Local Government and Communities Committee

Meeting date: Wednesday, September 8, 2010

Official Report 466KB pdf

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Property Factors (Scotland) Bill: Stage 1

Item 4 is oral evidence at stage 1 of the Property Factors (Scotland) Bill. I welcome our witnesses: David Ogilvie is policy and strategy manager at the Scottish Federation of Housing Associations; Alex Middleton is managing director of Greenbelt Group Ltd; David Reid is company secretary, chief executive’s office, at Hanover (Scotland) Housing Association; and Lorraine MacDonald is vice president of the Property Managers Association Scotland. Given time constraints and the size of the panel, I propose that we go straight to questions. I hope that that is agreeable.

Do the witnesses think that the bill, if enacted, would benefit the many residents who think that factoring services are not delivering benefits to their communities?

The SFHA welcomes the bill. We are fairly content that, by and large, the services that are provided by housing associations are more than up to the standards that are set out in the bill—particularly in the light of the fact that lately we have been doing a lot of work on the matter.

Some housing associations and co-operatives in Scotland have been thrown into a factoring role, some have grasped the role because they have seen an opportunity and some are growing factoring as a social enterprise opportunity. More than 47,000 properties under the management of housing associations in Scotland and an additional 35,000 owners receive services from a subsidiary company of a housing association, or from the housing association itself.

In the light of some failings in the sector, we sought to produce a guidance document on factoring; we sent a copy to the committee with our submission. The sector is already very well regulated under the auspices of the Scottish Housing Regulator. When that regulation is combined with the guidance, the sector is ready to go.

We give a thorough welcome to the Property Factors (Scotland) Bill, with the caveat that additional costs may arise from it. We are also concerned that excessive regulation could drive up costs for housing association factors.

Thank you for the opportunity to contribute. The question is an excellent one. In effect, it covered the whole issue. The bill recognises the need for registration, regulation and resolution—which are all good things for the industry, as they are for any industry. The bigger picture, so to speak, is that there is a lack of the three Rs in property management. I therefore welcome the opportunity that the bill or some other mechanism will allow to make that happen.

We are confused about some of the drafting of the bill. We understand that it applies to property factors. In our submission to the consultation, we made it clear that Greenbelt is not a property factor; indeed, we have been making that clear for a number of years. We have an interest in the bill, but it does not apply to us. That may sound like a pretentious thing to say, but that is our position. At the end of the day, we support a means or mechanism that would allow the introduction of the three Rs.

Other initiatives that are in place, including the accreditation scheme that is well advanced, might well achieve the three Rs. We are part of the on-going discussions on the scheme that have moved on quickly in recent times. The accreditation scheme should be given the opportunity to achieve the three Rs. Importantly, there is a general willingness for the industry to engage in the accreditation scheme process.

I turn to the question whether the bill will achieve what it sets out to do. We appreciate the intentions that lie behind it but, in its current form, it will not achieve that. We look to the accreditation scheme to achieve the objectives of the bill, which are customer interests and how to manage them.

I have a question for Mr Middleton. Will you expand on your statement that you do not think that the bill in its present form applies to the services that you deliver? I assume that that was what you said.

Yes, absolutely. As we have been trying to make clear for a number of years, a property manager is responsible for administering somebody else’s land—for example, common land or common parts—which is not our situation. Greenbelt is a landowner; it administers its own land. That simple distinction needs to be made. If Greenbelt is included in the Property Factors (Scotland) Bill as it stands, an automatic conflict arises with the Titles Conditions (Scotland) Act 2003.

Would any other panel member now like to respond to the original question?

Hanover Housing Association’s view broadly echoes that of the SFHA. We provide a factoring service to 1,000 or so retired self-funding owner occupiers in 30 to 31 developments across Scotland. Our practice is to adhere to the “Private Retirement Housing: Code of Practice”, which the Minister for Housing and Communities launched last year. I have the document in my hand; I think that the committee is familiar with it. We expect the standards in that document to be reflected broadly in the proposed code of conduct under the bill, as well as in the voluntary accreditation core standards, on which the Scottish Government is consulting. The prospect of a statutory code does not therefore present us with any difficulties. We believe that they are standards to which we should be working.

However, we echo the comments that are made in paragraphs 14 to 17 of the SFHA’s written submission about funding. Our customers are particularly sensitive to cost increases because they depend on pensions and savings returns for their living income. An exemption for registered social landlords would therefore be particularly welcome if it is eventually decided to proceed with mandatory registration.

An effective regulatory regime needs to focus on areas of bad practice in the sector, and to try to take a light touch across the body of providers, if at all possible.

We note the reference to a proposed register of properties; it will be interesting to learn what the purpose of such a register is and the extent, if any, to which it is anticipated that the regulatory body will carry out an active programme of inspection and investigation rather than merely responding to complaints that are lodged about reported breaches of the code of conduct.

Those are our main concerns, but I have a final observation: we foresee a role in dispute resolution for the Scottish Public Services Ombudsman.

My short answer is that, yes—the bill as introduced would improve standards in property management for the consumer, which is ultimately what we are trying to achieve. The PMAS supported the proposal that was made before, and supports the current proposal for accreditation. We have worked very hard and been involved with the working party during the past 18 months in support of accreditation. The bill would be another option for raising standards in property management.

The industry knows that there is a requirement to raise standards—there is no denying that—but the question is about how we go forward. The PMAS is concerned that accreditation being so far down the line and the Property Factors (Scotland) Bill being introduced has led to some confusion. There are people who were behind accreditation who, when the bill was introduced, wondered whether they should go for accreditation or just wait for the proposals in the bill. That confusion has disappointed me because of the amount of work that has been done, and it is as if we have been taken off the tracks.

Despite that, we are behind whatever has to happen in order to improve standards. My concern would be about the costs of implementing the bill and seeing it through. I am sure that Consumer Focus Scotland will have concerns about the cost to the consumer at the end of the day, and that is a concern for us as well. I would like the proposals in the bill and accreditation to come together in some way because they are trying to do the same thing.

As I understand it, the bill is before us today because of the dissatisfaction that there has been for a number of years, particularly with the role that is played by property factors, their inaction, or the lack of transparency in the services that are being delivered. I welcome the fact that Ms MacDonald has indicated that the PMAS is going for some kind of accreditation for its members. The reality is that we would not be considering the bill if property factors had been carrying out their duties and tasks as they were expected to by their customers and the residents in the areas that they cover.

I understand that there is a slight difference between the membership of SFHA and Hanover Housing Association and the private property factor service that is delivered throughout Scotland. Ms MacDonald indicated that her members were seeking to go for accreditation. Now that the bill is before us, why do they feel that the train towards accreditation has stopped all of a sudden? Why do they not feel that they can continue to go for accreditation to complement the bill?

11:45

They will do that. We intend to continue to support accreditation while the bill is being considered, and we will await—and, we hope, contribute to—the eventual outcome.

I understand what John Wilson is saying, but we fully support accreditation and we will take it forward. The core standards are very good and a lot of work has gone into them. We are not taking our foot off the gas on accreditation—far from it. It is just that the bill has led to a bit of confusion and negativity.

That is understandable, because all of a sudden we have been presented with something else. There is no code of conduct or set of core standards in the bill yet, so we wonder what will happen in that regard and whether it will be any different from the core standards that have been introduced for accreditation. We genuinely believe that the accreditation standards are a way of placing a badge of honour.

I am aware of the concerns. The debate on property management that was held in Parliament was really interesting. It was good that it took place, because the subject is a constant talking point. The Office of Fair Trading inquiry also produced a good report.

The biggest problem in property management is redress; no one has anywhere to go if they feel that they are not getting a good level of service. We believe that the accreditation scheme combats that with an ombudsman service, and that it contains a good redress proposal.

The concern that arose from the debate related to rogue factors and whether an accreditation scheme would catch them. I understand that concern, and we share it. However, it was hoped that the accreditation would be a badge of honour—for example, councils would recognise only accredited managers for grants, and planners would insist that an accredited manager be appointed to manage property.

We view the scheme as positive, but I understand the concerns that it may not get rid of rogue factors, which is why we support the bill. Perhaps the bill can dovetail into the accreditation scheme in some way. I do not know; I am not a politician.

I seek clarification on Mr Middleton’s earlier point. You do not feel that Greenbelt would be liable under the eventual act, if the bill is passed. Why is it that Greenbelt, as what is in effect a factoring company, is able to receive income from landowners for maintenance of land that it owns? I am sure that you would not like it if I asked you to pay out of your pocket to maintain my lawn, for example, but that seems to be the system that certain companies, particularly Greenbelt, operate.

First, there is a term “land maintenance companies”, which I do not necessarily recognise. The name is Greenbelt; we identified a need and developed an arrangement through early consultation of local authorities 15 years ago. The need is that an individual must take responsibility for the land in the same way that the local authorities did. In return for the land, which services and benefits a development, responsibility is taken for administering it, whether that involves maintenance, collecting contributions, insurance, health and safety, or management.

The Greenbelt arrangement involves taking responsibility for the land. It is directly linked to and aligned with the Title Conditions (Scotland) Act 2003. In effect, the arrangement is that, in return for our taking on the responsibility and obligation to manage the land, the title burdens require the owners who are associated with the land to make a contribution to the cost. That mechanism is quite different from a common ownership mechanism. We administer our own land, whereas property factors who operate under a common ownership-type model administer someone else’s land as management.

If the bill applies to property factors in the true sense—those who administer and manage common land or someone else’s land—there is every opportunity that the bill will go quite a long way. As things stand, if groups such as Greenbelt are included in the bill, there will be conflicts with the Title Conditions (Scotland) Act 2003. As an aside, I suggest that the housing associations might well find that there are conflicts with one or two other acts, such as the Tenements (Scotland) Act 2004, but perhaps those issues can be overcome. However, in our situation, it is quite clear from the Title Conditions (Scotland) Act 2003 that there will be a conflict.

Let me start off by asking the most obvious question. Why have 53 per cent of customers of property factors had reason to be concerned about the quality of service that they receive, and why have 35 per cent of such customers made a complaint, whereas in other sectors 14 per cent of customers are dissatisfied with the service that they receive and 10 per cent make a complaint? Why is there is such a difference with property factors? What is going wrong, from your point of view? You are the people in the field who deliver the service, and customers are not happy.

I can understand the concerns. To be honest, I am not a statistician so I never take an awful lot of account of such things, but we obviously understand that there are concerns about the industry. I have to say that many of the concerns—I will bang on about this until I am blue in the face—are due to lack of education. An awful lot of the issues and complaints about property management are due to a lack of understanding on the part of owners about what their obligations are. Do not get me wrong—I fully admit that standards in property management need to be raised. The PMAS recognises that. By the same token, many complaints boil down to—I do not mean this in a disrespectful way—lack of education. Many owners do not realise what their obligations are and what the agent’s obligations are. An awful lot of the complaints stem from a lack of knowledge, in all honesty. I genuinely believe that that is part of the problem.

However, some of the complaints are due to a lack of service or poor service. A lot of those are as a result of rogue factors. Perhaps the percentages are quite high because there are a good few rogue factors out there. As I said, we recognise that there are concerns, but by the same token—I have said this at accreditation meetings and at seminars—a lot of money needs to go into educating owners about their responsibilities for their property.

I am very conscious that, historically, there has been an unusually large number of what we can call complaints for just now and inquiries or concerns about the property management industry, including companies such as Greenbelt. Over the past three years, Greenbelt has introduced a customer care charter, which ensures that we attend promptly to every inquiry—whether it be a complaint, an offer to pay or a notification of change of ownership. Some 84 per cent of our inquiries are dealt with—done and dusted—within 20 days. The customer care charter is one thing that we are bringing to the table in the discussions about the accreditation scheme.

Codes of conduct are also important in ensuring that everyone understands exactly what they are doing. In the past, there were a number of codes of conduct, but there was perhaps not one consistent code of conduct to which everyone could refer. We apply service level agreements and quality agreements in a similar way to that of local authorities. There is an expectation of value. It is a quality contract.

Another thing that we have introduced in the past few years is an element of consumer choice, which, in our view, the bill does not recognise. One interesting aspect that we have discovered in relation to consumer choice is that there is a high level of reluctance to take on responsibilities for our land and its associated long-term management.

We have proactively pushed consumer choice with certain developments and residents groups. It comes down to performance on the sites and in property management. The accreditation scheme focuses on that—the code of conduct and the customer charters deal with the level of service that is provided. The scheme also introduces dispute resolution, which is the one area in which something is lacking.

There are two parties involved in a dispute, and Lorraine MacDonald made the point that many complaints come down to a lack of education. Part of the dispute resolution process is about educating those who are involved, so that each side understands exactly what their responsibilities are. A good, strong dispute resolution service would go a long way towards alleviating concerns and the impression that there is a big problem.

In the past two or three years, all those in the property management industry have come to realise that the customer element is as important as the delivery element. A mechanism for pulling that all together and looking objectively at the nature of complaints and inquiries and where they come from would be helpful for everyone.

I accept that the sector is perhaps rushing to get its house in order before statutory obligations are imposed. I am slightly worried by the idea that a significantly high number of complaints in the sector are due to the customer’s lack of knowledge. That is perhaps a reason to go further through legislation and guidelines to ensure that things such as billing are standardised, transparent and detailed.

There is a hotch-potch out there at the moment. If someone gets a bill from their factor, they must try to decipher what they are being billed for, why they are being billed and why they are obliged to pay. With regard to the knowledge gap, the onus should be on the factor, not on the consumer who is paying the charge.

I am delighted to hear that there is a move to improve things, but I am not sure about dispute resolution within individual housing associations and factoring companies. If the sector is getting its house in order and moving in the right direction, what is there to fear from registration?

There is a concern—I would not describe it as a fear—in the housing association sector about the challenging financial environment that housing associations will face in the next few years. In that context, there is a greater than usual degree of cost sensitivity, as housing associations are concerned about how they will manage costs in the round.

With regard to factoring, a statutory and mandatory responsibility to bring things up to a certain standard would be welcome on one level, but there will be an inherent cost involved, and we need to be mindful of that. That is probably the housing association sector’s main point of contention.

I want to come back on the first question. Some useful points have been made about information and education, but the issue is broader than that. Home ownership as a concept is something that we all need to get to grips with.

We are entering an economic environment in which we will all have to take far more responsibility and make more of a financial contribution towards the places in which we live. We need to help people to achieve that culture shift, and to view their homes and communities in terms of asset management. We are much more confident of that in relation to the housing association sector, where we are looking at things over the longer term, as part of a 30-year cycle, and trying to deliver cost efficiencies over that timescale.

If we could get more people in the private sector—the owner-occupier sector—to think in those terms, with the assistance of good-quality factors, we would be in a much better position. That answers the first question, but I really wanted to make that point.

Another point is that housing associations are regulated by the Scottish Housing Regulator, which publishes a set of activity standards for property maintenance factoring. As we mention in our written submission, the relevant SHR activity standard is:

“We are fair, efficient and effective factors for other property owners. We manage factoring funds on behalf of owners in a proper and accountable manner.”

To me, that says that the SHR is already aware of the need for associations to pull themselves up by their bootstraps. We hope that there is sufficient regulation through that.

12:00

As far as the PMAS is concerned, there is absolutely no fear of registration. We are fully behind any form of regulation or voluntary accreditation scheme that will raise standards, so there is no fear in that respect. Our only concern is that we are so far down the line with the accreditation scheme. Mr Wilson asked why we do not just keep going with that—which is fine, and I think that we will keep going—but I think that the accreditation scheme has slowed up because of the introduction of the bill. We really need to get this sorted. We need to get something out there so that people raise standards and there is a code of conduct or core standards for people to abide by. That is our frustration to a certain extent. That is why I advocate that we should bring the two things together in some way.

I want to add a comment in response to Mr Doris’s first question. Did he say that there was a 35 per cent dissatisfaction rate?

Our briefing states:

“53% of owners with a property manager reported that they had cause to complain about the service and 35% of all consumers went on to make an actual complaint”.

Hanover undertakes three-yearly surveys of the owner-occupiers to whom we provide a service. Our most recent survey in 2009 generated a 58 per cent response rate, which I am told is quite high as these things go. Across the board, 22 per cent described themselves as very satisfied with the service that they receive, 72 per cent described themselves as satisfied, 4.4 per cent said that they were dissatisfied and 1.6 per cent said that they were very dissatisfied. Although the survey asked a range of questions, that highlight serves to illustrate how the percentage figures that are quoted as industry averages must surely hide a wide variation among providers.

Absolutely. Worryingly, that means that, for some factors, the dissatisfaction rate will be far higher. The figures that have been quoted perhaps show that Hanover is in quite a good place, which is all credit to that organisation. However, I am still unclear about why the development of the accreditation scheme has slowed down. I would have expected it to have sped up or to have been fast-tracked and focused on. After all, registration is effectively statutory accreditation. As I understand it, the bill should provide a powerful motive because, under the bill, any factor who is deregistered will be unable to collect moneys that might be owed in connection with factoring. That brings into focus the responsibilities that factors take on. Should not that be a powerful driver for improvement towards the best practice that Mr Reid mentioned is already provided by some housing associations?

I do not want to get into the minutiae of the provisions under which a property manager who was deregistered would be unable to recover any charges that were due, but such property managers might have legitimate charges within their accounts that they need to pursue people for. Those provisions need to be looked at and consulted on because, with all due respect, that is actually quite unfair.

On accreditation, I have been part of the accreditation working party for 18 months. The working party has met on a monthly basis—I personally have attended something like 17 meetings, including sub-group meetings—but my gut feeling is that things have been pulled back a wee bit. It has just taken a bit longer to get to certain things. I just think that it would be great if we could use the core standards from the accreditation scheme for the bill.

I do not feel that the accreditation scheme has slowed down that much, as the bill has been on the go only since the beginning of June. However, the bill has raised the confusion that Lorraine MacDonald has referred to. It is absolutely right to think that we should move on with the accreditation scheme. That is the intention of all the parties.

The accreditation scheme has effectively dealt with things that are being considered for inclusion in the code of conduct in the bill, such as dispute resolution and itemised billing. It also offers an opportunity for various other aspects of property management to be examined. Perhaps the accreditation scheme offers that opportunity in relation to registration. I do not think that any of the parties involved fear registration. We certainly do not—we see the advantages of registration and regulation, and of dispute resolution. That is partly because quality players in the industry—such as Hanover Housing Association—are in an economically sound place. However, that is not where rogue players in the industry want to be. I have led Greenbelt towards having a number of those facilities in place, and we have seen the benefits already.

The accreditation scheme should plough on. The Property Factors (Scotland) Bill covers a number of points, and it could still effectively achieve the things that Mr Wilson mentioned. It is possible that it cannot do so in its current form, as there are several conflicts, but ultimately it can achieve what it needs to. The accreditation scheme is slightly ahead, and it should not slow down at all.

The devil is in the detail. Effective registration will deliver results, but I imagine that it is all too easy to go into a process with the best of intentions and for the process to take over. That would lead to a disproportionate amount of effort going into accreditation, which might require applicants to submit documents for registration and the detailed checking of policies and procedure statements, rather than the effective delivery of improvement in service standards where it is required. Sanctions should, of course, be proportionate to the offence.

I have one more brief question; I have a feeling that other members of the committee will want to ask questions on this topic.

One of the drivers is the issue of perception and reality. I refer to some of my constituency cases that relate to the housing association movement, rather than private property factors. It is felt that some housing associations are living off the fat of owner-occupiers, with regard to the bills that are received. The owners find it incredibly difficult to get to the bottom of how the bills are calculated. I have direct evidence that, in some cases, it is impossible to find any evidence base for the amount in the bill. That practice is unacceptable, and registration and enforcement could deal with it.

I have heard similar stories from within the private factoring sector. Are you relaxed about the current billing process that housing associations and private property factors employ? I am certainly not.

Since you mentioned housing associations, I would like to go first. We have concerns, which is exactly why we went ahead and pulled together good practice guidance. Although there are some examples of bad practice in the sector, there are many more examples of good practice. We are trying to ensure that everyone latches on to the good practice with regard to clear billing and making it clear that costs should not be passed on to owners unnecessarily.

The issue that you raised about perception and reality is the key. It is a communication issue, and factors and the housing association sector need to get the message through. We make no bones about the fact that some are far better than others. Where there are issues, we would expect the Scottish Housing Regulator to pick them up in the course of its regulatory function.

Our practice is to invoice developments for expenditure that is incurred on that development, whether it is for repairs and maintenance, development staff or whatever the case may be, and to levy a flat-rate management charge that reflects a share of the overhead—our head office and area office—costs.

We are a Scottish charity; any cross-subsidisation between one sector and another would present us with a difficulty. It is our policy that there should be no cross-subsidisation between the owner-occupier sector, the rented sector and the other ancillary services that we provide.

I want to explore further the answer that Mr Middleton gave earlier to my colleague Mr Tolson. Mr Middleton was keen to stress the important legal distinction between Greenbelt’s model for the maintenance of common land and other models. Legal forms are important but, ultimately, as far as the customers—the neighbouring property owners—are concerned, such a model is no different from what would happen if all the common parts of an estate were owned in common by the individual house owners. In that situation, the owners would almost certainly have a property factor or a residents association that would arrange for the grass to be cut and so forth. In the model under which Greenbelt operates, Greenbelt owns the land and bills the neighbouring property owners for those services. The issue about which we receive complaints is not who owns the land but the services, and the cost of those services, for maintaining the land. Surely it is entirely appropriate that, whatever legal model is followed, everyone who provides those services, about which there are public complaints, is regulated to the same standard.

Well, that is one interpretation; I have made our interpretation quite clear in our submission. My reason for doing so is that assuming that Greenbelt is a property factor would give rise to conflicts with our role as outlined in the Title Conditions (Scotland) Act 2003. We are a landowner. As a landowner, we are entitled to administer our land.

Further, the land that we administer is typically a wee bit more complex than the common ownership areas that were created in the past. Over the past 12 to 15 years, one of the concerns of local planning has been the long-term sustainable management of open space—whether it be grass or quite complex play areas or sustainable drainage systems—which requires expertise to ensure that it is managed properly. There is a need for responsibility and understanding of the land that we own, which is not necessarily neighbouring other properties but is part of the design of the development. As a landowner, we take responsibility for that and we have an obligation to manage and maintain the land and keep it safe, to the benefit of the development.

Yes, it could be argued that such areas would typically have been common land, but they are actually single-ownership land. The reason for having the land under single ownership was that there are specific requirements, obligations and responsibilities connected with the land such that a single-ownership model benefits the development and the home owners in the development.

In the past, developments with substantial common areas such as play areas and so on would have been adopted by the local authority. The developer of the estate would have paid a capital sum to the local authority, which was meant to ensure that the council used its council tax revenue to undertake all the maintenance. There was a clear division of responsibility between the property owner and the council, which became responsible for the maintenance of such common areas just as it is responsible for parks, roads and everything else. It seems to me that, instead of the developers being required to pay a capital sum to a council to adopt on-going responsibility for the common areas—which capital sum would then have been reflected in the price of the houses or the profitability of the development—the common areas of developments have been transferred to the likes of Greenbelt, with that cost then becoming an on-going revenue obligation on all the house owners. A different structure is being used to achieve the same result, with what was previously a capital expenditure incurred by the housing developer being turned into a revenue cost that is paid on a biannual basis by the occupier of the house. Is that not correct?

12:15

In effect, that is the case. That is why the local authorities—initially, Strathclyde Regional Council back in the early 1990s—set up our company. They foresaw a housing boom and saw something for which they did not want to take responsibility. As you know, local authorities want to concentrate on their core business requirements. Looking after open spaces and the responsibilities and issues that accompany that did not seem attractive at that time, so Greenbelt came along. We take on board all those matters.

We have developed a sustainable arrangement that achieves exactly what local authorities wanted in planning. The owner of a house has an obligation, but that is based only on an equal and fair contribution to maintaining the land that is round about and the safety of that land. Our average annual management charge is about £110 a year—it is about £10 a month. We look after 20,000 units. That represents a fairly major saving to the public purse, which is part of Greenbelt’s purpose. Property factoring was around 15 years ago, but local authorities regarded us as an alternative then. We still regard ourselves as an alternative, simply because of our model, which achieves exactly what local authorities set out to do back in the early 1990s.

Property factoring was around in 1992—it has been around for 100 years. Is the Property Managers Association Scotland not well over 100 years old, Ms MacDonald?

Yes.

Absolutely.

A different model could have been adopted for privately owned estates, but it was not.

I return to the basic point: the issue for individual home owners is the service. Whether you like it or not, just as they are in developments that are constructed under a pure factoring model, loads of complaints are made about the service that you and others provide under your model of ownership. In response to those complaints, we are being invited to address the system in the round. The public would see our doing so as perfectly equitable and reasonable.

You are more than welcome to visit Greenbelt and to see the facts about inquiries: the nature of inquiries, how we divvy them up, how we respond and how quickly and effectively we respond—our performance.

We have just conducted a survey on a new bill format, which I would share with the accreditation scheme. I am not sure of the exact figures, but the survey was favourable about the level of information that we provided. The bill was understandable and our customers were comfortable with it. I am sure that one or two other agencies are looking into that system, too.

You are welcome to come and see what the situation is with inquiries in September 2010—what we have done and what we have achieved in the past year or two. We were always conscious that the Greenbelt model was new—it is for the 21st century. We must undergo a cultural change and move on. Ultimately, it is all about ensuring that everybody who is included benefits equally and fairly. One issue of which we are aware and which has not been touched on is that, if a minority does not pay for a service that is being provided, that compromises the arrangement. We and property factors face that. Being equal and fair is an obligation.

We have a huge incentive to provide the quality, the service and the delivery. We have—down to the last person—worked hard on that. We do not want to spend our annual management charges on debt management, because that compromises the majority. We want to achieve a balance in which everything is run smoothly and value for money is obtained. That happens after three or four years on our developments. When we operate at a development that is three or four years old, we have 100 per cent payment—no problem. That is the situation that we want to be in. When the situation is new and when new home owners are perhaps not quite used to the model, questions are asked and members might be involved in finding out what the model is. I am keen to educate people about the arrangement and to let them see its benefits.

The complaints that we get are not from people who do not pay your bills; they are from people who pay them but think that they are too high and people who, by and large, would prefer an alternative arrangement and a measure of competition in the provision of the service that they receive on their estate.

If the majority of owners on an estate where you own the common parts came together and said that they did not want the present arrangement any more and that they wanted to employ a factor or organise their own grass cutting and maintenance of the common parts, would you accept that decision? Would you transfer the land to an appropriate new vehicle or into the common ownership of all the house owners, or would you basically say, “No. We own the land. It’s in your title deeds. Tough. You’ve just got to carry on paying.” What would happen? In other words, would you allow competition and choice?

The answer to that is yes.

Have you done so?

We have been proactive in trying to help residents on some developments take on the responsibility themselves by taking ownership of the land through our consumer choice option. My colleague Wendy Quinn has held the hands of people on one development all the way up to the point of saying, “Sign on the dotted line and it’s yours.” In every case, we have found a reluctance to take responsibility for the ownership of the land and what is on it for the long term. The option that you describe is available.

Is that the policy of the company? If the owners on an estate are unhappy with the legal structure and the arrangements that are written into their title deeds, you will facilitate the transfer of ownership of your land to a new ownership model so that they will no longer pay Greenbelt for its services. You would be quite happy to facilitate that.

We would do that. Several requirements have to be met when a transfer of land or property is carried out. As a professional company, we ensure that that is done diligently. In your profession, certain diligence checks have to be done; we would do those as well. One is to ensure that insurance can be secured if someone intends to take ownership of and responsibility for land. Another is to ensure that they understand the planning consents and conditions that are associated with that land. Another is to do with whether they have the expertise to do the work themselves or a management arrangement that is sufficient. A residents association is an example of a body that is constitutionally set up, to which papers could be signed over.

Our website is quite clear about consumer choice. I have said publicly that we allow for consumers to make such a choice, but we find that there is a severe reluctance to take on the responsibility for doing so. That comes back to the point that was made earlier. It is a question of service.

I have a quick supplementary. If there was a sustainable urban drainage system, or SUDS, on one of your developments, you would have a legal obligation to maintain that appropriately. If you went down the transfer road that Mr McLetchie suggested, how would the wider public interest of having that SUDs maintained properly be served? How is enforcement of that taken care of, or would you not consider transferring a property that had a SUDS?

If we are talking about responsibility and taking ownership of land, the SUDS obviously goes with that because it is on the land. We would ask any residents group a number of questions, including whether the residents were aware that there was a SUDS on the land and whether they knew what its function was. We would point out that they would need to manage it in a way that did not allow flooding not just of their homes but of the homes of everyone on the development. We would ask them whether they understood that and if they said yes, then fine—the responsibility would be theirs. That is the point about land. We will not pick and choose what people have and what they do not have—either they take responsibility for it or they do not. I think that that is fair. I am quite happy to consider the point that was made earlier. I have said publicly, “Yes, do it, by all means.” However, our experience has been that there is very little appetite for taking that responsibility.

It comes down to the code of conduct, the quality of the work, the agent’s responsiveness and a swift and effective resolution service that does not drag on and does not involve the courts. We heard recently that one or two of the courts are pretty full right the way through until the other side of Christmas. For people running a service in a small claims court, taking six months out of the process affects the equilibrium of the business. A dispute resolution mechanism is therefore a good thing for the industry.

Good afternoon to all of you. We will perhaps request a history lesson from Mr McLetchie on compulsory competitive tendering at some stage and why we got to the current situation with land and open space maintenance. However, we are where we are.

Do the witnesses accept that some property factors or managers—whatever you want to call them—do not behave in the way that they should in delivering the service that they should deliver? If that is the case—I think that that is what you have said—how many of them do you think would sign up to a voluntary accreditation scheme?

To be honest, the likelihood is that not many of them would do so because a voluntary accreditation scheme would contain tough core standards. It would include service level agreements and response times for various things and would be very detailed. Members have probably had a look at those things. The chances are that not many such people would sign up to such a scheme. Earlier, I said that I can understand the process and the idea behind the bill of trying to encapsulate and deal effectively with the rogue factors who are out there. I am sure that a substantial percentage of the complaints that are made are about the rogue factors. I do not think that they would sign up to such a scheme, but it is clear that the bill will deal with them.

The question is interesting. What is the point of having an accreditation scheme if it is voluntary? I have gone on record as saying that there could be a mandatory scheme. I would support that.

That takes us back to a point that I made earlier. It is in the agencies’ interests to provide quality delivery because that is how they will survive in the long term. If an agency is doing shoddy work or underdelivering, its long-term business interests are not being looked after.

A scheme could be made mandatory, or at least an attempt could be made to make the choices recognisable. If, say, a developer is choosing whom to appoint or residents want to reappoint somebody, they could have a register to look at. Electricians and people in other trades are registered and have accreditation, and other countries have accreditation schemes. People simply need to look at the choices that exist and be assured that there is a definite quality mark. That should be sufficient to separate those who do not want to be there and those who do.

The redress proposals are part of the point of an accreditation scheme and one reason why the PMAS is so behind a scheme. An ombudsman would address matters. It is almost like a dispute resolution. The property manager against whom the complaint is made will pay for the initial complaint or for the investigation to take place. The process is completely separate—no one is connected in any way to property managers. There would be a completely separate body, and property managers could be fined for not providing a level of service. That is a really good system that I have been keen to see implemented as quickly as possible. If the bill is passed, a similar type of redress system will have to be in place further down the line. The biggest fear that any property manager has is not accreditation but getting fined and something costing them money. I am being flippant but, at the end of the day, we need something with teeth. The outcome has to be a system that makes property managers sit up and take notice, particularly the rogue property managers.

12:30

I am sorry if Ms MacDonald feels that we have moved on from the work that the working group has done so far, because I think that its work has been good and we will want to build on it. However, an issue that arises is how we bring people to the table and make sure that they do things. I think that that is in your interests as well, because it means that people can have confidence in the service that is delivered. I think that we are all in agreement.

One of my pet concerns is about how the property factor is appointed, be it on a new estate where somebody takes on the role from the beginning or where a building has had a factor for 50 or 60 years and there is a new resident. There are concerns about how the owner can influence the information that is provided so that they can understand what the service is, but there are also concerns about the resolution of disputes. We need to tackle those two things in the bill. Do you have any comments on how you see that going?

I do not want to keep banging on about the accreditation scheme, but it does address a lot of the issues that people have. Under the scheme, as soon as someone moves into a flat or a house, they get a pack that says, “We are your factors. You’re going to be billed quarterly. It’s going to be detailed and transparent. Here’s your common insurance policy. We get a commission from the common insurance policy.” I am here to represent the PMAS, but my firm does that so that the person knows immediately what is expected of them in terms of their obligations, the accounts and so on, and also so that they have the information that they require about the management.

Each property can be tailored to suit the management of the development itself. There might be properties where people just want a basic management service. In other properties, it might be dictated that there are monthly meetings, quarterly meetings or whatever. Owners can influence that. I just think that there is sometimes an element of apathy. One good thing that has come out of the work is that more people are asking questions. There is probably more switching taking place now than there ever has been, thanks to the outcome of the work and the Office of Fair Trading report, because they have raised awareness.

Earlier, I mentioned knowledge. Knowledge is power to the individual owner as well. Part of the accreditation scheme is that the property manager must tell the person how to sack them. When that was tabled, everyone said, “Why would you do that? At the end of the day, they will come and ask you anyway, so why would you put it in your service level agreement?” Things like that have already been addressed in the accreditation scheme.

You have mentioned rogue property managers several times. How many of those are there? Is it a small number, or are there quite a lot?

There are a few. A limited number are creating a lot of problems. Before all this kicked off, more and more were coming out of the woodwork who just do not have any structure, controls or transparency in how they deal with things. That is why we fully support accreditation or the bill. I am passionate about what I do and I sometimes feel aggrieved that we get tarred with the same brush as the rogue factors. We really want to try to eliminate the problem as well.

Over and above the rogue factors, is there a need to raise the standards of the main body of factors?

Absolutely.

I come to the issue from a constituency MSP’s point of view. I get a large number of complaints about a whole range of factors. Is there not a system at the moment with a voluntary code of conduct? How does that operate?

The PMAS has a code of conduct.

Has that been effective in any way?

It can be effective. People have been censured. However, the PMAS is a trade body and it does not have an awful lot of teeth in terms of being able to fine or otherwise penalise people. There is a code of conduct and it is good, but the PMAS is a trade body that acts for its members.

Given that the code has not been very effective, can you understand people’s concerns that an accreditation scheme would operate in a similar way? It would be better, but it could still be tarnished with the sense that it is voluntary and therefore not very effective.

It is interesting that one comment made by Consumer Focus was to express concern about the delay with the accreditation. It has taken a bit longer because some people in the industry are reluctant to take it on board and host the accreditation scheme. I can completely understand that but, by the same token, it would be pointless for an organisation such as the PMAS or the Glasgow Housing Association to host an accreditation scheme when there are already methods in place for complaints that people do not have any faith in. They will see it as just being the same old same old. That is why in the working party there has been talk of, for example, the Royal Institution of Chartered Surveyors hosting such a scheme. That would be a good structure, but the key point is that ombudsman redress is what will give the scheme credibility.

I am struggling to see why you are reluctant to move on to some legal underpinning. You have suggested that there is a conflict or contradiction between the voluntary accreditation and the legal underpinning, but in a sense the bill is trying to give legal underpinning to the kind of accreditation scheme that you have been developing. It seems to me that the bill builds on the work that has been done, rather than being something that is contrary to it or slows it down.

I hope that it does build on the work that has been done. I do not have a problem with the bill; I would just prefer to see everything working together so that it supports the accreditation scheme. To be honest, the process for the bill is new to me, but my concern is that the bill is starting at square one as if we do not have core standards or a code of conduct. I was assuming and hoping that the accreditation would dovetail into it.

I am sure that it will. I think that we need to have a big discussion about the code of conduct, but not today as there is no time. Many people will be interested in what is actually in the code of conduct.

I have one final issue to ask about: switching. One issue that has come to me is how difficult it is in some cases, particularly in relatively new developments, for residents to switch from one factor to another. Do you think that changes are needed to make it easier for people to switch?

Absolutely. I think that everyone will know that some deeds of conditions make it very difficult for consumers to transfer property managers. In some cases, it is almost impossible. They can change if they have more than 50 per cent of the owners in attendance at a meeting and so on but, given the apathy that can exist, that can be difficult to achieve.

In some cases, it is written into the deeds of conditions that one company manages the property for five years from the sale of the last flat in a new development. Again, that is very restrictive to consumers who are getting a really poor service but can do nothing about it. That issue has been discussed at the working party. Planners and other authorities could have an influence in ensuring that contracts set up in the early stages, such as the deed of conditions, are not restrictive for the consumer.

Mr McLetchie eloquently covered the key point that I want to ask about, which is on switching. Like many members, who have highlighted this point already, I find that a significant amount of my postbag contains on-going complaints about factoring companies—Hacking and Paterson, Greenbelt and a host of others. That seems to be where the issues are, and I hope that the bill will address some of the issues that my and other members’ constituents bring forward.

Like many people, I am fortunate enough to live on an estate that was built pre-1995, as the local authority maintains the ground in perpetuity. I have no real complaints about its work, and I do not receive many complaints from my constituents who are in a similar situation. I therefore put to the panel the suggestion that, rather than the bill covering complaints procedures and so on—which it does quite well—either this or another bill should consider changes to planning legislation to ensure that, whether it is done by a private company, local authority, housing association or whomever, maintenance is in place in perpetuity for new developments.

Again, that issue was discussed at the working party meetings—that other people have to influence what happens in property management.

What was the outcome of those discussions?

There was a general agreement on that issue but I gather that, at the end of the day, they do not have the power to take it to that level. The Law Society was represented on the working party, and it said that it recognised that there were legal issues around the need to ensure that solicitors tell incoming owners what their responsibilities are. Various people have to work together with us.

I agree. Local planning conditions for new developments regularly require a long-term, secure, sustainable management arrangement for the open spaces and whatever is designed into them. That requirement could form a statement in the outline planning, but it should also appear as a statement in the detailed planning, to ensure consistency four, six or 12 years down the line.

I support the point of view that has been expressed. Planning legislation might not be required; perhaps there need only be a planning guidance note to say that local planners should simply determine whether arrangements are secure and sustainable. From our point of view, we know that the open spaces that we have now are not like the open spaces that we had 15 years ago; they are much more complex now and they have diverse types of management. Sometimes, more than just landscape contractors are needed to manage the site and other contractors must become involved, such as tree managers, water drainage experts, play area inspectors and play area maintenance guys. Sometimes, we have five or six contractors working on a site.

The suggestion that you have heard is a good one. That is how you will secure the long-term management of a lot of the sites that we are discussing, which will help everyone in this room.

Mr Ogilvie, earlier you mentioned the regulation of housing associations that act as factors, and I am conscious of concerns around overregulation. How many housing associations that act as factors have in fact been inspected as such?

That is a good question, but I cannot provide you with a specific answer at the moment.

Could you get back to us on that?

Absolutely.

We appreciate that.

Patricia would you like to ask a question?

No. I am conscious of the time and the pressures of today’s business.

I thank our witnesses for their attendance and for giving evidence.

We now move into private session, as agreed earlier.

12:42 Meeting continued in private until 12:57.