The second item is our continuing consideration of the Tenements (Scotland) Bill. Minister, we are happy to hear any introductory comments that you or your advisers care to make. Alternatively, you may wish committee members to proceed with their questions.
I am aware that the committee has been taking evidence on the bill for some weeks, so it is probably more useful if we go straight to questions.
Without further ado, I have a general question about the definition of tenement. One witness from, I think, the Scottish Law Agents Society expressed concern that the definition of tenement could result in the creation of a ransom strip, because the definition is silent on garden grounds, which might become pertinent if there were a demolition of a tenement. Would you or your advisers care to comment on that?
We recognise that there may be instances following demolition where an area of land is still available. There are two scenarios for such an area of land. One is that it belongs to the ground-floor properties, and the other is that it is shared among the owners of the demolished flats. We want to examine the specifics of that example, as to who would benefit.
That is helpful, minister. Perhaps, at the same time, you could consider another aspect of the definition: the way in which it seeks to define the physical structure of a building. I am possibly being tedious with semantics, but at an early stage in our evidence taking—it may have been when we took evidence from the bill team, but I cannot remember—we envisaged that the subdivision of a big villa, more than what we understand to be a tenemental structure in an urban setting, might be likely to lead to a configuration that did not conform to the definition in the bill. That is another aspect that you might wish to examine with your advisers.
Yes, we want it to be clear to people what we mean by a tenement. It is not only the regular sandstone building that people understand to be a tenement, but it could include, as you suggest, a converted villa, a multistorey block or any other variation on what people assume to be a tenement. We are clear what would be included in the definition.
Will you give us some information on the publicity and information that the Executive intends to use to inform homeowners about the existence of maintenance and management obligations? What kind of publicity programme do you have in mind, when would it start, and how long do you envisage it being rolled out for?
Mr Fox will be aware that the intention is that, after the bill is passed, it be commenced in conjunction with two other pieces of legislation that have already been passed: the Abolition of Feudal Tenure etc (Scotland) Act 2000 and the Title Conditions (Scotland) Act 2003. We want to renew awareness of those acts and make people aware of what is available under the bill when the acts are all commenced on 28 November 2004.
Do you have an idea of the amount of time that you will give to the campaign? You say that it will start in late November, but how long do you envisage that it will run for? Do you have in mind a budget that will be used to convey the information through the media outlets? Eight hundred thousand tenements is a lot, but have you considered the possibility of a direct mail shot?
I do not have a timescale for the length of the campaign. If we were to produce literature, such as a booklet or leaflet, that would be available for as long as it was suitable for the job that it was asked to do. On the budget, we are looking at a figure of about £25,000 at the moment.
A number of organisations said in evidence that they support a role for mediation in the resolution of disputes about repairs. They said that repairs are often not carried out in good time because the will of the majority of owners in a tenement can be enforced only through the courts. That is expensive, time-consuming—and perhaps a little scary for most people—so people let things slide until the problem becomes more serious and it is much more expensive to carry out the repair. I understand that the Sheriff Court Rules Council is considering whether parties to a dispute should be encouraged or directed to use mediation and that the Executive has stated that it would prefer to await the outcome of those deliberations, rather than include specific recommendations in the bill. Do you envisage a role for mediation?
There will be a role for mediation in disputes. The bill envisages that settlements will be reached between private individuals, rather than between individuals and public bodies. Mediation would be most appropriate at that stage and would be useful in ensuring that disagreements do not end up in the courts or lead to unacceptable situations in which people take desperate measures—the committee heard an example of such a situation. It is important that we recognise the role that mediation will have to play.
Thank you, minister. It is useful to have your comments on the record.
The bill provides that when a flat is sold, if there is an outstanding liability, for example for a common repair, the other owners can pursue either the buyer or the seller for the money. The provision is identical to one that is in the Title Conditions (Scotland) Act 2003.
Thank you. That is encouraging.
That is very helpful. I think that a similar procedure exists for statutory notices under the elusive acts that we talked about at a previous meeting, whereby those notices are registered against a title, which means that they can be disclosed to a purchaser. They are the known and public responsibility of the seller—there is a prior charge on the proceeds of sale. It was helpful to hear your comments on that.
On insurance, the bill sets out to make it obligatory for each owner within the property to have reinstatement insurance. I acknowledge that it is perhaps not satisfactory for someone to have to knock on their neighbour's door, ask whether they have insurance and request to check that their policy is up to date. I can imagine some of the difficulties with that but, given that the majority of people are law abiding, the fact that the provision will form part of the bill means that we would expect people to ensure that they had an insurance policy that fulfilled the requirement on reinstatement value.
If an owner sought, but was denied, information about another proprietor's insurance, would the ultimate sanction be for them to raise a civil action under section 15, to require production of the policy or the premium receipt?
Yes, it would. The policy is necessary if there has been a problem. Should it be found that an owner did not have the insurance policy that they were supposed to have, they would still be liable for their share of the costs of the work. That means that it would be open to the other owners to pursue the payment of that share through the courts. Although we are saying that it is preferable for people to have the insurance that they will be obliged to have so that they do not find themselves in those financial circumstances, we recognise some of the difficulties involved.
Do you anticipate that the same approach will be adopted to the payers under a tenement management scheme, when dissenting proprietors do not produce the money? Will the other proprietors have an ultimate right of civil recovery?
Yes. Because the legislation is very much about the resolution of difficulties between private individuals, ultimately that would be how such a situation would be resolved.
Some of the evidence that we have heard, which the minister has no doubt read, raises concerns about the service test. Some people are happy with it, but others suggest that it is overly complex and that it might lead to disputes. In general terms, do you have anything to say in response to that?
The principle of the service test is that of what is available "at this stage". For example, if pipes to someone's property are being used "at this stage", the person would be obliged to take responsibility for those pipes; they would become part of the person's property.
I appreciate the difficulties; I do not think that anybody finds it easy to say what the right way forward is.
I think so, because they would still have the ability to use the chimney should they choose to do so.
It is not an easy issue, but over the years would that not become increasingly fictional and undermine the service test? After 20 or 30 years the idea that somebody is still served by something would be difficult to sustain in reality. The test might become a bit incredible and people might lose confidence in it.
I am sorry, but there seems to be a problem with the sound system.
I apologise: it is my mobile phone. I thought that I had switched it off.
It is our resident recidivist.
There was no need to point that out.
I recognise the practicalities of what Nicola Sturgeon is getting at. It is not my role to speculate on what might develop, but maybe if I could—
It is not your role to speculate on what would develop, but—
Would you like to consult your advisers, minister?
Yes.
The hypothetical example of a water tank to which six people have access—three or four of whom decide to cut themselves off from it—was given. The bill implies that the remaining two people would be entirely responsible for the tank.
If the roof space belongs to the owner of the top-floor flat, he may have the opportunity to extend into it. However, if the roof space is within the ownership of everyone in the tenement, he would need all the owners to agree to that. Those people might feel that they were giving up part of their ownership and require compensation for doing so. There is nothing in the bill that would prevent that negotiated process from taking place. However, whatever the title deeds or the tenement management scheme said about where responsibility for maintenance of the roof lay would have to be taken into account when resolving the issue. As an ex-councillor, Mr Pringle will know that the owner of the top-floor flat would also need building warrants and planning permission to carry out the extension.
Absolutely. However, this is a concern.
There is a process to be gone through. I have come across examples of people thinking that extending into the roof space is the right thing to do, as well as examples of people thinking that it is the wrong thing to do. We cannot legislate for individual circumstances, but we need to ensure that there is understanding of who owns the roof space and of who is responsible for maintaining the outer roof.
This debate raises issues of how tenements are changed over the years. Chimneys are bricked up, attics are developed and so on. When we took evidence from surveyors, they made an interesting point. They said that no two surveyors will get the same dimensions when they measure a flat, because they all do things differently. They mentioned that there might be alcoves that had been boarded over—I am sure that other examples could be called to mind.
The choice of the figure of one and a half is a purely practical issue. It is a way of demonstrating that one owner has a bigger liability than others. I am a little puzzled by the assertion that two people could measure the size of a flat and come up with different figures.
The point was made in evidence to us.
We, too, were surprised by it.
Even where that is the case, I would not expect the figures to be very different. Surely boarding up an alcove will not take much out of a property. I would still expect there to be that general, overall difference in size that would indicate whether the flat was one and a half times bigger. It could be argued that that might not be the case.
There might be borderline cases, but I take what you say.
I wish to clarify a point in connection with the measurement formula. Would any account be taken of attic space?
The bill's explanation of that might be clearer than mine. Section 25(2) explains how the floor area is to be calculated. The floor area is the total floor area within the boundaries of the flat. No account is to be taken of any balcony or pertinents attaching to the property. An attic or a basement will be excluded if they are used solely for storage purposes and not as part of the living space. If the attic is used as part of the living space, it would be included in the calculation of the floor space of the flat. I hope that that is helpful.
If you have been following the committee's evidence taking, it will probably not come as a surprise that I want to ask about the tenement management scheme. We have had various evidence on the TMS and whether it should be the default position when the title deeds are silent or should apply irrespective of what the title deeds say. I am keen to learn why the Executive has chosen to make it a default scheme and how it will address members' concerns about owners of tenements whose title deeds do not give them the same protection as they would have under the TMS in relation to repairs.
I refer to the earlier question, "What is a tenement?" A tenement could be one of the sandstone buildings that we see in cities or it could be a four-in-a-block property, a converted Victorian mansion or a multistorey high rise; in fact, it could even be an office block. There are so many different definitions of tenements that the Executive felt strongly that the most appropriate way to deal with them was by reference to something that is specifically about the buildings, which is the title deeds that come with them. It was felt to be important that, where title deeds exist, we do not seek to remove them and try to provide a one-size-fits-all solution for tenements.
Personally, I am reassured by that, because it is important that any benefits of the TMS are available to as many people as possible. My concern was particularly for people who have title deeds that are not entirely silent, but they will be able to get any benefits of the scheme if their title deeds are considered to be deficient, so that is helpful.
I said earlier that I understood that some of the discussions would be very specific. That point is one on which we now have a response. As Karen Whitefield has said, scheme property is defined in rules 1.2 and 1.3 of the tenement management scheme. Rule 1.3 excludes chimney stacks from the definition of scheme property in rule 1.2(c). However, it does not exclude chimneys from the definition of scheme property in rule 1.2(a) or rule 1.2(b). Where a chimney is owned in common by two or more owners, it will be scheme property under rule 1.2(a). What I am trying to say is that, although it looks as if that has been excluded in one part of the bill, it is included.
Thank you for that clarification.
I am sorry, but I do not understand that. [Laughter.]
I can read it again if you want.
Going back to first principles, I understand that the scheme will apply only if the deeds are silent or do not apply uniformly to each flat. Is that correct?
Yes.
Before the scheme applies, the deeds must either have full provision for all flats or be inadequate. Is that right?
If the chimney is not part of common property, it would be the responsibility of only one person anyway.
Under the pertinents provision.
Yes, which is why it is excluded from rule 1.2(c). The effect of the—
This is quite important. You see, as I understand it, rules 1.1 and 1.2 do not apply to anything unless we have got a tenement management scheme. However, we will get a tenement management scheme only if our title deeds are silent or deficient, so how could the chimney be common property? If I understood you correctly, you said that the chimney would have to be used in common to be covered, but that takes us back to all the difficulties with flues blocked up and one person using the chimney and other people not using it.
If the chimney is not common property in the title deeds, under section 3 it will be the common property of the owners of the flats that it serves. Rule 1.3(c) will exclude only chimneys that serve only one flat. If the chimney serves only one flat, it is not common property. However, if it serves more than one flat, under rules 1.2(a) and 1.2(b), it would be part of the common scheme and so would be covered.
Right.
We should leave chimneys and flues there.
Are they a burning issue in Angus?
I want to move on to rule 3.4 of the TMS, which is slightly easier to understand than the rule about what is included and what is not included. The rule allows that where owners have decided that a repair needs to be carried out, money to meet the cost of it can be deposited in a bank account to allow for payment. Last week, we took evidence from the Property Managers Association Scotland Ltd, speaking as a landlords organisation, which raised concerns that the rule also allows for money to be repaid to individual owners after 14 days if the repair has not been carried out. The association was particularly concerned that the rule will be unworkable. It understood the principle behind it, but felt that 14 days was too prescriptive a period to allow for the gathering of quotes, for the owners to decide whether the work could be done and for the work to be undertaken. It was slightly concerned that we could have a situation in which, although most owners agree that the repair needs to be done and so pay in the money, someone might not pay in, which would mean that the money would have to be paid back and that the owners would have to try again to get the repair done. Even when everyone pays in, the owners might not be able to get anybody to do the work within the necessary timescale. The association wondered whether the measure was workable.
The crucial issue is the starting point for the 14 days. Karen Whitefield has outlined a number of steps that might need to be taken to ensure that the work goes ahead. There is nothing to stop that happening prior to the money being deposited. Therefore the starting point for the 14 days could be when a number of steps have already been taken. The starting point is in the gift of the owners; they can decide when the 14 days start, so it would be sensible for them to get quotes and ensure that agreements to the building work are in place before that.
I want to explore a couple of issues around the TMS. The City of Edinburgh District Council Order Confirmation Act 1991 is restricted to Edinburgh. Edinburgh has a unique way of dealing with property repairs, and I want to be sure that the bill or the TMS rules will not change that.
The simple answer is that they will not.
That is good. My second question is on the rule about majorities. Under the tenement management scheme, a majority will suffice. My concern is that that is not extended to all other common repair schemes. From my experience in Edinburgh, one of the major problems is the requirement to get everybody to agree to something—that is the reason why so many common repair cases go to statutory orders and, as a result, are taken on by the council. If majority decision making was extended to all schemes, that would help.
As you are aware, when title deeds are silent, unanimity is usually required and the common law would state that there must be unanimous agreement. However, when the tenement management scheme kicks in, it will allow majority ruling on the matter. The service should be no less than at present. If I am right to say that Mr Pringle's concern is about what happens in relation to statutory notices, particularly in Edinburgh, I reassure him that we do not expect the bill to make the situation worse. Schemes will still be able to operate in the way in which they have been operating.
My other question is on a matter that Ken Swinton raised at our meeting on 30 March. He talked about load-bearing walls, particularly in modern tenements that have glass fronts. Is a glass front load bearing? Is it considered to be a window or a wall? I quote from the Official Report:
My understanding is that where it is a wall, it will be part of the scheme property and where it is a window, it will be the responsibility of the individual. How one makes that decision when both the wall and the window are glass comes down to the design of the building; it will be clear from the design which parts are walls. A wall does not have to be load bearing to be a wall—that is the point that we need to get across. What is the wall and what is the window is open to interpretation depending on the design.
My question about floor area has already been answered.
I turn the minister's attention to legal aid; I certainly have more understanding of legal aid than of chimneys. The Scottish Legal Aid Board, in its evidence to both the Justice 2 Committee and the Finance Committee, raised a fundamental concern about regulation 15 of the Civil Legal Aid (Scotland) Regulations 2002. In essence, it said that, under the bill, the financial position of all the flat owners is taken together. An owner may be eligible for legal aid, but they could be prohibited from receiving it because of the financial circumstances of the other owners. It is clear that people might not choose that degree of enforcement because of the disproportionate financial burden. Will the Executive address that?
You will be aware that disputes can end up being resolved in the courts, so people may need to apply for legal aid. It is important to be clear that when someone who is part of a joint action is ineligible for legal aid and so may be assumed to be responsible for payment, concern may be felt about how the other people will be enabled to have legal aid. However, in many such disputes, receiving a letter from a solicitor has an influence on people's response. We do not expect many cases to end up having to be resolved in court, but we recognise that we must consider all instances and outcomes.
That is helpful.
Before we go on to the other aspects of extrinsic evidence for tenement management schemes, I will ask about one matter that I still do not understand—I am sorry to be tedious about it. I understand that the bill's definition of a tenement envisages a structure with divisions and two or more flats and that its guidance about decision making is that if a tenement has three flats or fewer, unanimity is required before anything can be done. What happens if the trio has a dispute? Would people in a subdivided Victorian villa be permanently locked into discord?
We said that the majority voting resolution applied only if four or more owners were involved because if two owners were involved, a majority would not be possible, and if the vote were split, resolution would be needed. As we suggested, mediation might be one way to resolve such a difficulty. We must accept that resolution through legal means might be needed when only two owners are involved.
What legal process will apply when a building with three flats does not have adequate clarification in the title deeds and so the tenement management scheme operates? What will be the basis for action by the unhappy duo against the third owner?
I am sorry; I did not quite understand that.
If the title deeds for a structure with three flats are silent, under the bill the tenement management scheme will kick in to regulate the position. However, the scheme requires unanimity. If there is no unanimity, repairs will not happen. So, what is the legal basis for a hapless duo, who are in the majority if there are three flats, who want to get repairs done but cannot because they have to work under the statutory tenement management scheme? On what legal basis could action be taken against the third person?
I suspect that your concern is over what happens when the minority wants to act but is not able to because it cannot achieve unanimity. In those circumstances—
No—my concern is over the majority, when two out of three want to act but cannot because they need unanimity.
The process in that case would be for people to apply to the sheriff court for the necessary repairs to be carried out. I think that I am right in saying that that has to be part of the bill so that it is possible to ensure that work is carried out.
Thank you; that is helpful.
We have already covered the fact that the TMS is a default scheme that will apply only when title deeds are silent or inadequate. The Law Society of Scotland has said that the TMS should override the title deeds. On the apportionment of costs, the society mentions some extrinsic evidence such as feu duty, rateable value and equitable shares. The society's view was that, in this day and age, it is difficult to decide what costs should be if they are based on those kinds of apportionment. Do you sympathise with that view?
As I said earlier, our intention was not to override the title deeds because we felt that the deeds were probably the most appropriate way of resolving such matters. When there has been a division of a property, for example, some properties will be bigger than others and the rights in decision making will be apportioned differently. It is appropriate to recognise such divisions within properties.
I was not aware of that but I accept that it is the case. It is the case for the feu duty, but is it also the case if the reference in the title deeds is to rateable value?
Yes. The valuation rolls could be consulted so that people would know in advance.
What about situations in which the title deeds refer only to equitable shares? How would that be defined?
If the title deeds refer only to equitable shares, that would be not be clear enough. The TMS would kick in at that stage.
I will be quick, because some of the points about insurance have been covered. Everybody supports the aspiration behind section 15, but there are concerns about enforcement. If I picked you up correctly, essentially it is up to the individual to access and to police insurance, after which they have access to the courts. There are no penalties if people do not comply.
There are no statutory penalties. People are obliged to have insurance, because that is what the legislation says.
So we are relying on people being decent.
Yes.
Therefore the aspiration behind section 15 might not become a reality.
It is in people's interests to have insurance, because they would be obliged to make their contribution even if they did not have insurance, which might be more of a burden. While we are relying on people being decent citizens, we are also relying on them to understand that that might be a heavier burden, and therefore that there might be an easier option.
Let us take an example in which somebody cannot access insurance. The notable case that we were presented with was Hooper v Royal London General Insurance, in which somebody had a previously undisclosed conviction as an arsonist. Irrespective of whether the insurance was block insurance or individual insurance, that person would not have been able to access insurance at all. In order to achieve your policy objective, have you had discussions with the Association of British Insurers about such instances?
We have had discussions with the insurers about those issues. If somebody was unable to get insurance because they had previous convictions, such as in the example you gave, they would still be liable for their share of the costs of whatever work needed to be carried out.
I have one final, small point. It struck some of the people who gave us evidence as slightly strange that somebody who had a fraud or arson conviction could demand to see the insurance policies of other people in a common close, yet their policy could not be seen. Can we examine that further?
Yes.
For clarification, is it correct that although the bill has no mechanism for compelling people to have insurance, it gives grounds on which other proprietors can take action under civil law?
Yes. We cannot compel people to take out insurance. It is interesting to note that the insurance people themselves seem reluctant to make insurance obligatory. They felt that that was not the way forward. However, other proprietors can pursue the matter through civil law.
Section 17 makes provision for how the cost of partial demolition of a tenement building should be allocated among owners. How would you respond to the view that several people have expressed to us that partial demolition often benefits those units in a tenement that remain, and that therefore the owners of such units should be liable for part of the costs as well?
I accept that they may benefit, but the demolition is the responsibility of the owners for whom it is taking place. It would be difficult for the situation to be otherwise. I am comfortable with what is proposed.
Section 20 deals with the sale of abandoned tenement buildings. The issue exercised Ken Swinton from the Scottish Law Agents Society, who was very unhappy with the word "return" in section 20(1)(b). For example, someone could buy a flat that had just been emptied and, despite the fact that all the other owners might have been working together to repair the building, he or she might decide to use the provisions in section 20 to get rid of all the property.
We are considering procedures that will protect owners in such circumstances and allow them to lodge objections to one person taking such an action.
So you are taking action on that matter.
We are pursuing it.
My final question concerns owners associations, which are not a devolved matter. We have received evidence expressing hope that the Executive might consider the matter, because it seems very unfortunate that such associations should be excluded from the whole process.
We acknowledge the benefits of owners associations, particularly in bringing owners together to manage properties and to ensure that they are well looked after. We are pursuing the matter with our Westminster colleagues and hope to resolve it fairly soon. Indeed, I hope to be able to return to the committee with that information in the very near future.
Great.
As you will see from our agenda, minister, we will consider our approach to the stage 1 report on the bill later in the meeting. Although the matter is not germane to that consideration, it might help committee members if you can share any information about what the proposed private sector housing bill might cover.
As the housing improvement task force made a number of recommendations that will need to be taken forward through other legislation, the Executive has proposed the introduction of another housing bill during this parliamentary session. We should make it clear that while the Tenements (Scotland) Bill focuses on the relationship between individuals, the proposed private sector housing bill will focus on the relationship between individuals and public bodies and between public bodies themselves.
Thank you for that helpful response.