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Agenda item 4 is to take oral evidence on the bill. I welcome the witnesses. Joining the minister is Stephen White, head of consumers in private housing, and Simon Stockwell from family and property law in the civil law division of the Scottish Government. The minister has an opportunity to make some brief introductory remarks.
Thank you very much, convener. In the interests of time, I will make my remarks very brief. We have outlined our position in the submission and it is clear that we support the aims and principles of the bill. We have worked and will continue to work closely with Patricia Ferguson as the sponsor of the bill to identify the improvements that we believe will be necessary to make it as effective as possible in achieving its objectives. We have already identified to the committee a number of areas in which we believe there is some room for improvement. We have discussed those areas with Patricia Ferguson and I think that we have agreed a way forward.
Thank you, minister. Are there any questions for the minister?
Among the key points that have been highlighted to the committee in evidence is that about the model that is sometimes used, particularly by Greenbelt and some other factoring companies, on land maintenance and maintenance of individual properties. Should the particular difficulties that have been highlighted with the land maintenance model—or Greenbelt model—be addressed in the bill, or is that beyond the bill’s scope at the moment?
We have had this conversation with Patricia Ferguson. If we take Greenbelt as a classic example, the bill covers a lot of Greenbelt’s activities, but when such a company owns the land and manages it, the bill is at its weakest. Some issues remain to be addressed in the bill or consequently because it will put some companies in a different situation. The legal point is quite technical, so I will ask Simon Stockwell to expand on what I have just said.
As the minister said, and as the committee picked up at its previous meeting, one of the major issues is that Greenbelt generally owns, manages and maintains the land. When we start thinking about issues such as the switching of land maintenance companies, or the switching of companies generally, that makes it more complicated. If Greenbelt continues to have responsibilities for the ownership and insurance of the land, that goes above and beyond the responsibilities that it might have to the homeowners who live nearby. The issue is quite challenging and Greenbelt itself would say that if a move was made to dismiss or replace it as a land maintenance company, agreement would also have to be reached about the ownership of the land.
Greenbelt’s chief executive gave evidence to the committee a few weeks ago, during which he questioned Greenbelt’s role under the bill. He feels that, in some ways, the bill does not cover Greenbelt. Does the minister have a view on that?
There is no doubt in our minds that the property maintenance and factoring activities of Greenbelt are covered. There is no doubt about that whatsoever.
At last week’s evidence session, it was alleged that Greenbelt gets title to ownership for a nominal charge by developers. Whether the bill would cover any future transfer of land based on the fee for which Greenbelt took on responsibility for it and whether the land could be transferred back to the residents in the area was raised. I know that this might diverge slightly from the bill, but the more important issue that was raised last week is whether that type of ownership, by companies such as Greenbelt, is a method of land banking—whether developers are securing, by transferring land to companies such as Greenbelt, possible future use of land and effectively denying development opportunities and the wider community benefit of community ownership of land. That was particularly relevant to some of the examples that we were provided with last week.
John Wilson raises two valid points. The first, in relation to changes of ownership, is not really within the scope of the bill and therefore would need to be treated as an entirely separate subject.
One issue that came up at last week’s meeting—it has been partly addressed by Mr Stockwell—is the minister’s power, in extremis, to deregister someone who is on the register. I want to address two types of case. The first is a case such as Greenbelt, when it owns the land. If we get to the stage of wanting to remove a company from the register, which removes it from the register entirely—not only in relation to one area where it acts in this way but throughout Scotland; it is all or nothing—it is clear that relationships have totally broken down. In those circumstances, it is difficult to see a happy arrangement to buy the land from the company arising. It is also difficult to see where the funds to buy the land would come from. So what, exactly, happens? The company is operating the land, which is not necessarily amenity land—it may be land that is necessary to sustain a sustainable urban drainage system—and it has an obligation to maintain that land, but by deregistering it you would remove its only source of income. It strikes me that in such a situation you, as a minister, would probably not want to remove a company from the register—and that you never would. So is the power just a paper tiger?
That is one of the issues that we have raised with Patricia Ferguson, as the member in charge of the bill, and it is one that we think the committee has to spend some time on, because there is a great deal of concern about the consequences—direct and unintended—of deregistration. For example, if you deregister a local authority, which is quite possible under the bill, what happens? There is no answer. We have had internal discussions in the Government and there is no easy answer to the question, “What would happen?” One of the areas of the bill that needs further thought is what happens after deregistration.
The second case involves what might happen if you want to deregister a more general and traditional property factor that may be factoring a variety of properties.
It is a potential issue, and it comes under the category of unintended consequences of deregistration. In the longer term there is a need for new legislation. Whoever wins the election next year should consider that with a view to making it much easier for people to switch factors.
I have some questions about the cost of the registration scheme. This morning, as members will recall, we heard in relation to the housing regulator about the Neil doctrine, which is that the regulated should never pay fees to the regulator. Can we take it that a further example of that doctrine will be that none of the factors to be registered will be required by the Scottish ministers to pay any fee to the ministers to contribute to the cost of maintaining the register?
That will be for the Parliament to decide, but there is a practical issue with regard to the registration fee. The Convention of Scottish Local Authorities has not formally submitted evidence to the committee so far, but I know that a number of local authorities and RSLs believe that they should not have to pay a fee. If you take those organisations out of the equation, the fees for those that are left—the private sector factors—would be extremely high in relative terms. As we have noted in the policy memorandum, about 200 factors operate in Scotland. I think I am right in saying that more than 100 of those are in the local authority or RSL sector.
Indeed, but the principle behind my question is not about excluding one category of fee payer or another; it is about the doctrine that you enunciated earlier, which is that no one should pay a fee. In other words, is the Scottish Government happy with the proposition that the costs of running the registration scheme for the Scottish ministers should be borne entirely from the Scottish budget and not require a contribution from any registered person?
Without undermining the Neil doctrine, I point out that that already happens in parallel with the landlord registration scheme, whereby the landlords pay a registration fee. I am not suggesting that the Neil doctrine can be universally applied at this stage.
Yes, but the landlord registration scheme is run by the local authority; I am talking about a scheme that, according to the bill, will be run by the Scottish ministers. Is that not correct?
Yes, that is correct.
So you are free to apply your doctrine if you so choose.
The other practical problem is that we must consider our priorities and, given the public spending cuts that are coming from London, there will be very little money left to subsidise any additional schemes other than the ones that we are already funding.
Indeed, and that makes one wonder why you moved amendment 2 to the Housing (Scotland) Bill earlier this morning. Never mind—the logic of it escapes me, but no doubt it never escapes you, minister.
In the Property Factors (Scotland) Bill as it stands, it would be paid for by the Government. I have discussed this with Tricia Ferguson, too. There is a wider issue about how disputes are handled in the whole housing sector. Recommendations were made last year for the establishment of a dedicated court to deal with housing matters. There is also the operation of the private rented housing panel to consider—and a number of other procedures relating to evictions and so on.
If, in its report, the committee accepts that part of the bill as it stands and it lays the cost of the dispute mechanism on the Government, would the Government accept that proposition?
At the moment we have no intention to amend those provisions.
So that is a yes.
The committee is at a very early stage in taking evidence on the bill. We know that some dispute procedures can be expensive. Once we have heard all the evidence, we will need to be sure that we are not picking up a blank cheque.
Are you content with the costs that the promoter of the bill has estimated for running such a scheme?
We have no problems with any aspect of that at the moment.
That is fine.
As I said, I am attracted to that proposition, because competition in the sector would be a good safeguard for the people who are the end users and who have to pay the factors. If it was relatively easy to switch factor, that would be a real incentive for factors to take complaints seriously. I am not saying that that is the total solution and I still think that the main provisions in the bill are valuable, but the ability to switch factor fairly easily could be a powerful tool for the consumer.
What are we waiting for? Why do we not have switching provisions in the bill? Why have we not had them in some of the extensive pieces of housing legislation that the Government has introduced? The issue is not exactly new.
No, it is not new—and it was not new when the member’s party was in power or when previous Administrations were in power. The issue is not within the scope of the bill. Obviously, the question has to be put to the promoter. As I have already said, the time has come for us to consider legislation in the area. If we can get a consensus in the Parliament on that after the election, that would be extremely helpful. The ability to switch a factor easily would be a useful reform measure that would be extremely beneficial to the consumer.
I have a couple of bids for supplementary questions on switching—one from Bob Doris and one from Patricia Ferguson.
People must be able to make an informed choice if they want to switch from one company to another, whether it be their energy supplier or whatever. Last week, we heard that many owner-occupiers have to do a lot of Miss Marple work to figure out what percentages they pay in management fees to factors. Whether we do this in the bill, the forthcoming private housing bill or future proposed legislation in the next session of Parliament, there is a strong need for standardisation of the bills that factors issue to their customers so that people can see easily and clearly where the charges are and what they are. They should be benchmarked against the industry standard; they will be meaningless unless people can compare suppliers. If we want competition, surely that is essential.
Absolutely. If we had a bill to facilitate switching, I presume that it would need to address many of those issues. However, when we start talking about charging we can go into the realms of consumer protection legislation, which is not a devolved matter. We must be careful, because we must work within the competences of the Parliament.
This is not a cheeky supplementary, convener, but I would like to clarify whether the minister is saying that the Parliament might not have the power to standardise billing from factoring companies.
Some specifics with regard to charging could be open in that respect. However, I think that with the bill’s code of conduct provisions we can legitimately and within the Parliament’s powers build in certain requirements. I have made it clear in my discussions with Patricia Ferguson that the code that was published under the proposed voluntary scheme would be acceptable as the code that the bill would provide for in law. That would allow for financial transparency.
It is time, I think, to switch to Patricia Ferguson.
On the switching of factors, which is a problem for many people, has the minister given any thought to the fact that often the problem is not that there is no mechanism for switching but that people do not comply with it? Often there is a lack of involvement by owner occupiers, or the people in the properties might be an absentee landlord’s tenants. No matter what criteria are used, it might always be very difficult for those who stay and have an interest in a property to effect change.
Absolutely. As I said in response to Mr McLetchie, the issue is not covered in this bill, and indeed has not been tackled by any Government, because of the complexities of dealing with it effectively, some of which you have just highlighted.
As a quick supplementary to Alasdair Morgan’s questions on deregistration, I wonder whether, given that they would be responsible for registration or deregistration, ministers would be amenable to the proposal that they suggest alternative factors to cover temporarily while the residents got themselves organised and found a replacement. After all, deregistration could leave people without the services that they require, particularly if we are talking about a lift in a block of flats, a SUDS pond in a development or something else that you would not want to neglect for any period of time.
I would really have to think about that, because such a move might have implications. My initial reaction is that the local authority or similar body would need to take the default position on an interim basis. It would be difficult for ministers just to impose a new factor on residents without first going through a fairly complicated tendering procedure. It could, in fact, complicate things a lot.
I gave the example off the top of my head, so I am happy for you to think about the issue in more detail. What happens in the interim period after deregistration is clearly an issue.
The bill tries to deal with the issue. I should have thought that home reports would mention such arrangements, because they should include all financial obligations relating to the property. We will look at the issue to see whether we can do more. The UK consumer code for home builders includes such provisions, but it is a voluntary code. I will look into whether factoring arrangements are covered in Scottish home reports, and, if they are not, whether we should ensure that they are. That is a reasonable suggestion.
That would be really helpful. I have been approached by residents who were in their property for three years before they discovered that they had a factor. They have back bills to pay, but they do not know whether the work was done in the first place. The issue has been raised in the Parliament, in a debate to which Mr Ewing replied. Some way of ensuring that residents are aware of their rights and obligations is important in developing the relationship with factors that we want to see established.
Like burdens, such rights and obligations are normally set out in the title deeds. If I were buying a flat, I would ask whether there was a factor, but some people may never have lived in a flat before and may not be aware of that dimension. The issue is worth pursuing, so that we can see whether more provision needs to be made in home reports.
I am sorry that I missed the first two or three minutes of the discussion. The minister will understand that I am here only for this item—I am not a member of the committee. Can you confirm that you agree that a statutory register is needed? If so, what relationship do you envisage between the register and the work that has been done on the voluntary accreditation scheme? That is the more interesting question.
I hope that they will be complementary. I have discussed the matter with Patricia Ferguson, the bill’s sponsor. She will correct me if I am wrong, but it appears that the code that was drafted as part of the original proposed voluntary accreditation scheme will fit the bill—literally—as the code that the bill will implement. That is a good example of the interaction between the two.
Can you provide an update on the accreditation scheme? Is work on it still under way, or are you waiting to see what happens to the bill to advance it?
Where the scheme eventually goes depends on what happens to the bill. We will not spend more money on it until we get clarification on the progress of the bill.
Do you accept that the scheme that has been developed could be translated into a code? Some witnesses have said that the bill would require only minimum standards whereas the code is supposed to set desirable standards. I do not accept the distinction, but I seek confirmation that you think that the two could serve the same purpose.
The industry itself has been heavily involved in preparing the code, so it would at the very least be a good starting point for the code that is provided for in the bill.
Okay. That is positive.
I accept that dispute resolution is another difficult issue. Our preference is some kind of ombudsman system. As a result of our discussion with Patricia Ferguson last week, we have looked at how various ombudsman systems operate. I am happy to share that research with the committee. There is quite a large number of ombudsman systems in the private and public sectors, and our view is that it is probably easier and simpler to have an ombudsman system than to have complex machinery for settling disputes.
Would there be a new ombudsman, or are you talking about an existing ombudsman?
That would need to be decided. Our alternative suggestion of resolving disputes through an ombudsman has not been accepted. We are continuing to research in co-operation with Patricia Ferguson to find out whether there is a practical way of doing things.
You refer to a complicated system being proposed in the bill, but do you accept that the private rented housing panel has been a successful mechanism and that what has been proposed is based on it?
Yes, but the bill would quite substantially widen its remit, of course. As I said earlier—I do not know whether Malcolm Chisholm was in the room when I said this—we need to reform how we settle disputes right across the housing sector. Whether we are talking about factoring, landlords, private rental issues, evictions or antisocial behaviour going to the sheriff court, it would be much easier if we took a more streamlined approach to settling disputes right across the sector.
That may well be true, although it may be difficult to come up with that within the timescale for the bill.
I am not suggesting that.
We have to decide something for the bill. Does not research indicate that the private rented housing panel has been very successful?
I think that you referred to research at last week’s meeting. We were not aware of that research. We researched to find out whether there has been research and found out that there is none. I do not know who you quoted last week.
I did not refer to that last week.
Somebody did.
Somebody else might have done. However, I shall try to send the research to you.
I do not want to interrupt, but—
I am nearly finished, convener. I know that you will not let me come back if I go on for too long.
It depends on issues that Patricia Ferguson raised earlier relating to the legal complexities involved and on agreement being reached, which is not always possible.
Okay. I will not pursue the matter at the moment, but I do not think that the obstacles are insuperable, let me put it that way.
Perhaps people in Edinburgh are a lot friendlier than people in other parts of the country. However, as Patricia Ferguson has said, such situations are much more complex than one might believe.
We have all had the opportunity to ask questions, but Alasdair Morgan, David McLetchie and Mary Mulligan want to ask more. Questions should be brief.
Obviously, a voluntary code of conduct can have in it whatever the volunteers want to sign up to, but, given what the minister said earlier about the limitations of devolved power, would that place any restrictions on what could be put in a code of conduct for property factors that ministers would lay down under the bill? Could you put pretty much anything that you wanted to into that?
The code of conduct would, of course, be dealt with under the affirmative resolution procedure in the Parliament, so it would have to be within the Parliament’s devolved responsibilities. I was specifically talking about issues that Bob Doris touched on in his question about charges and various other aspects of consumer protection. We would need to be sure that any primary or secondary legislation that we proposed was within the Parliament’s remit.
Do you have a copy of the draft code of conduct?
We will ensure that the committee has the code of conduct developed for the voluntary accreditation scheme. A consultation on that has just ended, so we will be able to update it soon.
That would be helpful.
Minister, I think that I heard you say in response to an earlier question that you would look at the contents of home reports and the information that is provided on factoring services. I invite you to undertake a wider review of the operation of home reports with a view to ridding people in Scotland of such an expensive, superfluous and wholly unnecessary burden on the smooth operation of the Scottish housing market. That would be met with wide acclaim and would prove that you are your own man and not one to follow sheepishly in the steps of the previous Scottish Executive.
Given that that question has nothing to do with the business that is before us, I ask the minister to resist the temptation to answer it. However, if he really wants to do so, he should remember that we expect to finish by around half past 12. He could pick up the discussion with Mr McLetchie over lunch if he wishes to.
We have completed a review of home reports. The conclusions of that review may not be to Mr McLetchie’s liking, but we will publish them in the not-too-distant future.
I am sure that he will scrutinise them with interest, minister.
I have a brief supplementary question about Malcolm Chisholm’s suggestion relating to residents introducing their own scheme. Residents groups have frequently suggested that local authorities should pick up the responsibility for ground maintenance in particular. Do you have any comments to make on that?
I doubt that local authorities would agree to that, given the current situation. We have had informal discussions with COSLA. It is a pity that COSLA has not yet come forward with its views, as it is clear that the opinions of local authorities as the strategic housing authorities and authorities that are often involved in factoring would be extremely helpful. The committee may want to invite COSLA to give oral evidence, as issues that we have discussed will have a direct impact on local authorities’ work.
As there are no more questions, I thank the minister and the witnesses for their time and the evidence that has been provided.
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