Justice and Home Affairs Committee, 23 Nov 1999

Meeting date: Tuesday, November 23, 1999

Official Report 260KB pdf

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Petition

The first item on our agenda this morning relates to petition PE14 from the Carbeth Hutters Association. Members will recall that when we last dealt with that, at our meeting of 26 October, a number of statements were made by witnesses on behalf of the Barns-Graham estate. Some of those comments related to the motivation for the Scottish Landowners Federation's stance towards the estate. Given the allegations that have been made, we felt that it was only appropriate to ask the Scottish Landowners Federation to talk to us briefly about its position and to give it the opportunity to consider the questions that were raised by the representatives of the estate.

We are concerned, in particular, with the comments that were made by Mr Andrew Smith. For the sake of those members of the committee who do not have copies of the Official Report of our meeting of 26 October with them, I will read out the relevant passage. Mr Andrew Smith stated:

"The Scottish Landowners Federation has a very difficult job on its hands, trying to convince a sceptical public that it has a role to play. The public perception is that the SLF represents fat-cat absentee landlords who rent out their land for lots of money, for hunting, shooting and fishing and who own huge tracts of Scotland and do not attend to it. What could be more perfect when trying to redress that opinion than to take on a landlord and pillory him in the press? That is exactly what the Scottish Landowners Federation has done.

Allan Barns-Graham's estate has perhaps the greatest public access of any estate—certainly any lowland estate—in Scotland. There are rights of way through it and there is access to crags for climbers and the public. I think that the Scottish Landowners Federation chose to come out publicly, very strongly against Carbeth estate because it was politically expedient: it suited its purpose nicely."—[Official Report, Justice and Home Affairs Committee, 26 October 1999; c 258.]

I welcome the witnesses from the Scottish Landowners Federation. After they have introduced themselves to the committee, we will take a brief statement from the SLF. No doubt committee members will then have questions.

My name is Robert Balfour and I am one of the vice-conveners of the Scottish Landowners Federation.

My name is Michael Smith and I am the in-house legal adviser to the Scottish Landowners Federation.

Mr Balfour, would you care to take a couple of minutes to comment briefly on the Scottish Landowners Federation's view of the situation at Carbeth and to respond to the allegations that were made at our meeting of 26 October.

The SLF decided to involve itself in the case of the Carbeth hutters when the hutters asked to see us. It is fair to say that they thought that they were taking a big chance when they did that. They came to see us at our office in Leith and put their case, which we listened to and took note of. We then had a meeting with Mr Barns-Graham and one of his solicitors. Having heard both sides of the argument, we concluded that the original commitment that the Barns-Graham family had made—to provide for a social need by allowing the people of Govan to get into the countryside and build holiday accommodation—had been reneged on by the present owner, and that the level of rent and other burdens that he had imposed was unreasonable. For that reason, we decided that we would back the stand of the Carbeth hutters, to the extent that I have become a trustee of the Carbeth Hutters Association.

Can we be clear: are you saying that it was the Carbeth hutters who first approached the Scottish Landowners Federation?

Absolutely.

You have seen the statements that were made at our meeting of 26 October. Can you address what is a political—with a small p—criticism of the Scottish Landowners Federation's stance? Can you respond to what has been said by indicating why you have chosen to back the hutters, rather than the landowner, who might, in the first instance, have been the obvious person for you to have supported?

We felt that there was an element of natural injustice in what was happening at Carbeth. There was certainly nothing political—with either a small or a large p—in what we were trying to do. There was a more fundamental issue of how one deals with short-term leases of what is, in effect, a mixture of commercial and social property. I do not think that it is relevant to the Carbeth hutters' situation for me to comment on what amounts to a rant by Mr Smith against the SLF's position. Quite frankly, what he says is not true and does not merit a response.

Do other members of the committee have questions for the witnesses?

When did you become a trustee of the Carbeth Hutters Association?

After our meeting with the hutters.

When was that?

About a year ago.

Do you think that there is a conflict of interest here? You say that you are taking a dispassionate and objective view, but you are a trustee. There must a conflict there.

I do not see why. I do not believe that there is a conflict of interests. The objectives are the same: to ensure that the hutters at Carbeth get more security and a fairer lease than they have at the moment.

Have you considered the ramifications for other hutters in Scotland if a special case is made of the Carbeth hutters in legislation?

We are not suggesting that a special case be made of the Carbeth hutters, but that the situation of hutters per se needs to be addressed.

You used the phrase "natural injustice" to describe the situation in which the Carbeth hutters find themselves. In the paper that you have been kind enough to submit to us this morning, you make great play of what you regard as the unacceptably high service charge on the estate. Is that the main element of the natural injustice that you have identified, or does it extend to the lease conditions and the insecurity of tenure?

I do not have a copy of the lease in front of me, so I am speaking from memory. However, I believe that the notice periods and the terms of compensation that it stipulates are unreasonable.

Do you believe that the level of the service charge is also unreasonable?

That is what the paper was designed to show.

Is that because it is unusual for a service charge to be levied in a rural situation?

It is unusual for such a charge to be levied in a rural situation, but my objection was rather to the estate's levying a service charge to recoup a capital cost.

It is appropriate for me to make clear that the document to which we are referring is the same document that Mr Ballance of the Carbeth Hutters Association mentioned. At the time it was not available to us, but today's witnesses have been kind enough to supply it. We thank them for that. Are any other questions?

I take it that, as a trustee, you have been out to the estate and that you know it reasonably well.

I beg your pardon?

I take it that you, as a trustee of the Carbeth Hutters Association, are reasonably familiar with the estate and that you have been out to it?

That is correct.

We took some evidence a few weeks ago on the issue of the service charge. Some new roads had been laid on the estate by Barns-Graham and the Carbeth hutters' view was that the new roads amounted to some rubble and not much else. Can you comment on that?

The roads that were put in were not tarmacked, if that is what you mean. They were tracks that had been upgraded with bottoming and quarry blinding to a standard equivalent to that of a forest access road.

My understanding is that the existing lease is the same as that which existed when the estate was set up. Is that the case?

That is my understanding as well. There have been one or two minor alterations.

Would it be fair to say that the same lease has existed throughout, but that there is now a slightly different application of it?

That would be fair.

In your view, is the lease that is in force particularly unusual?

Ground leases are becoming far less usual than they were. Since 1974, new leases of domestic dwelling houses or other domestic property are limited in length to 20 years. Therefore, there is that control. Ground leases are still granted for commercial and other purposes but they tend not to be used for domestic property for that reason.

I refer in particular to the terms of the lease on notice to quit, which is renewed annually. Is that unusual?

I think that it probably is.

It is unusual in the sense that it gives the landlord quite inordinate powers over the other party to the lease.

The Carbeth hutters have asked the committee to introduce some sort of protective legislation. Do you have a view on that?

It would probably be appropriate to review the position of ground leases of various kinds. Ground leases probably fall into three categories. I am speaking now purely about domestic dwelling houses or property that is lived in by people to some extent. I am not addressing the question of commercial property.

The first category is what I might call traditional ground leases: those that were entered into before 1974 and that run for perhaps 99 years, or in some cases for 999 years, although one does see other periods.

The second category is what I might call the unprotected mobile home or caravan. In many cases, these mobile homes are quite luxurious and are on sites that are run purely for commercial purposes. They are second homes. People may like to have a fairly luxurious caravan on a site somewhere in the country. That is a purely commercial operation.

The Carbeth huts are an example of the third category: huts or properties that are of less value and that are on ground that is let under ground leases. A mix of social and commercial considerations may be involved in the lease.

One can distinguish those three categories. Whatever one wanted to do, in examining the Carbeth hutting type of situation, one would need to be careful that one did not cause complications for the rather more commercial dwelling leases or for the traditional ground leases. One has to be careful that what one does for one category does not create problems for other categories.

There are a couple of problems with this situation. One is the basic problem of having what is, for all practical purposes, a heritable structure on land that one does not own—one view is that it is never a very clever thing to do, although from time to time it happens. These huts are not caravans; they are heritable for practical purposes, although the hutters do not own the ground.

The second issue concerns the lease, which has no rent value control. The landlord can simply say, "As from next week, the rent is £1 million a year. If you don't want to pay it, push off."

I will deal with those points in reverse order.

It was suggested to the owner of the land that the rent should be fixed on a more normal basis; that is, for the next three years, the rent would be so much and there would be rent reviews. If rent could not be agreed, an independent arbiter could fix it, which would stop the landlord from deciding unilaterally that the rent would be £1 million a year in order to drive people off the land. However, we were told that could not apply in this case, as there was no comparison available and that, while it is all very well to fix rent for an office in George Street, in the Carbeth situation there is no basis on which an independent arbiter could work.

In other words, those who spoke for the landlord claimed to us that the situation was unfixable and that the landlord was the only person who would know what the rent should be, because it is a one-off situation. I thought that that response might be disingenuous, but I would like to know what you think and, if you think that those witnesses were wrong, why.

I believe that other comparisons can be made, although the sites are not located in Scotland. Comparisons have been made with situations in Wales. My background is as a professional chartered surveyor, and I believe that a chartered surveyor would be perfectly capable of fixing a rent for the sites at Carbeth.

So do you think that it is simply not right to say that it is not practical to fix rents?

Absolutely.

The other problem occurs when there is something that I describe as being like a heritable structure on the land. The landlord knows that—he rents out the ground with the heritable structure in place or he allows people to build on his land a structure that, for all practical purposes, can never be moved. Do you think that some sort of rent control of that situation would be appropriate, such as can be found in a rent act situation, or would that cause more problems than it would solve?

I think that it would cause more problems than it would solve.

Why?

The rent acts are based directly on comparisons or on a market value.

I am not thinking so much of the amount of rent charged. I am thinking about giving people security of tenure, once a structure is in place. In other words, if a landlord allows a tenant to put a structure on the land that is as immovable as these huts are, that tenant should have some security of tenure.

A third-party arbiter, as you suggested, who could fix the rent would probably overcome the need to have any statutory measures such as a rent act. Once an arbiter has fixed the rent, there is immediately an indication of what the level of rent should be. The next person would be able to point to the particular level at which the arbiter fixed the rent, which is therefore deemed to become the market rent. Equally, the arbiter could decide on the length of term of the lease, if the parties were unable to agree that.

How could an arbiter fix a length of term?

If the parties do not agree, they could always use an arbiter to broker an agreement. That occurs in other forms of lease, where, if the two parties cannot agree, they can use an arbiter to sort out the disagreement.

I am sorry to press you on this point, but I am trying to get my mind around that. I can see how an arbiter would fix rent—one party says that it should be £5,000, the other says it should be £2,000, and an arbiter fixes the rent. However, I am finding it difficult to understand how an arbiter could fix a length of term.

At Carbeth, the hutters are, in effect, sitting tenants. If the landowner and the tenant cannot reach an agreement on any points of the lease, there is nothing to stop them going to arbitration in order to arrive at an agreement.

Presumably the rent could be balanced against the ish.

Could you explain what an ish is, for the benefit of those committee members who are not legally qualified?

The term refers to the departure of the tenant.

So the tenant leaves?

Yes.

It is the opposite of entry.

Are there any further questions for these witnesses? Do the witnesses wish to add anything about the issue in general or about specific points that have not been raised?

Michael Smith has been able to put across the Scottish Landowners Federation's view of the kind of lease that would deal with the Carbeth situation—one that does not impinge on other types of lease but that sorts out this particular problem.

For the avoidance of doubt, has the Scottish Landowners Federation publicly criticised other landowners in the past?

I do not know, to be quite honest. I cannot give you a straight answer.

Thank you very much. You are free to go, although you may stay and listen to whatever you find of interest in the remainder of the proceedings.