathie Craigie and the convener have posed today, we will look at the issue carefully once again and come back to the committee if we have any further reflections. However, I hope that we have given a fair account of our view on an issue that I admit is not without its difficulties.
We will now move on to perhaps less contentious issues. You have had the opportunity of listening to the evidence of Mr Strachan, of Brodies, and you have also had sight of the evidence that we have received in recent weeks.
The £100 cut-off is set out in section 1(4)(a). The exception was set out following comments that were made by the Scottish Rural Property and Business Association and the Law Society of Scotland that the bill could inadvertently cover leases let on modern commercial terms, which could not be said to amount to pseudo-ownership. We considered the issue carefully and took the view that the leases that were being described were not meant to be covered by the bill and should be exempted. We also considered whether the arrangement that was set out in the bill for the compensatory and additional payments would cover the points that were made by the SRPBA and the Law Society. On balance, we considered that those provisions would not adequately deal with those concerns.
To some extent, we are talking about the matter in a vacuum, as we do not have the numbers on which we could make a reasoned judgment. The estimate that only seven leases would be affected suggests that the issue is not of great importance, but we cannot be totally satisfied that that is the correct figure. That causes some concern because Professor Rennie stated that it was “crazy” to set the rent level as low as £100, particularly if the intention is to exclude commercial leases, and that a preferable approach would be to use a formula based on a percentage of the capital value—I refer you to columns 4107 and 4108 of the Official Report of last week’s meeting for further details. Do you think that that criticism is valid? I suspect that you do not but, if you were to accept it, do you think that Professor Rennie’s approach might be preferable?
We selected the cut-off point of £100 on the basis of evidence that was carefully researched by the SLC and which I think is fairly clear cut. The SLC has examined all the leases and has gone through all the registers in order to arrive at a figure of how many leases there are. All of that is set out clearly in its report. It has produced a very useful and solid piece of research on which to found the bill and its principles.
Did you consider Professor Gretton’s suggestion—which there is certainly evidence to support—that it might be advantageous to increase the period from 175 years to 225 years?
We considered the length of the lease, as I have outlined. I should say, for the sake of completeness, that the recommendation was that convertibility should apply not simply to leases of more than 175 years, but to leases of more than 175 years that have more than 100 years left to run. That is very important because it was felt that where there was less than 100 years of a lease left to run, the landlord would have a recognisable property interest. That was the broad rationale of the SLC’s proposal, as I understand it.
Cathie Craigie will finish off the questioning in this area, but before she does, I draw your attention to the fact that although the SLC looked at entries in the land register for its study, it did so for only four out of the 33 land registration counties. One hopes that its findings were typical of the whole of Scotland, but when a study is fairly limited, the figures can sometimes be skewed. That underlines the concern that I expressed earlier.
I do not know whether my committee colleagues are interested in this—I certainly am. The minister said that there are roughly 9,000 ultra-long leases. Does the Scottish Government know how many people own the leases? How many owners or landlords are we talking about?
We know that many of the ultra-long leases were originally granted by landed estates and we have some information about who the landlords are in Blairgowrie, because we made inquiries as a result of issues to do with renewable leases that arose there: the committee has discussed the matter. However, we do not have specific information on who the landlords are in the ultra-long leases. That is partly because, although leases might have been granted by the landed estates in the first instance, the landlord interest might have been sold on over the years, given the period that might have elapsed since the leases were first let.
Can you check with Registers of Scotland, to find out the cost in time and financial resources of doing the work?
I know the answer to the question, because I have asked it. What we are talking about is a significant piece of work, mainly because Registers of Scotland would have to look at the register of sasines, which is an older register and is not plan based. Going through the whole register would be quite a job. Registers of Scotland has done work for us in relation to limited examples, but to do it for the whole lot would be a significant task.
When Registers of Scotland did the work on limited examples, what did it learn about how many owners there are as a percentage of the number of leases and about who the owners are? How did that pan out?
We know that ultra-long leases tend to be found in pockets of the country. They tended to be granted in specific parts of the country, perhaps because the landed estates were granting them at the time, for some reason.
We have 9,000 ultra-long leases and I am trying to get an idea of how many owners of leases we are talking about. Are we talking about 10 people or 1,000 people?
It is certainly more than 10—
Is it fewer than 1,000?
If you asked me to guess, I would say that 1,000 might not be a bad guess, but I would need to check the information that I have, because I do not have it to give off the top of my head and I have not asked how many landlords are out there. Martin Corbett of Registers of Scotland is probably shouting at me if he thinks that I am going to ask him to try to find out. However, I can ask the question and see what response I get.
An awful lot of leases will be concentrated in comparatively limited areas. Is there a danger of getting a skewed result?
Yes, there is. We know that ultra-long leases exist in specific parts of the country, so certain areas will produce significant results and others might not do so.
We will move on. James Kelly will ask about finance.
Am I right in saying that the figure of 9,000 ultra-long leases is an estimate that is based on an extrapolation from the Government’s survey?
Yes.
I wanted to be clear about that.
Yes. We considered that when we were framing the exemption. It is necessary to look at the provisions on compensation in relation to rental, and to additional payments. Section 49(1)(c) allows a claim for additional payment to be made in respect of
If you were listening to the evidence earlier, I am sure that you would have heard the discussion about the point that Glasgow City Council and the City of Edinburgh Council have made about substantial grassums being paid up front with peppercorn rents of perhaps less than £100. The councils feel that the bill should not apply to such contracts. The alternative view that has been put to us by the Law Society of Scotland and the Scottish Law Agents Society is that, when a large payment has been made up front, a type of ownership has, in a sense, been taken on and therefore it is correct that such leases should be captured by the bill. Do you have any comments on those views?
I am no expert in that area, but I am aware that in some lease transactions a grassum is paid—a grassum being a price that is paid at the outset. My understanding is that, in such cases, the grassum is the main element of the consideration that is received by the landlord. Indeed, it might be argued that the grassum is equivalent to the price that would be paid for the property were it being purchased, especially if the rent is a peppercorn rent of £1 a year or something like that. If the annual rent is modest and the lease is for more than 175 years and with 100 years left to run, there are good arguments for conversion to full ownership in the normal way with, of course, appropriate compensation and additional payments. However, I think that Mr Kelly’s point—if I understood him correctly, I agree with it—is that, in those cases, payment has, in effect, been made already at the outset of the transaction and the landlord has received payment by way of a grassum of a sum that is broadly equivalent to the price that he would have received had there been a sale transaction. In those circumstances, full consideration may well have been received. If the rent were, say, £1 a year, the compensation will plainly be nugatory.
On that point, a local council that has entered into such an arrangement with a payment up front that was probably the market value might want a lease so that it can keep the property on behalf of the community. It might be in an important part of a city or of the local authority area. Is that a way of allowing councils to keep that public interest?
My answer to that is the argument that I raised earlier: the bill provides not only for leases to be converted, but for title conditions to be preserved. If title conditions are granted to protect an element of public interest, there is provision for those title conditions to be preserved and, therefore, for the public interest to be preserved.
That issue can be considered.
Good morning, minister. I am sure that you are aware of the discussions that we have had over the weeks on the vexed subject of leases for underground pipes and cables. The principle was questioned by Professor Gretton, I believe—
I think that it was Professor Rennie.
Let us not worry about the source.
I must confess that it has been some time since I read Professor Gretton’s evidence of 18 January. He said:
That is where I am starting from.
That seemed to be the point that we needed to study—and study it we will. We introduced the exemption following representations that were made by the SRPBA and the Law Society of Scotland. At that time the SRPBA said that it was aware of leases for pipes and cables that were exactly 175 years long and which would not, as a result, convert under the bill because the leases in question have to be of more than 175 years. However, the SRPBA said that there could be leases of more than 175 years and the Law Society pointed out that until section 77 of the Title Conditions (Scotland) Act 2003 came into force there was some legal doubt about the use of servitudes in respect of pipes and cables. We started off from that statement.
I think that we need to cast some light where there is currently darkness. There are plenty of opportunities to do so today.
We can consider that.
With regard to non-exclusive rights of access to private roads, it was also put to the committee that it seems unreasonable that a leaseholder would suddenly become the owner of the property in question. Another problem that could arise with the provision, and which I do not believe was raised, would be in cases in which two mutual non-exclusive rights of access to a private road were held by a third party.
We have looked at that issue. It was raised by the SRPBA, which cited in particular the example of part of an estate being sold off with an access road being leased to ensure that both the estate owner and the owner of the part that had been sold could use the estate road. Such practical arrangements have probably been made in most estates in Scotland. However, it is not clear whether they are likely to be covered in the bill, under which leases have to be, or must be capable of being, registered. It is possible that there are such leases, although, as I have said, my view is that such arrangements are unlikely to come under the bill. In any event, my officials will explore the issue further with the SRPBA.
Section 7 of the bill addresses the preservation of sporting rights. As you will be aware, Professor Paisley has argued that it is not advisable in policy terms to preserve sporting rights as a “separate tenement” because that would deprive landowners of a material aspect of the right to develop the land without compensation, which may in turn raise ECHR issues. To what extent do you see merit in Professor Paisley’s arguments?
I have not studied the particular arguments that Professor Paisley has advanced, but it is plain that section 7 of the bill allows a landlord to preserve rights to game and fishing. We have received advice that those rights are preserved as a separate tenement in land—in other words, they can be owned separately from the physical land to which they relate. We followed the approach that the SLC recommended in its report.
So you believe that no unintended consequences will arise from section 7, and that the bill is rational and coherent in that respect.
We believe that the bill is consistent with legislation that was passed by previous Administrations to abolish feudal tenure: exactly the same approach has been taken. We are not aware of any significant problems in that area, which has arisen from the Abolition of Feudal Tenure etc (Scotland) Act 2000, and we would not expect many cases to come up.
Good morning, minister. On the conversion scheme for leasehold conditions in the bill, the SLC, as you will be aware, recommended that conditions contained in qualifying ultra-long leases that are comparable to real burdens that are found in conveyances transferring ownership should be subject to a conversion scheme of their own—from leasehold conditions to real burdens—in the bill. The Scottish Government has followed those recommendations in part 2 of the bill.
Our approach in adopting section 53 of the 2003 act follows the SLC’s recommendation at paragraph 4.52 of its report, in which it noted that it was following the regime that was laid down in section 53. In response to the first part of your question, we are acting on the clear recommendation of the SLC, having looked at its consideration of the matter in its report.
So, do you think that section 31 of the bill effectively clears up—I suppose that that is one way of putting it—the arguable position that the two different starting points of the two different bits of legislation end up at section 31? Is that the best way of dealing with the issue?
We thought that it was. I understand that the criticism that has been made of section 53 of the 2003 act is that enforcement rights might be given to too many people. In the past, of course, the feudal superior and the landlord could enforce title conditions, but modern society recognises that, with a tenemental flat, every owner or tenant has an interest in ensuring that the building is properly maintained, and that those rights should extend beyond the feudal superior and the landlord. Modern mores and times require the recognition that a greater variety of people may have an interest in enforcing rights than we might have opined had we been sitting here 150 years ago, for example. I heartily subscribe to that progress.
Section 53 of the 2003 act was quite controversial when it went through, but, somewhat to my surprise, we have not had much correspondence about the existing section. I think that the general tenor of the evidence that the committee has received so far is that there were concerns about the section, but that it is not as bad as critics suggested it might be. That is certainly reflected in our correspondence. We get a lot of correspondence about property law issues, but not on that section.
I think that that is the case from the evidence that Kenneth Swinton of the Scottish Law Agents Society gave. He said:
That is helpful. Thank you.
We turn to residential ground leases.
The Law Society has expressed concern about residential ground leases, which do not qualify as ultra-long leases under the main conversion scheme in the bill, and which could thereby become targets for title raiders. What reassurance can the minister give the committee on that matter?
We took the view that the bill should not cover residential ground leases of less than 175 years. Ground leases are, of course, leases of ground, not the buildings on top of the ground. That differentiates them in principle from what we have been talking about. The SLC considered that matter in part 9 of its report, but it was not included in the bill. In paragraph 9.26 of its report, it estimated that
The Law Society considers that
I will study the Law Society’s views on the matter. I have not read that part of its submission. If there is a proposal involving an element of discretion, that rather sounds like a voluntary proposal. The bill sets out a procedure that would be compulsory. If tenants decide that they wish to convert their long leases, they will be entitled to do so by virtue of the bill.
I wish to address the specific issues around Peterhead Port Authority, of which I think the minister will be aware. It made a submission suggesting that it would have a particular problem with one of its piers. Last week, Professor Rennie questioned whether that would be the case, although he admitted that he had not seen the lease. I have not seen the lease—I do not think that the committee would be qualified to comment on it, in fact. Are you aware of that lease’s particulars? You will have seen the correspondence about it. Do you believe that we should, in principle, be prepared to make exceptions if necessary?
I am aware that a written submission has been received from Mackinnons Solicitors, on behalf of Peterhead Port Authority, dated 14 January 2011. It has been considered by my officials.
I come now to a matter concerning delegated powers in section 78. You will be aware that the Faculty of Advocates has expressed concern about the significant delegated powers for Scottish ministers in the bill, in particular regarding what the faculty views as the potentially far-reaching nature of section 78. The faculty goes so far as to describe that section’s proposed power as
I hesitate to make a judgment about the Faculty of Advocates in such a direct manner as Mr Butler puts it in his invitation. The provisions of sections 78 and 79 appear to me to be of a fairly formal type, which we routinely see in legislation. Having been a minister for four years, I can assure you that there is no Machiavellian purpose to the inclusion of the provisions. Rather, the purpose of such provisions, which have probably been developed over centuries, is to allow future Governments to correct mistakes that have been made by their predecessors. I have noticed as time goes on that provisions of that sort do not seem to be becoming absent from bills. Nonetheless, I will carefully study the particular points that the Faculty of Advocates makes, and I will revert to the committee in due course on that.
I am obliged, minister.
There are no further questions. I thank the minister and Mr Stockwell for their attendance this morning. There are a number of unanswered questions—more than I would have preferred—so it would be appreciated if we could have the information as quickly as possible.