It is my pleasant task to welcome the bill team for the Tenements (Scotland) Bill. The team comprises the team leader, Mrs Joyce Lugton; Mrs Edythe Murie, solicitor; Mr Norman Macleod, solicitor; and Mr Hamish Goodall. We are grateful to you for coming before the committee this afternoon and, as you will see, we are desirous of taking initial evidence from you. There are several areas that members of the committee want to discuss.
Certainly. I have a prepared statement that is approximately 10 minutes long. If anyone wants to interrupt at any time, they should feel free to do so.
Please continue.
The Tenements (Scotland) Bill is the third bill in the property law reform programme, all three bills in which have been prepared by the Scottish Law Commission. A member of the committee who is not yet here this afternoon has had the pleasure of dealing with at least one of the bills.
Thank you for being so helpful. You have made me positively nostalgic for notes on title days.
The short answer is that there is quite a close relationship between the Title Conditions (Scotland) Act 2003 and the Tenements (Scotland) Bill, but not very much connection between the Abolition of Feudal Tenure etc (Scotland) Act 2000 and the Tenements (Scotland) Bill. As I said, the three bills were prepared by the Scottish Law Commission and have been introduced in the running order that the Law Commission suggested. The logic was that the first act—the Abolition of Feudal Tenure etc (Scotland) Act 2000—would get rid of the old system of land tenure and that the Title Conditions (Scotland) Act 2003 would replace it with a new system of property tenure that would apply to all properties. The Tenements (Scotland) Bill is a more specific bill that applies only to a subset of properties—tenements—but it builds on the Title Conditions (Scotland) Act 2003 and, as one would expect, its provisions are compatible with the Title Conditions (Scotland) Act 2003.
The private sector housing bill is still to come. How developed is the Executive's thinking on that bill? How was a decision made about what should be in the Tenements (Scotland) Bill and what should be left for the private sector housing bill?
It is partly an historic matter that the Tenements (Scotland) Bill has been drafted and is ready for introduction whereas the housing bill has yet to be fully developed and will not be ready even as a consultation draft for some time. It was thought to be wrong that the Tenements (Scotland) Bill, which is regarded as helpful, should be held up for the artificial reason that the housing bill is yet to come.
That is helpful. Is it envisaged that, with future developments of tenemental property, the legislation could be referred to in title deeds?
It is very much hoped that it will be. My colleague Norman Macleod might like to say something about that.
The easiest way to look at the matter is to consider that the tenement management scheme provides a default scheme for management of tenemental property whether that property is existing or future property. With a new-build property in which the developer is starting with a clean slate, the developer will have freedom to insert, by way of real burdens, whichever provisions he chooses. However, the proposed legislation will act as an underlying legal default position so that if the developer does not include provision to deal with any element of the tenement management scheme, it will apply automatically by force of law anyway. It would be perfectly possible—and frequently perhaps even desirable—for a developer to use the legislation as a template and to translate the system of rules into a deed of conditions and impose them as a system of real burdens.
I understand that the recommendations in the bill come from a report by the housing improvement task force. What has been the relationship between the bill and the task force and what will the relationship be in the future?
It would not be quite right to say that the bill stems from the housing improvement task force, because the bill has been in preparation for some years. The first consultation on a tenements bill was conducted in 1990, which is a very long time ago. Jackie Baillie will probably be able to tell me exactly when the housing improvement task force was set up; I think that it was in about 2000.
Yes—it was set up in about 2000.
The task force was able to consider the proposals in the bill and its members were broadly supportive of what was in it, although they made one or two suggestions for additions, which the Executive has considered with other matters. The remit of the housing improvement task force went much wider than just the bill, so it also made recommendations on a number of other matters, including those that could lead to the separate private sector housing bill that has been mentioned.
Do you think that the relationship will continue? Will the on-going consultation and the evidence that is given to the committee be passed to the housing improvement task force?
No. I do not know whether it would be correct to say that the task force has been wound up, but it has certainly produced its report. I am sure that the individual members of the task force will continue to take a keen interest in the bill, but the task force does not have a continuing life as a separate body.
I want to explore the consultation process. Who was consulted, how long did the consultation take and what was the result of it? Did the opinions of the people whom you consulted differ from yours on what should be included in the bill? That is quite a big question.
It is a very big question. I will start off and we will see how far we get. There has been a great deal of consultation on the bill. As I mentioned, the original discussion paper that was drawn up by the Scottish Law Commission was published in 1990 and the commission held a couple of seminars on the subject. There was then a hiatus while the other pieces of legislation in the picture were drawn up.
No, that is fine.
I have been looking with interest at the definition of a tenement; it is interesting that it seems to have been broadened to include business premises. Traditionally, tenements were defined as flatted dwelling houses. Will the way in which the definition is phrased take in an office block?
Yes. The thinking is that people who own commercial premises should not be in a worse position than people who own residential premises. The important point in tenements is not really the use to which they are put but the interdependence, shall we say, of the different properties with each other as far as maintenance and repair are concerned. Many properties are mixed: members need only cast their eyes to the tenements around the Parliament to see a number of tenements in which there are commercial properties on the ground floor and residential properties above. The definition of tenement extends more widely so that it will cover properties that are not mixed but are purely commercial. However, it is probably fair to say that many properties that are purely commercial will be more modern; such properties tend to have title deeds that are more comprehensive and in relation to which the need for a default law may be rather less.
Did the consultees raise that issue?
No. The bill has always provided that commercial properties would be included. We have not made any change in that respect.
I can see the logic of that provision. You are quite right to say that in the average tenemental dwelling the ground floor is usually made up of commercial premises. However, I am slightly surprised that the bill intends to cover what could be, according to the definition, a freestanding set of office suites.
Yes.
I notice that the definition of tenement in section 23 states that the flats
Perhaps my colleague would like to speak on that very technical matter.
The convener is right. The fundamental aspect of a tenement is that flats are divided horizontally and are on top of one other. A semi-detached house is not considered to be a tenement in normal parlance. The definition of tenement is designed to work in a wide variety of situations, but the common denominator for them all is that there will always be an element of horizontal division. You are right that if a house was converted and divided into two upper and lower villas it would at that point become a tenement.
I have seen villas that have been sub-divided into ground and first-floor conversions, where the ground floor retains an upper storey at one end—the end of the original villa. I do not think that such conversions would be included in the definition, because they would involve a vertical division.
The starting point is a building or part of a building; if there are two flats within that building, there will certainly be a tenement. To ascertain the extent of the tenement might present some difficulties. It will depend very much on the facts and circumstances of the case. The definition is intended to allow sufficient flexibility to make it possible to examine an individual building and its title and burdens, to establish what the tenement is in that particular building.
This is not the time to get into the nitty-gritty, but I have experience of situations that in every sense conform to what the bill envisages but that would not be included by the specific definition in the bill. I mention that en passant.
The bill provides for ownership of certain pertinents, such as pipes, to be allocated according to a service test. I note that the majority of people who responded to the consultation—albeit a narrow majority—opposed that provision and said that ownership should be allocated equally among all the flats in the tenement. Why did you opt for the service test, notwithstanding that opposition?
You are right to say that it was a narrow majority of those who responded—which was a fairly small number—who opposed the provision.
Maybe I am being awfully dense. Is a common staircase a pertinent? Would a common staircase be excluded?
It depends on who has access to it. If the common staircase is accessible by all flats, all flats will have a share in it. For instance, it is quite common for the flat at the bottom of the stair not to have a door into the close but to have a front door on to the street. In that case, that flat would not have a share in the close or stair.
And if entrance to the ground-floor flat is from a door in the common close?
In that case, the ground-floor flat would have a share.
If I live in the bottom-floor flat, I use only the hall to access my flat, whereas the people who live in the top-floor flat make more use of the whole staircase. That seems to be a slight illogicality if we are applying a service test.
I think that you are referring to proportionality of use, which is different and which we considered. We gave the example of a fire escape instead of a stair. Consider a block of eight flats that has a fire escape that serves four of the flats. If maintenance costs were to be allocated on the basis of proportionality of use, the person in the top-floor flat on the side that was served by the fire escape would, I think, have to pay—my arithmetic is not very good—three times what the person on the first floor would pay. Essentially, that seemed excessively complicated. That is why it was decided not to use a proportionality test in addition to the service test.
Yes. Some of us are struggling a little with the distinction between a service test and a proportionality test. I can understand how such a service test would apply to a pipe that serves my flat and another flat, but I am now slightly confused about how it would apply to a common part that is used by three or four flats more than it is used by the fifth or sixth flat. It seems to me that a service test involves asking who benefits from the feature and to what extent they benefit. Therefore, proportionality is implied. Otherwise, unfairness develops.
The issue is complicated. It is not easy. Perhaps I should read out the section from the policy memorandum. It says:
Can you point us to the relevant page of the policy memorandum?
I refer to paragraph 30 on page 7. The paragraph continues:
But the ground-floor flat does not need a fire escape.
We actually discussed that at some length and we concluded that there were circumstances in which people in the ground-floor flat might wish to use the fire escape. However, we have provided only an illustrative example, which was designed to show the complexity of a proportionality test. We changed the proposal following the consultation exercise because, when people looked at that sort of example, most of them took the view that the proportionality test was just too complicated.
On that basis, is a lift a pertinent?
Yes.
If I own the ground-floor flat, my visitors and I never use the lift. In conveyancing, one would normally ensure that the ground-floor proprietor was excluded from that responsibility.
The answer to that is that the bill will provide a default law. In conveyancing, people would normally make specific provision for that sort of thing when they were drawing up title deeds. If you are preparing a default set of rules, it is difficult to foresee all sets of circumstances. By attempting to do that, you might well end up creating peculiarities and anomalies. A relatively simple rule, however, has an element of rough justice about it.
With its own peculiarities in the long run.
You talked about the ground-floor residents whose doors opened into the close having to pay for a proportion of the upkeep of the staircase and close. What would happen if the default rules were being applied to a tenement and the ground-floor resident decided to block up the door into the close and—assuming they got planning permission—install French windows that opened out on to the street instead? I am talking hypothetically, obviously, but the situation is not impossible.
Indeed it is not. I think that that is a question that my solicitor should reply to.
I have not thought about that issue at any great length. I think that the answer would be that if you could carry out the work required—and, as it is your door, I presume that you could—you would no longer be served by the close and, under the default rules, you would no longer have a share. However, I do not know whether you would be able to carry out work of that nature without obtaining consent from the other owners and, therefore, implicitly obtaining their permission to withdraw your liability for, say, the painting of the common stair.
Irrespective of that, if the title deeds say something else, would they stand?
If the title deeds say that everyone in the close has a share of ownership of the common close, that is the ruling provision.
Including those flats on the ground floor that have no access to the stair?
Yes.
Have you any other questions about pertinents, Nicola?
No, I think that I will let pertinents lie.
In response to Mike Pringle, you said that the tenement management scheme was an area in which the consultation document proposed something different from what is in the bill because the consultation was based on the tenement management scheme being compulsory irrespective of what the title deeds said. Why has the Executive changed its position on that?
What you have said is not entirely true; there is a qualification to be made to the remark that the tenement management scheme would have been applied on a compulsory basis. The idea was that it would have been applied on a compulsory basis with two exceptions: one being that the title deeds had an adequate provision concerning decision making, which would apply in any case; and the other being that the title deeds had an adequate provision on the apportionment of costs, which would also have applied in any case. The Executive considered the remaining provisions in the tenement management scheme and weighed up whether any of those should prevail over the title deeds or whether the title deeds should prevail over them. It consulted on that issue and found that the overwhelming view of consultees was that the title deeds should prevail in all matters. The Executive accepted that view.
Did all the consultees support that or was it only those consultees who had an interest in the operation of the tenement management scheme who did so?
An overwhelming majority of the consultees supported that idea. Hamish Goodall might be able to be more precise. Was it only three who did not?
I cannot remember exactly, but well over 75 per cent of those who responded favoured the idea that title deeds would prevail over the tenement management scheme. Those respondents included most of the major consultees, including the Law Society of Scotland, the Royal Institution of Chartered Surveyors, the Scottish Consumer Council and the Scottish Federation of Housing Associations.
What are the benefits of title deeds prevailing? I assume that the consultees said that their preference was for the tenement management scheme not to be compulsory. What benefits or disadvantages did they see in the scheme not being compulsory?
The general view was that if developers have taken the trouble to set out adequate provisions in title deeds, those are likely to be the best arrangement for that particular tenement and it is therefore sensible for those deeds to prevail. For example, one of the rules in the tenement management scheme is to do with emergencies. However, there are existing developments, such as sheltered housing schemes, where the title deeds make specific provision for what should happen in an emergency. It seemed right that those specific provisions—which have been drawn up with great care and which are often more sophisticated and elaborate than the basic provision that is in the tenement management scheme—should prevail. In that way, a provision that is bespoke and complicated should be preferred to one that is rudimentary and simple.
The distinction between compulsory and non-compulsory is perhaps not a good one. We are dealing with a default position and not one that people can opt out of. A developer who is faced with drawing up deeds for a tenement in the future has to deal with the law as set out in the bill. They cannot pick and choose and not have certain provisions. If they elect not to have certain provisions that are considered to be part of the desirable default provisions, then the default provision will kick in. The law will always apply in the absence of alternative provision. That is not a compulsion, but it means that if one does not make an alternative arrangement, one must comply.
Are you confident that for those people to whom the scheme will not apply, their title deeds will be sufficient to provide them with enough protection?
If their title deeds do not provide them with the benefits of the tenement management scheme, the bill will apply the tenement management scheme to their tenement.
What would happen where the title deeds stated clearly that the owner of the top flat had responsibility for the roof, but the owner did not have the money to undertake the repair or did not believe that they should have to do so and, by failing to do so, not only their own property would be damaged but other properties in the block?
If the title deeds say that the owner of the top flat is responsible for repairing the roof, they prevail and he is responsible. However, section 8 will replace the common-law duty on providing support and shelter. The section says that the owner of any part of a tenement building must maintain the building so as to provide support and shelter for the other parts of the tenement. If the top-flat owner failed to maintain the roof, he would breach his statutory duty under section 8.
I will follow that up, because we have not reached a conclusion. At present, if the person in the top flat refuses to repair the roof, the other owners on the stair can tell their local authority that they want the building to be repaired and the local authority can say that it will repair the building under a statutory notice. However, that means that everybody pays a share. Local authorities used not to follow that practice, but that is what most do now. If the management rules in the bill applied, who would force the owner of the top flat to repair the roof?
The answer will always depend on the circumstances. In the situation that has been described, the top-flat owner is liable for repairs to the roof.
That is in the title deeds.
If that is the case, it is because the top-flat owner owns the roof in its entirety.
Because that is what the title deeds say.
The title is probably silent on who owns the roof, so the common law provides that the top-flat owner owns the roof and is therefore responsible under current law for it. The bill provides two ways of repairing the roof in the situation that has been described. One is by majority decision. A majority of the owners in a property will be able to decide to undertake works, whose cost will be shared among owners.
That is an important point on which I would like to ask a question.
The other way to repair the roof arises from section 8, which we have discussed. That section will impose on the owner of the roof a duty to provide shelter. If maintenance of the roof is required to fulfil that duty, section 10 deals with that as if a majority decision has been taken and makes all owners responsible for the cost, even though a majority decision has not been taken.
I have experience of the example that you excluded, when the title says that the top-flat owner is responsible for maintaining and repairing the roof. That situation applies to a large number of older tenements in Edinburgh. I suspect that it also applies in Glasgow, Aberdeen and elsewhere, but my experience is in Edinburgh.
I suspect that the title would rarely provide by way of real burdens that the top-flat owner would have to pay the full cost of repairing the roof. It is much more likely that by omission—complete silence—no provision would be made on who should maintain the roof, so the common-law position that the top-flat owner has to pay for that would apply.
I am sorry to repeat my question, but I am asking about title deeds that say that the top-flat owner is responsible.
If the title deeds provide for that, then, as the bill is drafted, real burdens provide primary responsibility for liability, so that owner would be responsible for maintaining the roof.
Perhaps I should add that we are not interfering with any of the powers of the local authority to issue statutory notices. That system will continue.
So owners will still have the right to go to the local authority.
Yes.
I will come back on that.
I think that the witnesses covered this in their last couple of contributions but, for absolute clarity, the management scheme kicks in only when the title deeds are silent. As long as the title deeds have something to say, no matter how subjectively unreasonable it might be, or whether it provides less stringent protection than the bill seeks to provide, the title deeds will prevail. In other words, the tenement management scheme is a genuine default position and not a minimum standard. Am I right in thinking that?
If the title deeds are silent or inadequate.
Or inadequate?
Yes.
So to return to the example, if the title deeds say that the tenant on the top floor is responsible for repairing the whole roof—
That is not inadequate.
What you mean by "inadequate" is crucial. "Inadequate" does not mean that the protection for all the tenants in the tenement is not as adequate as is envisaged in the bill; it means that the position is not explained properly.
"Inadequate" means that the title deeds do not work: for instance, if they apportion costs but the proportions do not add up to 100 per cent. It is that sort of thing—if the deeds are inoperable.
So the deeds are inadequate rather than deficient.
If the title deeds are perceived to be inadequate on a value-judgment basis, they will not be superseded but will remain. In the case that we are discussing—which we think will be rare—where the title deeds specifically say that the roof is to be repaired by the owner of the top flat, and that he is solely responsible, the ultimate enforcement action that the other owners could take would be either through the local authority, as described, or through the courts.
So with the bill we are not in any way looking at a set of minimum standards that are to be applied to tenements. The bill kicks in simply when the title deeds are silent.
There is a minimum standard in the sense that the bill will ensure that all tenements have a way of getting to a position where they are maintained and managed properly, but it holds back from interfering with the provisions in existing title deeds, on the ground that, generally speaking, provisions in title deeds are not there by accident.
I understand everything that you are saying, but I am trying to get clarity. The bill does not provide a solution to people in a tenement who have title deeds that cause problems—the deeds may not be technically inadequate in the way that you describe, but they cause problems in the management of the tenement. The bill will not deal with title deeds just because they prescribe something stupid.
That is right. It is worth standing back a little bit from the bill and pointing out that the Title Conditions (Scotland) Act 2003 provides some means by which it is easier to vary real burdens that are not satisfactory.
I wish to pursue that, but I will try not to go over the same ground, because it is largely the same point. You say that the Title Conditions (Scotland) Act 2003 applies, but it does not apply retrospectively to existing title deeds, does it?
The powers to change real burdens can be used only in the future, once the bill comes into force, but then they can be applied equally to existing real burdens and to burdens created in the future.
That maybe covers the point about minimum standards and extending beyond technical deficiencies.
It depends on whether you think that the title conditions that have been deliberately and carefully drawn up, and which provide that certain people will pay for certain costs, are a deficiency or whether they are simply well-drafted legal documentation.
Could I have clarification on an important point that Nicola Sturgeon raised? Let us assume that we have a title that expressly makes the top-flat proprietor liable for the roof. Section 8(1) clearly provides an obligation on the owner of any part of the tenement building to do certain things; that is the creation of a statutory obligation. Our owner of the top flat may have no interest in doing anything about his leaking roof, but the rest of section 8 seems to give to other owners a right of enforcement. Nicola Sturgeon's question is whether, notwithstanding the title conditions that exist in that imaginary case, section 8 will fortify that right of enforcement. If I own the flat downstairs and have dry rot going round my second-floor flat because Nicola is not attending to the top-floor flat's roof, can I come in under section 8(3)?
Yes—that is in the bill and not in the tenement management scheme in the schedule, so that will be the law as it applies to all tenements. Irrespective of what is in the burdens, every tenement owner has a duty to provide support and shelter; every other owner who is affected can enforce that.
At the moment, that is done by the owner going to the local authority and getting the local authority to enforce the work that is to be done.
That is one way of doing it. At the moment, the work could also be enforced using the common law. The new provision is a replacement of the common law.
In my experience, that has never happened, because it is so expensive for individual owners to get involved. That brings me back to the question about ownership. If there are 10 owners in the stair and six say, "Yes, we'll go ahead," the real problem is to get the other four people in the tenement to pay. The way that that is done at the moment is to get the local authority to do the job—the local authority makes them pay.
That option will still be open to people.
I may be wrong about this, but is not there an obligation on a local authority only when a building becomes dangerous, but not in matters of maintenance and repair? I presume that we are talking about section 19 or section 34 notices.
I was not talking about that particularly; I was talking about situations in which somebody in the stair knows that there is a leak in the roof but nobody is doing anything about it. If that person goes to the local authority to say that they want the problem to be repaired, that does not mean that the building is dangerous.
The situation is not as simple as that. My understanding is that a local authority cannot do anything without serving a statutory notice on all the proprietors.
That is correct.
My understanding is that local authorities are reluctant to do that unless there are the most compelling circumstances that merit their getting involved.
Several different provisions can be used by local authorities. First, section 108 of the Housing (Scotland) Act 1987 can be used if a local authority is satisfied that a house is in a state of serious disrepair. However, when a local authority uses such a notice, it is obliged to approve an application for a repairs grant in so far as it relates to the execution of works that are required by that notice. The other route is to use section 87 of the Civic Government (Scotland) Act 1982, under which a local authority may require an owner of a building to rectify such defects as are specified in the notice in order to bring the building into a reasonable state of repair. A person who complies with a notice and carries out the work has the same entitlement to loans and grants as if the notice had been served under the Housing (Scotland) Act 1987. In other words, a local authority is obliged to make repairs grants available, which is one reason why some local authorities are reluctant to use those provisions.
I apologise. My experience is only of Edinburgh—I thought that that was what happened nationally.
Before I go on to mediation, I want to be absolutely certain that I understand what you are saying. If the title deeds make provision for everything that is in the tenement management scheme, but at a different standard or a lower value than what is in the tenement management scheme, will default provisions apply automatically, or do the title deeds have primacy?
The title deeds have primacy. I am not sure that I understand completely the question about standards, especially if you are talking about apportionment of liability. The bill sets out a default provision in situations in which there are no provisions in the real burdens that set out what the liabilities are. The bill sets a baseline for liabilities in the absence of alternative provision, or of provision that works. I refer to provisions that are inadequate in that they do not add up to 100 per cent liability.
If the alternative provision is less favourable or is in some way unfair, people will not have automatic access to the default provision. I want to know what is the connection between the Title Conditions (Scotland) Act 2003 and the bill. We may need more detail on the Title Conditions (Scotland) Act 2003 and how it relates to this element of the bill.
We are happy to provide more details, if the committee wishes them.
I will give an example that may help you to understand what members are getting at when we ask about the relationship between the default provision and minimum standards. I asked you earlier about the service test and how it relates to pipes, for example. You gave a very good answer and said that the situation was much easier to deal with when two owners are served by the same pipes. If a pipe is broken, those people agree to fix it and pay for it between them instead of having to get the agreement of, and money from, all 12 owners in the tenement, which might hold up repairs significantly. What would happen if the title deeds dictated that the agreement of all 12 owners was required, so that simple repairs to pipes that served only two properties in the tenement were delayed? That is what we are talking about when we say that such title deeds, which are less fair, simple and practical than the default provision, are inferior to the proposals in the bill. You are saying that title deeds that set out a procedure will prevail automatically.
That is right. The way round the problem would be for the owners to decide that a more practical way forward would be for decisions to be taken by a smaller number of people and to vary the title deeds under the provisions of the Title Conditions (Scotland) Act 2003. We would be happy to provide the committee with a note on the procedures that can be used to do that, if it would be helpful to the committee.
It would.
Nicola Sturgeon described a case in which the title deeds say that the agreement of all owners must be obtained before repairs are done. In practice, people would simply go ahead with those. People often find practical solutions.
We should not, when we are debating the bill, assume that such will be the case.
I take the member's point.
I seek some technical help for the official report. Mike Pringle raised the issue of statutory notices. I mentioned section 19 and section 34 notices, but Edythe Murie did not comment on them. Perhaps those provisions have been repealed. Such notices used to be issued either under the Building (Scotland) Act 1959 or under one of the Housing (Scotland) Acts.
I would need to check that.
It would help the official report if you could drop us a note.
I will move on to mediation. Members who stay in their constituencies for any length of time will deal in their surgeries with disputes between owners and owners, between owners and owners associations and between owners and factors. This seems to be an area in which we can all easily fall out.
There are different ways of approaching the issue, but I will deal first with the more detailed issue to which you referred at the end and consider the position on mediation that is being set out in other bills, particularly the Education (Additional Support for Learning) (Scotland) Bill.
The placing of a dispute-resolution duty on, for example, a local authority does not imply that it cannot be a kind of independent arbiter. I would have thought that such a role would be attractive because independent arbitration could prevent matters from ending up in court. To have reached the court stage means that there has been no early action, and that it is too late amicably to resolve a dispute. The inclusion in the bill of a duty of dispute resolution would not imply the use of a particular type of mediation, so the Executive would still be able to adopt its generic approach to mediation as a skills set that could be used in different settings.
It was considered that, although the final word would probably have to be with sheriffs, it might be possible to place a duty on sheriffs—for example, when awarding costs—to consider whether parties had participated in mediation. For example, if one party to a dispute refused to participate in mediation, it might be possible for that party to be penalised by differential award of costs. The Sheriff Court Rules Council is considering that in a general way and the Executive does not want to pre-empt the council's discussions by including in the bill the provision to which I referred.
Section 14 of the bill will allow the owners of flats in a tenement access to other owners' flats for maintenance purposes, subject to certain safeguards. Some respondents to the consultation expressed concern that that provision is, in theory, open to abuse and they wanted the safeguards to be strengthened. Did you take account of those concerns in the bill and, if so, how?
Yes, we did. The original version of section 14 would have allowed owners to request access to different parts of the tenement to carry out maintenance or other works, or simply to carry out an inspection to determine whether it was necessary to carry out maintenance or other works. We have removed the references to "other works" so that access is restricted to necessary occasions. The view that was taken was that it would be unreasonable to allow access in a case in which someone wanted to make alterations to their flat and it was more convenient to them for their neighbour's floor to be dug up than for their own ceiling to be disrupted. The change means that access can be required only when necessary.
On a technicality about access, there are, in the rules that govern the management scheme, fairly precise directions about giving of notice and the method of sending it. Are those directions also meant to cover access for maintenance purposes?
I do not immediately know the answer to that—I think that we will have to write to you on that point.
The bill would be more comprehensive if further direction was given about the form that notice should take.
Certainly.
Section 15 deals with insurance. Some respondents to the consultation suggested that there should be a common insurance policy for an entire block. I wonder why the bill has not gone down that route. My other question is on insuring to the reinstatement value. I am not sure that everybody does that now, so how will the bill make sure that people do so in the future?
To take the question about common insurance first, the idea that everybody in a tenement should be involved in the same insurance policy is attractive, for obvious reasons. However, we discussed the matter with insurance company representatives and there is a difficulty in that if one person does not pay the premium in a common insurance policy, the whole policy is vitiated.
Oh—right.
I see your reaction. The effect would be that the other people who were paying up would be in a worse position than if they were paying for policies that covered only their own flats. That is why the Executive chose not to go down the route of common insurance.
I am sorry, Mrs Lugton, but I will just interrupt for a moment. Such people would be in an even worse position if an individual proprietor was underinsured.
Perhaps we can come back to underinsurance, which relates to Mr Pringle's question about reinstatement value. However, to return to common insurance, perhaps I have not expressed the point clearly enough. Under a common insurance policy, if one person failed to pay the premiums, the policy for the whole tenement would be vitiated, so nobody would be insured. It is hard to see how any scenario would be worse than that.
A common insurance policy would normally be administered by the factor, who would produce premium receipts for all proprietors.
If everyone pays up and the whole thing is properly managed by a factor, there are certainly advantages in a common insurance policy. However, if there was no factor and people were allowed to slip with payments, the lack of an insurance policy that covered the whole block would be a fatal flaw.
I wonder whether section 15 is enforceable, because in my experience common policies have normally been administered by factors for the simple reason that that makes matters visible and accessible and everyone knows at once whether the premium has been paid. In fact, most factors pay such premiums in advance and recover the money from the proprietors. However, what is the enforcement sanction under section 15? It is all very well to provide a duty for
The issue of enforcement is different from that of a common policy. The obligation in the bill is simply that proprietors should insure for reinstatement value. However, enforcement of that obligation is left to neighbours. Indeed, who else would carry out enforcement in the absence of a factor? The bill does not provide for a compulsory factor.
So far I am with you; I do not disagree with anything that you have said. However, the obligation that is set out in section 15 would be only as good as the benefit that would then be conferred on the other proprietors. How can they find out whether flat proprietor A has discharged his obligations under section 15?
Proprietors have a right to inspect next-door neighbours' policies and to see evidence that premiums are being paid.
That is an improvement on the current position. At the moment, people do not have such a right.
That is right. The bill provides two things: compulsory insurance to reinstatement value and the right to inspect a neighbour's policy and evidence of payment.
While the convener is reading through the bill's provisions—being a lawyer, she might find the relevant point more quickly than I—I should say that although we will, under the bill, have the right to find out information that we cannot find out at the moment, I am sure that we all know what the response would be if we asked a next-door neighbour whom we very rarely saw whether they had insurance on their property. How will the provisions in the bill make such a neighbour or the other owners in a stair provide that information? How will we enforce the proposed new rights?
All rights are enforceable at law through the courts. If the threat of legal action does not cause the duty to be done, the ultimate recourse will always be to go to court to get an order to enforce the duty.
I am not sure that that is much of an improvement on the present situation. I suppose that you have answered my question about reinstatement value. I suspect that if huge numbers of tenement owners were asked about insurance, we might be surprised to discover how many of them have no insurance at all. I would be even more surprised if we did not find that many of them have never considered the reinstatement value under their insurance policy.
I think that the information that we have is that probably about 10 per cent of people are not insured.
That is a very large number.
What we do not know is the value to which people are insured. People may be insured to a value that is less than reinstatement value. The Executive accepts entirely the points that you make. However, the alternatives are neither attractive nor practical. The provision is a step forward to encourage people to be insured. Once the bill has passed through Parliament, the intention is for there to be quite a large publicity drive to give people information on the changes in the law. The opportunity will be taken at that time to encourage people to adopt good practice, which is what insuring to the right value is.
If I understand section 15 correctly, it could work by creating an obligation that entitles the owner to request the owner of any other flat in the tenement to produce evidence of their policy, the sum insured and evidence of payment of the premium. Section 15(6) gives the owner the right to enforce the duty to insure on any other owner.
Yes. It is always possible to paint scenarios of that kind, but the object of the bill is to try to improve the position of people who live in tenements—people whose properties might not be well maintained and insured.
Is it possible that the facility could be abused by a speculative developer?
In what way?
Someone might suspect that some of the flat owners are underinsured, buy up a couple of the flats, use this statutory power to demand to see what they are insured for, get their properties insured for the correct reinstatement value and inform on the not insured. If those poor individuals could not pay, in effect that would be them.
That would certainly be a major unintended consequence of the bill. I think that it is a fairly unlikely scenario.
I simply make the observation.
During the progress of the Housing (Scotland) Bill in the first session of the Parliament, considerable discussion took place about the need for consideration to be given to establishing sinking funds for properties, which would deal with the problems of owners who do not always have sufficient money to do repairs when they arise. There was also discussion about problems that relate to communal and/or shared areas and to the issue of being underinsured and so not having enough money to undertake joint repairs. The bill is silent on that aspect. What consideration did the Executive give to long-term maintenance funds?
There has been a lot of consideration of sinking funds. Mr Fox mentioned the housing improvement task force, which gave a lot of thought to the matter but in the end concluded against recommending that sinking funds should be established. The thinking of the housing improvement task force fed into the Executive's thinking on the bill. The task force concluded that it would not be practical to establish sinking funds in either existing or new developments.
We are fortunate to have relatively low interest rates. I could make a political point and say that that is all down to our Labour Government, but I will not. However, we might not always have low interest rates and it might not always be possible for people to add the money to their mortgages. Even if interest rates remain low, people might have other commitments.
Many modern developments have provision for sinking funds. It is possible that such provision will grow in future but, at this stage, it has not been thought appropriate to include any statutory provision for sinking funds.
Some have said that the legislation is silent on the need for common factoring schemes. The consultation paper proposed common factoring, so why did the Executive decide against it?
The consultation paper did not actually propose common factoring; it was absolutely neutral on that issue, as on others. However, the paper did ask the question and raise the issue. The Executive's general aim is to encourage owners to establish effective arrangements for managing communal repairs, maintenance and so on. Another, slightly separate, aim is to ensure that good-quality professional property management services are available in Scotland.
Do you agree that the advantages of having compulsory factoring, so that everybody can enjoy the benefits of it, far outweigh the disadvantages that might be presented to people who can manage their properties? People might be getting on quite well with all their neighbours at the moment and things might be going according to plan, but it only takes one neighbour to move out for things to change. It strikes me that having a common factoring scheme could have greater benefits and advantages than it has disadvantages.
The view that the Executive has taken is that it wants to encourage common factoring, but it does not think that it is appropriate for common factoring to be compulsory. For some of the reasons that have been rehearsed, there are some properties for which it is simply not necessary to have a factor and it would seem to be unduly onerous for them to have one. There are also problems of enforcement. If it was compulsory to have a factor, how would that be enforced? Would that be yet another job for beleaguered local authorities? Having to do that would be an expensive burden. The final problem is that there is currently no proper accreditation scheme for property managers.
I presume that, in the debate that took place, regard was paid to the fact that the relationship with the factor is a contractual relationship—one of principal and agent—between the owners of the flats and the factor. Was regard paid to the right of individual proprietors to make their own decisions?
Yes.
Owners might decide universally that they do not want the expense of a factor and that they are sufficiently clever to do it all themselves.
Absolutely.
One of the other recommendations that the task force made was that owners associations should be established in new-build tenements with eight or more properties. Is it right that the Executive has decided not to include that?
Not exactly. What the Executive has decided is that it cannot include that at present because it touches on a reserved matter. Mr Macleod will correct me if I am not using the right term, but I think that owners associations are considered to be public bodies. Is that right?
No.
No. That is obviously the wrong term. They are considered to be business associations.
They are considered to be business associations under the Scotland Act 1998. The creation of an owners association would equate to the creation of a business association, and the creation of such bodies is reserved to the Westminster Parliament.
And so the Executive is discussing with the relevant Whitehall departments the appropriate way forward.
I thought—because you touched on this in answers to other questions—that the answer was going to be that, in new-build properties, the title deeds tend to be specific and loud and clear, so because the obligations and management are clear, the provisions in the bill, which are a default, would not apply. That is a factor, but you are saying that the issue is because the matter is reserved.
It is certainly because the matter is reserved that it is not possible to put anything in the bill at present. In the policy memorandum, the Executive has not expressed a view on the desirability or otherwise of owners associations, but it can see the arguments about the need for them. The Executive is currently considering the best way forward.
Okay.
Are there any other questions? If there are none, it falls to me to thank Mrs Lugton and her colleagues Mr Macleod, Mrs Murie and Mr Goodall for what has been a riveting session. I am sure that some of us have been overcome with nostalgia, and if not overcome with nostalgia, visited with innovatory zeal to understand the delights of tenemental dwelling and ownership. It has been a helpful session for us. We look forward to receiving clarification on the one or two points that you agreed to clarify for us.
We will suspend for five minutes.
Meeting suspended.
On resuming—
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