Item 5 is our inquiry into the effectiveness of the provisions of the Title Conditions (Scotland) Act 2003. This is our second evidence session. We will hear from only one panel of witnesses today. I welcome to the meeting Jean Charsley, chair of the Glasgow factoring commission; Mike Marriott of Greenbelt Group Action; and Kyla Brand and Darren Eade from the Office of Fair Trading. Jean Charsley’s written submission was emailed to members on Friday and hard copies have been placed on their desks. We will go straight to questions from members. If members of the panel want to answer, they should indicate so by looking at me appropriately or whatever. I will then call them and their microphone will go on—they do not need to press the buttons on their console.
My question is for Mr Marriott. What was the initial impetus for setting up your group?
Part of it was a problem with the developers. When we bought our homes, we were not told anything about the arrangement that was made until after about 12 months, when we got a letter from Greenbelt Group saying that it was going to take ownership of the land and manage it for the life of the estate. It said, “You’ve got to pay us what we want when we want it and you can’t dismiss us and you can’t sack us because it’s a legally binding contract.” I thought that there was something wrong with that and looked into it, which led me to look at the Title Conditions (Scotland) Act 2003 and some consumer regulations. It all mushroomed from there.
Are you saying that no solicitor advised you that there would be a management fee or anything of that kind? You were never told about it.
Never. In the sales office, we were told that there was a one-off up-front fee of £150 for the maintenance of the landscaping. I received a copy of the missives and there was nothing whatsoever about the agreement in them. When it came to moving into the house, my solicitor did not contact me at all with any such information. I went back to the law firm that did the conveyancing for me and was told that it was a standard arrangement, but the firm did not get a copy of the title deeds until two weeks before I moved in. I had signed the missives, which are the contract of sale, in November 2004, and the firm did not get a copy of the deeds and the details of the arrangement until March 2005 for a move-in date of April 2005.
I will leave that there. Up until the date of entry, matters can change. The missives are a contract, but it is not concluded until the money is exchanged and entry is taken. I just wanted to give you the opportunity to say whether a solicitor had advised you. It is your position that you were not advised that there would be any such obligations. That is a matter for you and your solicitors.
That was going to be my second question, so I am glad that that has been clarified. Where do you think the responsibility lies for sharing that information with you?
The sales office that was selling the homes should have advised me. I gather that the arrangement had been agreed between the developer and Greenbelt long before the homes were built. The developer knew what the costs were likely to be and what the arrangement was and had no right to withhold that information from us when we were considering buying the home. At the very least, it should have been in the missives, because that is the contract of sale. By the time our solicitor got the information, even if he had told me and I wanted to back out of the sale, it was too late because I had sold my previous house and was living in temporary accommodation.
Presumably your first action was not to set up a group. Did you follow a complaints procedure against any of the people you dealt with?
I wrote to Greenbelt and said, “This isn’t right. There’s something wrong here.” Greenbelt told me that I was under a legal obligation to pay it. It did not respond to any of my queries. It was a case of, “You’ve agreed to this arrangement through the title deeds. It’s a legally binding contract. Just pay up.” I got the views of various neighbours and put out a flyer to see what other people on the estate thought. A group of us got together, said, “This isn’t right,” and started looking into it.
Did you tender a formal complaint to the Law Society of Scotland about the conduct of the solicitor who had transacted the business for you?
No, I did not, because at the time I was unaware that I could. A lot of people are quite ignorant of the law relating to the whole affair, including me when I first came up here. I still talk to people who do not know about consumer law, title conditions in Scotland and even suing solicitors. I found that people were extremely reluctant to tackle their solicitors. Some of them are personal friends of their solicitors and did not want to take it any further.
Perhaps John Lamont would like to come in while we are on this tack.
My point is for the Office of Fair Trading. Is what we have just heard quite normal practice? I should probably declare an interest as a former solicitor. When I was advising clients, I would expect to report to my client any obligation that they would undertake as a consequence of this type of deal. It strikes me, given my experience of this type of problem in my constituency, that a large part of it is due to solicitors not reporting accurately to their clients the burdens that they are taking on as a consequence of buying a particular home.
The work that we did in relation to land maintenance companies and property factors was in 2008-09. There have been a number of developments since, not least the passage of the Property Factors (Scotland) Act 2011 and the introduction of the new code of conduct, which have clarified some of these issues about the kind of information that should be made available.
If John Lamont is doing it, I, too, should declare an interest as a former solicitor. For the majority of solicitors, good practice would certainly involve advising purchasing clients of the obligations that would be coming down the road to them. Whether the clients listen to that is another matter. It is understandable that, in their keenness to purchase something, they may sweep that advice to the side. I am not suggesting that you did that, Mr Marriott. However, it can happen that clients make a purchase and say, “That doesn’t matter; I don’t care about paying that,” only for reality to strike home once they are into a contract.
That is absolutely right. In the study to which Kyla Brand referred, we found that the property itself and its location were much more important drivers of consumer choice, although the other factors are very important and consumers should know about them.
I am sorry—I chopped John Finnie off there.
I am trying to understand the background and have one final question. Was the experience of your neighbours similar, or largely similar?
Yes, it was largely similar. Only two weeks ago, I spoke to someone on our estate who had just moved into the property and still had not been told.
Good morning. I want to follow up on the OFT’s written submission, which refers to the possibility of removing land maintenance companies as factors or managers. However, a number of other submissions suggest that that is only part of the problem. For example, if the Greenbelt land maintenance company retains ownership, we have only a partial solution. Has anyone at the OFT thought about this further in recent times? Has anyone looked at Greenbelt’s consumer choice documentation, which indicates terms on which it might be prepared to transfer ownership to a residents association? Can anyone from the OFT comment on that?
Yes. As I said, we did a market study in 2008, which was published in 2009. While we have been following the developments after that, we have not done a further piece of work in the area. The answer to your question is no, we have not looked in the recent past at how the Greenbelt consumer choice model is playing out. However, like everyone else, we are aware that it is not being taken up by groups of home owners. Therefore, that is at least some evidence that it is not hitting the spot in terms of the gap that you identified, where a land-owning land maintenance company exists.
Indeed, we heard evidence that some of the companies in Greenbelt Group do not consider themselves to be property factors and are therefore not registered under the 2011 act anyway. We have quite a complex problem.
Yes. I presume that those responsible for the registration scheme will look into those areas of potential concern.
I have raised that issue with the Scottish Government and am still waiting for a response.
I have one comment on Greenbelt Group’s options. There were originally three options, all heavily in favour of Greenbelt. A few years ago, the Scottish Government’s property law division wrote to Greenbelt and said that two of those options were not compliant with the Title Conditions (Scotland) Act 2003. They have since disappeared and we are left with option 1, which states that before residents can take up that option, all past debt must be paid. When people withhold payment because services have not been delivered, the maintenance company calls that “debt”. In that situation Greenbelt turns round and says, “We can’t activate option 1.” It is a no-brainer.
In fairness, it may be a disputed debt, but it is still a debt.
Yes, but Greenbelt can control option 1 if it wants to.
I am not taking sides—I am just clarifying that it is still a debt, notwithstanding that it is disputed.
Yes.
Mr Marriott raises an issue that echoes some of what has come before the factoring commission—the importance of people understanding their rights and responsibilities before they purchase a property, which should be reinforced at the point of sale. It has been suggested that sales agents and mortgage lenders, for example, should have some input as well as solicitors, before the decision to buy the property is made.
In our report, one of the recommendations for property factors in general was that there should be a mechanism for a much broader distribution of information about the responsibilities that a person takes on when they buy a house, particularly when that involves shared ownership of any kind. The Scottish Government took the view that it was not timely to take that recommendation up and that there were other initiatives in hand. Our observation is that that information is not made available regularly enough and people regularly do not understand their continuing responsibilities or the choices that they may have. I would commend that recommendation again.
Can you recall the other initiatives that were in hand? I do not know what those were.
I must confess that I cannot recall them in great detail. There were certainly initiatives to inform social housing tenants. There was a feeling that there was a question of scale, and of how to identify the kind of platform that private home owners would naturally look to for information. It was left in the ensuing conversations about the code of conduct and was not pursued.
There were also some points about the complexity of the information and the law in this area. We advocated simplification and clearer information for consumers. In particular, the 2003 act is quite a complex piece of legislation that even lawyers have difficulties with. Some exposition for laypeople so that they readily understand the legislation would be good as well.
I do not understand why you say that it is complex. A person is told that someone owns the land around a development and that they will be charged for the maintenance and will have to pay for a long, long time, as it appears difficult for people who form that settlement to have sufficient numbers to change the management. That does not sound complex to me; it sounds quite straightforward. Why is it so complex to tell people that?
On the consumer side, there can be quite a lot of inertia in engaging with the issues. Explaining it in simple terms and motivating—
That is inertia, not complexity. That is my point.
It is complex to organise that sort of thing.
Ah, I see. I think Patricia Ferguson wants to comment on that point about information.
Thank you, convener, for allowing me the opportunity to be here today.
Thank you. You made that point much more eloquently than I did.
In an evidence session, that is all right—I do not mind. Does anybody else on the witness panel want to comment?
If you say to a prospective home owner that there will be a factor, they will understand factoring in relation to the communal spaces in a building that are partly owned by the home owner, but there is a vast difference between that and the land maintenance model in which the land maintenance company owns the land. It is because of land ownership that we have encountered the problems that we have. That does not come across clearly in any home report.
Putting something in home reports is extremely interesting.
Good morning, panel. I have a general question and one about a particular area that Jean Charsley mentioned in her submission. The factors and developers say that the 2003 act strikes the right balance between home owners and managers. What are the panel’s thoughts on that? Jean Charsley referred in her submission to the issue of the two-thirds majority that is required to change factors, although there can be absentee landlords and so on. Could you comment on that as well? Does the requirement for a two-thirds majority prevent people from changing factors or managers because of their bad service?
I will take that one because we have gone through that process. There is a slight mistake in our submission. I said that we undertook the process in March 2007, but in fact we did it in March 2008. I have in my hand the paper that is proof of delivery of our petition.
I ask Jean Charsley, who mentioned the issue of the two-thirds majority in her submission, whether that is a difficulty, perhaps because of absentee landlords and so on.
The main difficulty is when there is a mix of owners and a lot of them are absentees. The law, as stated by factors, does not allow other people access to the contact details of such people. I think that it is generally considered that the two-thirds majority requirement is fair. Only a simple majority is required in order to make improvements, but a two-thirds majority is required for decisions affecting common responsibilities, which seems to be fair. However, the difficulty is contacting everyone who has a vote on whether something happens. There have been several cases in which repairs were essential but people could not be contacted to get agreement to put the repairs in hand. I do not think that a simple majority in such cases would be effective, because there are often more absentee owners than resident owner-occupiers.
I have a follow-up question for all the panel, but perhaps it is particularly for Jean Charsley, who is proficient and experienced in this area. Do managers, factors or developers tell you that they cannot give you access to information about people because of data protection issues? Surely managers or factors have details about absentee landlords and could write to them on other residents’ behalf.
There are two points here. First, factors usually say that they cannot give out details about people. I think that it is generally considered that that issue needs to be addressed. I made specific recommendations on that in the report, which were based on the evidence that was presented.
You are thinking.
No. I am trying to answer the second part of Sandra White’s question, but I have forgotten it.
That is what I meant. You were thinking and trying to work out what the second part was.
That is right.
That does not matter. It happens to us all. It happens to me every time.
Jean Charsley has said that factors will say that there are data protection issues, but surely in the case of a huge repair being required—if, for example, the roof caved in—factors must have the details of the owners, and they would be responsible for contacting them. However, they do not tend to do that.
One problem is that not everyone has a factor. The assumption of a lot of the arguments that have been put forward is that everyone has a factor, but that is certainly not the case.
I hear mumbling from Patricia Ferguson. Do you want to ask a question or give more evidence, Patricia? I am not bothered which.
This is one of those situations in which I would be happier being at the witnesses’ end of the table. I have been trying to think about how creative I can be in framing questions.
Brilliantly done.
Not all people who refuse to pay are absentees. That is a serious problem for people who are expected to fund that missing amount, which can be considerable. If the factors will not tell them who has not paid, because they say that that information is protected by data protection, how is the issue going to be resolved, even by discussion?
Part of the difficulty around the sharing of information comes from the fact that individual home owners often act individually in relation to the factor. Our research showed that, where there is some kind of residents association or a collective group, people are far more effective in their management of the relationship with the factor or in dealing with a situation in which they have chosen not to have a factor and to manage any contracts for maintenance and so on themselves. That is a critical point. If you have some kind of corporate body, you have a different opportunity for gathering, sharing and holding that kind of information, even about those who might not be active in the association.
The committee has been supplied with a document called, “Creating Great Outdoors”, which is Greenbelt’s customer care charter for contractors and their staff. You might be familiar with the document.
I have seen numerous documents, which change constantly.
Whether or not you have a disagreement with the company, do you find that it acts contrary to the guidance that it sets out in the document? Is the guidance fulfilled in reality?
No.
I just wanted to get your reaction to that.
Yes. We commissioned a number of landscape audits to prove that the maintenance had not been done to the specification that had been written into the title deeds. I and other residents have tackled Greenbelt Group on that issue on numerous occasions; indeed, I have with me a letter from a resident who, when they quite rightly tackled the company on its standards of maintenance, received this response from the head of customer services:
That is fine but, in fairness to Greenbelt Group, I should make it plain that this is your evidence.
I also point out that the deeds set out a quite detailed maintenance specification. Under the property factors legislation, I wrote to Greenbelt Group with 24 points; it responded to only a few of them but one of the questions concerned the Menstrie Mains development service agreement, in which it emerged that all the maintenance items that were standard in the maintenance charge had been separated out and were being charged as extras. The fact is that the maintenance on our estate has never matched the requirement in the deeds.
Are you suggesting that that is a common experience, or is it mostly people’s experience of Greenbelt Group?
As the committee is dealing only with Scotland, I will talk about only Scottish estates. Having spoken to more than 50 estates in Scotland, we have found that they are all experiencing the same thing.
From other companies, not just Greenbelt?
It is mainly Greenbelt, but only two weeks ago someone phoned me up about Ethical Maintenance. On the question of prices, when we decided to dismiss Greenbelt Group, we showed other companies the spec and asked them to give us a price; we then discovered that Greenbelt was charging us three times more than what those companies were quoting.
I wonder whether our OFT witness wishes to comment.
People usually indicate whether they wish to respond to a question. You can respond if you wish, but you do not have to.
We do not have experience of the document that you are discussing, but I can say that this kind of issue is precisely the target of the code of conduct. It has been in place for only a few months, but we expect that the really interesting issue will be the extent to which it begins to bite and changes, say, the exchange of information. If the costs that are being incurred after a transparent tendering process for contracting services turn out to be very high, there might be questions about how those potential service providers have been chosen.
Mr Marriott said that his journey began in 2004, so let me set that as a benchmark for all the witnesses. From both of the evidence sessions that we have had, I get the sense that we are to an extent marking time on this problem and I do not get the impression that there has been any improvement in the intervening nine years. Am I misleading myself or have I hit the nail on the head?
I think that you have hit the nail on the head. As I said in my written submission, we are in a stalemate. A lot of us do not even communicate with Greenbelt Group any more.
Obviously there are different potential stages for development. One issue that is pertinent to the land-owning and land maintenance model is the difficulty faced by anyone who owns a home of changing their current situation. We would all say that the best thing is to have a good relationship with one’s factor, whatever the context, and to have a good service, so that there is no need to make dramatic changes, which take up too much of people’s time, when mostly they are not bothered.
We will hear from academics, I think next week, who might offer some solutions. Do you want to ask a supplementary question, Sandra? I see that Sandra White is pleading with me to let her in. I give in to her.
My question is supplementary to Graeme Pearson’s question, and it is for the OFT. It has been claimed that factors use preferred contractors and build a premium into the contract, from which they make a profit, although doing so leads to more expensive bills for tenants and residents. Has the OFT received submissions about such practice?
I do not think that the issue that you described—in that sort of detail—was the subject of submissions that were made to us when we were doing our report, but the whole question of the transparency with which a factor tenders for services is key.
Is it up to individual residents to raise the issue with the OFT if, like Mr Marriott, they have information that suggests that their bills are much higher than they would be if they had another supplier? That is evidence of price hiking, I presume.
In some circumstances that kind of experience would become an issue for the OFT. We do not have the power to take up individual issues, so I would not want people to be distracted in our direction only to find that we could not take their case forward. I think that the context would be the new registration regime, in particular, and the home owner housing panel.
Thank you.
I have a question that is supplementary to Mr Pearson’s question and Ms White’s questions to the OFT. Do you agree that it is important to differentiate between land-owning maintenance companies that act as factors and factors per se, as most of us normally understand them?
Forgive me, but I think that we explored that issue last week. We appreciate that there is something of a relationship—to put it tactfully—between developers and land-owning management companies, which can lock everyone into the system. We explored that.
Thank you, convener. I want to stick with the land-owning and maintenance issue, which has caused significant problems in my constituency. I know that Consumer Focus Scotland did some research on it. There is a high level of dissatisfaction about it.
Councils have a hand in the maintenance specifications. In our deeds, the specifications are quite clear and exact. In terms of the planning process, I think that councils have been particularly lax in this area—that is certainly true of when our estate was built.
Does anyone else wish to comment on whether there are opportunities in the planning process to address that issue?
We would refer the committee to the part of our report that looks at that relationship—it is paragraphs 6.39 to 6.47. When we carried out our investigation, we found that local authorities were quite nervous about the responsibilities that would come back to them. Therefore, the whole issue of how they set the commuted sum and how they ensure that responsibility is transferred effectively and does not come back to them was quite a strong driver for many of them. Obviously, the picture is variable, with different local authorities taking rather different positions. That was at the heart of their inhibition from being too demanding in terms of those relationships. I suspect that that will not have changed.
That is extremely unfortunate, because local councillors provide residents with a really close link. If the local authority is maintaining the land, residents have a democratic connection with how the maintenance is being carried out.
Our recommendation was that Consumer Focus Scotland would take that on. I think that it was willing to attempt that, but there was a high litigation risk. Of course Consumer Focus Scotland no longer has those responsibilities. I am afraid that it is not obvious to me who would have that kind of handle on this issue at the moment. Things may have moved on in the sense that, rather than just worries about being able to ascertain how the act should work, there is a real demand for an alternative.
I am surprised that a man or woman of straw has not come forward to test the legislation. Perhaps there are problems with getting civil legal aid for that. Is that the case?
I do not know. Some of those who have been more active in the field might know of attempts to bring such a case. However, we should be aware that a counter-case is likely to be made in favour of the current arrangements and that a lengthy and costly legal process could be opened up.
One of the tests for legal aid, apart from showing cause, is that there is some public interest in pursuing the case. I am surprised that no one has gone down that route, but perhaps we will hear something later if somebody who is listening to our evidence has tried it.
My question is a supplementary, convener.
Ah. Roderick, do you mind if he leapfrogs you?
Er—no.
Well, that was very hesitant. [Laughter.] John, on you go.
Thank you, convener. Thank you, Roderick.
Tangentially. We have a sense that, where home owners collectively take an interest and are motivated to deal with the issue as a group, the success of their maintenance arrangements is hugely enhanced. If someone is able to motivate a group of home owners to exercise a community right to buy, they will be a long way towards identifying and capturing that community interest, and it would seem to be quite a strong contender for a successful long-term arrangement. However, there are undoubtedly other aspects of community right to buy that we are not experts on.
Mr Marriott, that question is perhaps more in your field. Have you had thoughts about the right to buy?
I think that we face a couple of problems. Unlike 40 years ago, when people moved to estates and stayed there, people now move on after a couple of years, so it is difficult to get continuity. I know that there have been a couple of estates—including one in Ellon, I think—on which Greenbelt had quite a lot of resistance from residents and it offered to sell the land to them, but it put in a ridiculous price and the residents said, “No chance.” Greenbelt owns the land, so it can control what price it goes for.
Following on from the issues that Alison McInnes raised, do you have a view on whether specific planning conditions would have assisted, or is the ownership of the land always the issue?
If land was given over to the community by developers, rather than being put into private hands, half of the problems would not exist. We can compare the arrangements for blocks of flats in which the community owns the open spaces. In such cases, there is a common interest, but where there is a landowner, all the control is with them and no one else has any.
That was all your questions, John. You slipped your other one in as well, you naughty person. Roderick, you are next.
John Finnie jumped in and asked about something that I was going to raise. In relation to the community right to buy, the cost of acquiring land from land maintenance companies is an issue. Obviously, the costs will depend on individual circumstances. Can you perceive that creating difficulties for occupiers? Without public assistance, it would not necessarily improve matters. What is your view on that? The question is for Mr Marriott in particular. How would you raise the funds to acquire land?
Especially on big estates such as ours, the difficulty would be getting everyone to agree to fund such a move. Communities are more transient nowadays. People have moved into our estate and been gone—they have sold on—two years later. There is a big shift of people. We do not build communities that last any length of time now. Therefore, a community buyout, or purchasing the land from another, is fraught with problems. It would be a little bit easier if the planning system conveyed the land to the community in the first place.
There was some concern as to who the community would be in such a situation. If it was the group of home owners on the estate and the matter concerned facilities such as play parks, there would be a public interest in the wider public being able to access those facilities, which could equally become privately owned, but by a slightly wider group than is currently the case. There is a balance of interests that needs to be sorted.
When I first started in the campaign, one of my initial fears concerned going down the route of gated communities. On our estate and, I think, one other, we have had problems with children from the villages being told to get off the play park because we pay for it. I do not agree with that, but the fear about communities owning land that should be in the public domain was that such things would happen.
I have a question for the witnesses from the OFT. Section 3(7) of the 2003 act says:
That is an important point. We have constantly tackled Greenbelt over the monopoly. In the early years, it came back to us with the reply that it is not possible to have a monopoly on land ownership. However, the argument is not about land ownership; it is about the relationship that we, as residents, have with the landowner or the person who does the maintenance.
We are talking about a burden, which is a duty to do something on land.
Yes. I have a number of statements from Greenbelt on headed paper, such as:
Do the witnesses from the OFT wish to comment? If one could find somebody to test the 2003 act, might that be something to be tested?
That is certainly one of those questions to which we found that we could not provide a categorical answer. If there are real burdens, it becomes an issue for us that the unfair terms of contract regulations, for which we have responsibility, would not bite. That would be another route of consumer protection in the arena.
That is a contractual matter, is it not?
If a burden is introduced, that supersedes the contractual relationship.
I understand that, but I am saying that your role is where the matter is contractual between a developer and a land management owner or company. That is a contractual arrangement, is it not?
That is not quite the case. We are involved with unfair terms of consumer contracts. We are involved where there is a contract with the consumer or, in this case the home owner, rather than with business-to-business contracts.
Yes. That is a contractual matter with which you are not engaged, but it is a contractual matter.
It is all right.
Do members want to ask final questions? We are finished with our questions. I thank everyone—[Interruption.] I beg your pardon. We have finished our questions, but we have not finished with the evidence.
This month, the Glasgow factoring commission is looking at whether the law as it stands enables the problems that we have discovered to be addressed or whether additional measures are required. The commission will present proposals to the Government to try to address those. I am not talking about the social and economic aspects, but about the aspects that affect property law as a whole.
Do you have any timescale for that? We may do a report on this brief inquiry. I have put you on the spot, but you could let us know about that. If we could have a look at your proposals before we produce our report, that would be useful. If we cannot, they could be an addendum.
The report will go to the council before the recess, and it will then be distributed among other people to comment on. The finished report will be produced sometime in the summer. However, if you have a timetable, perhaps we could see whether the commission could produce something for you. Can you tell me what your timetable is?
We will come back to you on that. The committee will have another evidence session next week and we will have to consider our way forward. We will get back to you when we have a timescale for producing a report. I think that we considered producing an interim report. Am I dreaming again or was that suggested? We will discuss that next week.
One plea that I make is that, when you are considering title and condition, you consider the common interest of people in keeping their buildings repaired. I make the plea that you consider not just individuals, but the property.
I think that we are aware of that.
I am sure that you are.
It should not be just the people on the top floor who see that the roof is repaired.
I would like to make one more point. To tag on to the convener’s question about section 3 and a monopoly, that section also states:
Okay. Thank you for bringing that to our attention.
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