Defective and Dangerous Buildings (Recovery of Expenses) (Scotland) Bill: Stage 1
Good afternoon. Our first item of business this afternoon is a debate on motion S4M-09391, in the name of David Stewart, on the Defective and Dangerous Buildings (Recovery of Expenses) (Scotland) Bill.
It is with great pleasure that I open this debate on the Defective and Dangerous Buildings (Recovery of Expenses) (Scotland) Bill. I thank the Local Government and Regeneration Committee, the Finance Committee and the Delegated Powers and Law Reform Committee for their robust scrutiny of the bill, and all those who worked hard to get it to this point. The non-Government bills unit, the legal team and the drafters have been superb in their support and encouragement. Any errors are, of course, my responsibility alone.
I also thank the Minister for Local Government and Planning, Derek Mackay, and his officials for the open and constructive discussions on my bill. It has always been acknowledged that the Scottish Government and I share the same goal, which is to improve local authorities’ ability to recover their costs, although, of course, we differed slightly in our solutions. I think that the minister recognised that my bill dealt with a non-contentious and non-political subject matter and that agreement and consensual working would be the key to resolving timeously the difficulties that local authorities face in dealing with defective and dangerous buildings.
I hope that members will indulge me by allowing me to provide a little context to the development of the bill, not least because it has been four years, two sessions, two proposals and a statement of reasons in the making.
The first proposal on which I consulted was much wider and included issues such as building MOTs, although it also encompassed charging orders, which are important. My second, current proposal in this session focuses solely on charging orders, as I am acutely aware that local authorities need a solution quickly and that a single-issue member’s bill is much more likely to garner support than one that tries to solve too many problems.
We all know, of course, that owners have a responsibility to maintain their properties, but members will be aware of properties in their constituencies and regions that, as a result of their owners’ neglect, blight their surrounding communities. Local authorities have a statutory obligation under section 29 of the Building (Scotland) Act 2003 to carry out work to dangerous buildings where it appears to the local authority that a building constitutes a danger to persons in or about it, to the public generally, or to an adjacent building or place. A local authority may recover from the owner any expenses that the local authority reasonably incurs.
Section 30 of the 2003 act makes provision for a local authority to serve a dangerous building notice, carry out the necessary work, and recover its costs where that work has not been done by the owner within the specified period. Under section 28 of the act, local authorities may also take action in relation to defective buildings where owners have failed to undertake the work specified in a defective building notice and may recover their expenses similarly.
I know from talking to building standards managers that councils do not recover all their costs. The Scottish Government’s 2012 paper entitled “Research project to identify a cost recovery mechanism for local authorities dealing with dangerous and defective buildings” confirms that cost recovery sits at around 50 per cent. The Local Government and Regeneration Committee heard from witnesses that the average cost of work that is carried out by their particular local authorities was about £3,000, but there are examples of authorities being out of pocket for hundreds of thousands of pounds with little hope of recovering the money with the limited debt recovery tools that are at their disposal.
I will give an example of a case in Fife, which, although it is not an everyday one, perhaps illustrates the range of costs. The council spent £300,000 to demolish a precarious, heavily shored-up building in a tight town centre site. The building was at risk of collapse into the street. Prior to the 2003 act, local authorities relied on the Building (Scotland) Act 1959 to tackle dangerous buildings. Charging orders were available under that act to assist local authorities to recover outstanding costs. However, when the 2003 act repealed and replaced the 1959 act, the charging order mechanism was not carried over. The reason for that omission is not clear, although, suffice to say, it has left local authorities without an effective mechanism to tackle an increasing debt burden that needs to be addressed now.
How do local authorities currently recover any costs they incur when they use sections 28 to 30 of the 2003 act? If the owner is known, the local authority approaches the owner to seek payment of the outstanding sum. The problem lies in recovering sums from owners who do not have the funds, who will not pay or who cannot be traced. If the owner can be located, local authorities can pursue them through the civil courts. That can be expensive, however, costing up to £5,000. Cost issues are more complex and mount up where there are multiple owners. Court action is, of course, not possible where the owner is not known or cannot be traced so, in some instances, the local authority has no alternative but to write off the debt. Building standards managers have told me that they estimate the write-off figure to be around £700,000 since 2005.
The Scottish Government’s research project collated information from eight local authorities. The project estimated that the total unpaid debt for those authorities alone amounted to £1.5 million. That figure, when roughly extrapolated, produced an all-Scotland figure of £3.9 million. However, the Convention of Scottish Local Authorities considers that figure to be “too low”. Those are substantial sums, and they have the potential to impact on the level of service that local authorities can provide.
That brings me to the primary aim of the bill, which is to enhance local authorities’ ability to recover debts that have been incurred when dealing with defective or dangerous buildings by legislating for charging orders. It would perhaps be helpful if I explained that a charging order is a form of statutory charge that attaches to property and is registered in the land register of Scotland or, where appropriate, the register of sasines. My bill, in its simplest terms, provides for a charge to be secured on a property for 30 years and for annual instalments to be paid, and it can be used in relation to both residential and commercial property.
I will illustrate that point. A South Ayrshire night club caught fire. The fire extensively damaged the night club and also some street-level commercial premises. The council had to undertake works to make the buildings safe. There was real difficulty recovering costs, which ran into a couple of hundred thousand pounds. Had charging orders been available, the local authority would have been in a much stronger recovery position.
How will charging orders benefit local authorities? When a local authority registers a charging order against the title of the property, that means that, if the property is sold or transferred—bearing in mind the fact that a purchaser will want to get a clear and unencumbered title—the local authority is likely to be repaid through the proceeds of the sale. Another advantage of charging orders is that the cost of registering one is only about £50, which is significantly lower than the costs involved in pursuing the owner through the courts. Where the owner cannot be traced, a charge can be registered on the title, giving local authorities some assurance that they will recover their costs at some time in the future.
Charging orders can also benefit those owners who want to pay but who are not in a financial position to do so immediately. A charging order allows them to pay by annual instalment over a manageable term. If, during that period, the owner’s financial circumstances improve, the bill provides for early repayment and, if appropriate, negotiation of an early settlement sum, which, on payment, would result in the charging order against the property being discharged.
Until now, I have concentrated on dangerous buildings. Let us not forget that the bill will also make charging orders available to local authorities when they carry out work on defective buildings. That is an important feature of the bill, because the statistics from the most recent Scottish house condition survey, from 2012, show that 81 per cent of Scotland’s dwellings were in some state of disrepair and 39 per cent were in an urgent state of disrepair.
It is my hope that, by providing local authorities with greater assurance that they will recover their dangerous buildings costs, councils will have more confidence to tackle what I call high-level defective or borderline dangerous buildings at an earlier point, which is less costly and will preserve the value and structure of the property, rather than dealing with the building in a dangerous state. It is notable that local authority action without notice under section 29 of the 2003 act, which is the most urgent action, has more than doubled from 402 instances in 2010-11 to 992 in 2011-12.
I thank the Local Government and Regeneration Committee for its insightful consideration of my bill and for supporting the bill’s general principles, once again demonstrating that the Parliament can come together to deliver solutions where they are needed.
During its scrutiny of my bill, the committee’s main focus was on the term of a charging order. Local authorities queried the long repayment term of 30 years, particularly for smaller sums. The Scottish Government’s memorandum also considered that the
“terms of repayment should be flexible”.
I reiterate the commitment that I gave to the committee that, should the bill progress, I will amend the relevant part of it at stage 2.
I also confirm that I have heeded another point of concern related to the registration of the charging order. Local authorities are concerned that a property might be sold or transferred—perhaps to another company—before they can register a charging order. I give a commitment to lodge an amendment to provide a mechanism that will close that gap.
The Delegated Powers and Law Reform Committee suggested that my bill should be amended to allow the Scottish ministers to directly amend new schedule 5A to the 2003 act, to alter the form and content of a charging order, rather than there being the prospect of that being done by way of subordinate legislation. I have confirmed to the Delegated Powers and Law Reform Committee that I am content to amend the bill as suggested.
I again thank everyone for their contributions and their collegiate approach. I look forward to working with the minister and his officials to further refine my bill, should it be supported today. I am delighted to move the motion.
I move,
That the Parliament agrees to the general principles of the Defective and Dangerous Buildings (Recovery of Expenses) (Scotland) Bill.
14:41
I am pleased to speak in the debate on behalf of the Local Government and Regeneration Committee. The committee has heard evidence at stage 1 and this debate follows our report on David Stewart’s bill.
I thank all those who provided the committee with evidence—both written and oral—at stage 1. I also thank the committee’s Scottish Parliament information centre researcher and the clerks for their assistance and support.
Following a call for evidence, we received 30 written submissions, which were mainly from local authorities, but there were also a few from others with interests in issues such as conservation and construction and from housing associations and the legal profession. Thereafter, we held two oral evidence sessions. The majority of the evidence that we received supported amending the Building (Scotland) Act 2003 to introduce, as proposed in the bill, charging orders for use by local authorities.
The bill’s key aim is to allow local authorities to make charging orders for the recovery of expenses incurred when they have carried out work to defective and dangerous buildings. Carrying out such work is a statutory duty imposed on local authorities—they are required to take urgent action to reduce or remove danger to people in and around buildings.
We heard various figures for the scale of the problems facing buildings in Scotland. The highest was that 83 per cent have some disrepair and we were told that around half require urgent repair to prevent the fabric of the building from degenerating further into a dangerous state.
The bill would allow an additional means by which local authorities can recover costs and expenses that they incur when carrying out their statutory duties in relation to dangerous and defective buildings. They used to have that power but, for some reason that nobody could explain to the committee, it was removed when the Building (Scotland) Act 2003 was passed.
Currently, when a local authority incurs repair costs having served a defective building notice or a dangerous building notice, or having taken urgent action to deal with a dangerous building, it can pursue the debt through civil debt recovery procedures. Charging orders should therefore operate by means of local authorities attaching a formal charge over the building concerned. The charge would be registered in the land register of Scotland or, when appropriate, the register of sasines.
I will concentrate on the committee’s findings, which are set out in our report. We looked closely at the provisions requiring the repayable amount under a charging order to be paid by means of 30 annual instalments.
The consensus from the evidence that we heard was that 30 years is too long a period for the recovery of expenses and that payment in annual instalments is too rigid an approach and might prevent people from paying back costs in a lump sum. The committee agreed that the bill is inflexible and recommended in our report that local authorities should be able to recover expenses over a timescale that relates to the amount that has been incurred and the debtor’s ability to pay. I am glad that David Stewart raised that point today.
The committee received representations on the authorisation of retrospective notices in relation to outstanding debt. Approximately £4 million is due to local authorities as a result of work on defective and dangerous buildings, and some people want the bill to give local authorities the power to apply for retrospective notices. We agreed with the member and the minister on the issue and would not support the addition of retrospective powers to the bill. It is unusual to make retrospective provisions in general, and in this case difficult legal and technical issues would arise.
Evidence from local authorities noted that there was limited capital and revenue immediately available to undertake repair work. A number of authorities suggested that the Scottish Government should set up a national fund and stated that such a resource would allow local authorities to access funds to undertake their statutory duties in relation to urgent repairs of defective and dangerous buildings.
We recognise that local authorities have limited funds available and choices to make in how they prioritise and spend their money. One choice that they have is to undertake repair work but, of course, they will in many cases have to wait for repayments. We acknowledge the concerns and the choices to be made, but we consider a national fund to be an issue for the Scottish Government and local authorities to consider rather than something for which the bill should legislate.
In oral evidence we heard requests for the bill to increase the flexibility of charging orders to allow housing associations to pay building repair costs on blocks of flats in which they have properties and to have those costs recovered by local authorities on their behalf. That would avoid a situation in which housing associations would, in buildings in which they have a majority interest, have to make full payment and then chase other—perhaps private—owners for repayment of their share through the court system.
We note those concerns but do not consider it appropriate to burden local authorities in that way. We would, however, encourage local authorities to work closely with housing associations and to take a flexible approach to assist them when circumstances permit.
We heard a fair bit of evidence about private owners—generally companies or the like—chopping and changing ownership to try to evade repayment. I am sure that many members in the chamber have experienced such situations in their constituencies and regions, as I certainly have. We heard evidence to suggest that a power to make an interim order or a liability order that could be attached at the point at which the repairs were made would help to address the situation.
We sympathise with that suggestion and are keen to minimise avoidance opportunities. We recommend that consideration be given to providing appropriate powers, which we understand the Scottish Government is considering. We look forward to hearing more about that and, perhaps, to considering amendments at stage 2.
I congratulate David Stewart on introducing the bill, and we appreciate his flexibility in giving evidence to the committee. The committee supports the bill’s general principles.
14:47
I am delighted to contribute to the debate, and I too acknowledge the significant amount of work that David Stewart has done in the past four years to get his bill on defective and dangerous buildings to this stage. His bill proposes considerable improvements to the existing cost recovery powers of local authorities in dealing with defective and dangerous buildings.
The current powers in the Building (Scotland) Act 2003 require local authorities to take action on buildings that they consider to be dangerous. In some cases that will mean undertaking emergency work to secure the building and the surrounding area, and in other cases it will mean carrying out repair works. In certain extreme circumstances, local authorities can decide to demolish all or part of a dangerous building. They also have discretionary powers to deal with buildings that they consider to be defective. Unlike the situation with dangerous buildings, the local authority can, where an owner has not carried out the necessary repair work, undertake the work itself. The powers cover all types of buildings and allow local authorities to intervene to stop buildings deteriorating or to deal at once with immediately dangerous situations.
Those powers are important not only to ensure the safety of people inside and outside buildings, but to help in protecting our built environment for future generations. When a local authority becomes involved, its intervention is usually enough to prompt the building owner to rectify the problems themselves. In cases in which that does not happen and a local authority has to do the work itself, it can seek to recover its costs from the building owner.
As we have heard this afternoon, that currently means using the normal debt recovery methods, which to date have unfortunately not always been successful or adequate. Local authorities need a process for debt recovery that provides them with flexibility and gives them more certainty of recovering any expenses that they may have incurred.
The previous building legislation, up until 2005, included provision for charging orders for dealing with dangerous buildings. I, like many other members in the chamber, do not know why that power no longer exists. It linked the debt to the property and required the debt to be paid by 30 equal annual payments. Although, since 2005, powers have been widened to cover defective buildings, charging orders were not proposed. As such, the proposals in David Stewart’s bill can be seen as reintroducing the system of charging order powers that used to be in place. The Government has acknowledged that the existing powers need to be strengthened. As part of that, it is essential that any changes must include registration of the debt against the property to alert future owners to any existing liabilities. Indeed, having recognised the concerns of local authorities, the Government included proposals for improved powers in the consultation on the proposed community empowerment (Scotland) bill at the end of last year. Important differences to the bill that David Stewart has proposed were the inclusion of flexible repayment terms, the use of notices of liability, and a wider scope to cover all enforcement powers under the Building (Scotland) Act 2003.
We have now had the consultation responses to the community empowerment bill, and the Local Government and Regeneration Committee has taken evidence on David Stewart’s bill. The responses show strong support for improvement, but ask that the payment terms be flexible. Many respondents also requested that the period between the debt being incurred and the registration on the appropriate property register be kept to a minimum to prevent avoidance tactics. Those views were echoed by local authorities at a consultation workshop in January, and by the Convention of Scottish Local Authorities. I am pleased to hear that David Stewart intends to address those two specific issues at stage 2.
As I said earlier, the Government acknowledges that the cost recovery aspect of the legislation should be improved. That important part of the Government’s work is at the core of protecting the built environment, but it requires local authorities to invest time and resources, particularly when owners do not fulfil their legal obligations. Linking the local authority costs to the property would be a welcome improvement that would, in turn, give local authorities more certainty about getting their expenses back.
I am therefore pleased to confirm that the Government supports David Stewart’s bill on the basis that he will address a number of key aspects at stage 2. I also confirm that the Government will work with David Stewart on developing his bill to improve existing local authority cost recovery powers. That will largely satisfy COSLA’s request that we take this approach, as opposed to leaving it to the community empowerment bill that will come later in the parliamentary session.
14:52
We, too, welcome the proposals for the bill. I congratulate David Stewart on the work that he has done thus far, and echo his thanks to all those who contributed to the discussions and gave evidence to the committee, and to the clerks for taking us this far.
Many properties are not properly looked after and can become dangerous and fall into a state of disrepair, which is bad news for residents, for neighbours and for the regeneration of our communities. Given the Scottish National Party’s persistent underfunding of local government, the bill provides a useful way for councils to recoup the costs that they incur in making buildings safe or when they are obliged to undertake urgent repairs. We support the bill and hope that it will enable our local authorities to recover a higher proportion of those expenses.
I agree with all the comments that have been made so far about the need for flexibility, and I am glad that David Stewart is keen to accept amendments at stage 2. The evidence shows that the 30-year payback period is too long. It has also been made clear that, for many people, a monthly payment might be a lot easier than an annual payment. It would be sensible to enable councils to be flexible in light of the circumstances of the owner and the size of the payment.
The Scottish Federation of Housing Associations raised a couple of issues in its submission that have not been mentioned this afternoon. First, the SFHA thinks that it would be desirable for housing associations to have similar powers to local authorities, either through possible collaboration with councils or by having the power to issue charging orders themselves. The SFHA argues that that would enable a more practical approach to the restoration of mixed-tenure buildings. I would be interested in the comments of the minister and the member in charge on that suggestion.
Secondly, the SFHA seeks clarification of when action could be taken to repair a dangerous and defective building. David Stewart referred in his opening remarks to his desire for high-level defective or borderline dangerous buildings to be tackled earlier. It would be quite useful to think about how that might be defined, so that people will know when it is appropriate in the future to apply the bill’s provisions. The SFHA makes the obvious point that preventive repairs are much less costly and potentially safer in the long run. The issue is to consider how such repairs link with the bill’s provisions and to decide at what point they would be triggered.
I cannot comment on the bill without reflecting on the statutory notice system in Edinburgh, because there are lessons to be learned from it. The system has been dogged by mismanagement and allegations of corruption, but the principle underpinning the system is sound. We need to think through Edinburgh’s experience of the system in order to make the bill stronger. The City of Edinburgh Council commented in its written submission on potential delays in the sheriff court and costs being successfully challenged where the apportionment between owners is not clear; I know that that is a live issue in Edinburgh. Guidance to ensure fair and clear apportionment between owners would be very useful, particularly in dealing with tenements. Where it is not possible to track down an owner, the capacity to lay a registration or an order on a property’s title could mean that money would be recovered—that is an important principle in the bill.
I want to reflect on the linkage between different elements of legislation. I am glad that the minister will look at community empowerment principles being adopted in the bill. The law of the tenement enables owners to undertake repairs and claim back the costs from owners who refuse to pay their share. However, the fact that they have to resort to the courts to claim back that money means, in effect, that it is a possibility that is virtually never used, given the costs and the time delays.
An opportunity that could come from the bill would be to allow the council to step in and pay the contribution of an owner who had refused to take part, even though the law of the tenement had been used in the drawing up of a scheme of works, and then to enable the council to claim that money back from the owner, using the powers in the bill. That would empower neighbours who have come to an agreement but whose repair works have been stalled by an absent or unco-operative owner. It has certainly been the case in Edinburgh that such situations have forced the council to become involved, which has led to lengthy delays, disputes and increased costs.
I would be very keen to introduce at stage 2 a power for local authorities along the lines that I have described, but I would be interested in hearing members’ views on it before we get to stage 2. I would be grateful for the view of the member in charge and his advisers on whether the bill as drafted would give local authorities that power. If their view was that it did not, I would be grateful if the minister and David Stewart would look at the proposal before we get to the detail of stage 2, because I believe that the bill presents an opportunity that we should not miss.
I very much welcome the bill. I hope that the motion on its general principles is passed today and that we can move to discuss the detail for stage 2.
14:57
I tend to start my speeches by welcoming the opportunity to contribute. However, I confess that on this occasion I can say with an unusual amount of sincerity that I am pleased to speak in support of this bill. I have met David Stewart to discuss his bill, and I congratulate him not only on his hard work, but on his persistence. Dangerous and defective buildings are not a subject that is being hotly discussed in many households around Scotland at this precise moment. However, the member has identified a real problem with the present situation and has come forward with a sensible and straightforward solution. We should be grateful for his efforts in pursuing the matter. Indeed, I suspect that his real and abiding achievement is to have brought forward good legislation that has not been hijacked by the Scottish Government.
The bill presents a fairly neat solution to the problem of recovering costs for repair work by using a charging order where, for instance, civil law routes are not appropriate due to difficulties in tracing the owner. The bill will allow local authorities to tie the debt to the property title as opposed to the owner. Put more simply, the bill will give local authorities another route to claiming back the costs and as such it is most welcome, with 80 per cent of councils indicating their support for it in their responses to our consultation. There are an estimated £3.9 million in outstanding costs for such work, so anything that makes it easier to recover that money is surely a good thing.
Of course, as David Stewart stressed in his evidence, the proposed route is an optional one, so it will not bind local authorities to using a charging order in every circumstance, and in some cases it will not be appropriate. In committee, I raised the example of derelict barns and outbuildings in rural areas where the titles are not clear or are non-existent. John Wilson memorably referred to that problem as a case of raiders of the lost titles, a reference that might explain his penchant for fedora hats. We want to avoid situations in which charging orders become a disincentive for the redevelopment of land, or where they push buildings and sites into negative equity.
Clearly, there are situations in which charging orders will not be a viable solution. There are also situations in which the ownership is not at all clear, and one of the key challenges that I have faced personally was a situation in which an owner simply could not be found. The fact of the matter is that tying a debt to the title of a property is no use when nobody will take responsibility for the ownership of it. Whether or not it is in the bill, there needs to be a review of such situations and of the feasibility of fixed timeframes for establishing ownership.
As members of the Scottish Parliament, we are all familiar with buildings that have sat abandoned for long periods of time and on which work has been required to make them safe. Alex Rowley referred to a derelict hotel in Cowdenbeath High Street in his constituency, where no owner could be found, and I seem to remember that a similar case brought revelations over Stewart Stevenson’s links with the business community in Panama, though not in a personal capacity.
The key to the bill’s success will come from the difference that it makes not just to how effectively costs are recovered, but to how likely councils are to act on dangerous buildings. David Stewart referred to instances in which the decision on whether a building was dangerous or defective was not clear, and noted that in those circumstances it was likely that the decision would be taken not to take action because of the difficulties associated with recovering costs. I hope that the change will spur councils to act.
Another thing that must be considered is whether the remedial work that is to be carried out will be the bare minimum required to ensure that the building is safe and not liable to further or immediate deterioration, or whether local authorities have the confidence to act, knowing that costs could be recovered, to allow for a slight widening of the scope of the works so that they are more robust and longer lasting.
A couple of issues arose in the committee’s evidence sessions about the timeframe for the recovery of moneys and the appeals process. There was near unanimous support for the proposal that the 30-year timescale should be a maximum rather than a set, prescribed collection period, and we now know that moneys will be collected in instalments.
I am pleased that David Stewart has indicated his intention to work to bring forward any necessary amendments at stage 2 to bring in a flexible regime for the collection of moneys over a shorter timeframe, which is particularly relevant given that some costs will be relatively modest. There has to be flexibility in that regard. Likewise, there was some discussion over the appeals procedure, which the member has clarified would be for the purpose of disputing the validity or competence of any order, rather than reviewing the overall cost and associated terms. I note that the minister will consider that issue further, since he requires assurances over the role of the Government and reporters. However those seem to be fairly minor problems and I feel sure that any issues will be resolved at stage 2 and that we can move forward with the bill.
15:02
I offer my congratulations to David Stewart on introducing his bill in such a consensual manner that he has actually brought on board the Scottish Government to lend its support to the bill’s progress.
Many people assume that they understand what is meant by dangerous and defective buildings, but in practical terms that may not be the case, although the Building (Scotland) Act 2003 offers legal guidance on the matter.
As a member of the Local Government and Regeneration Committee, I must respond to Sarah Boyack’s comment about the Scottish Government and local government finance by reminding her that she was a minister in the Scottish Executive when the 2003 act was introduced and that that act took the charging powers away from local authorities in Scotland.
Will the member take an intervention?
No. I do not have time.
Although Mr Stewart’s bill has helped to provide a context as it has progressed, in that its intention and clear objective is to amend current statute in respect of the Building (Scotland) Act 2003, the general thrust of the bill raises concerns about how local authorities that have served either a defective buildings notice or a dangerous buildings notice, or which have taken alternative urgent action to deal with a dangerous building, can discharge their existing public safety role.
That raises an issue about the charging costs that were presented to the committee. We heard that the average charge was £3,000 for such buildings, but many witnesses indicated that that sum applied only to making the building safe, not to carrying out the necessary repairs that might be regarded as essential to make it habitable.
There is clearly a problem with keeping properties maintained, particularly in an era of buy-to-let owners who can be difficult to trace from title deeds, hence my reference in committee—alluded to by Cameron Buchanan—to the raiders of the lost titles. There are similar difficulties in cases where landowners operate from an offshore base.
As witnessed in the response from the Scottish Government, there is a high level of support for the principle of establishing better cost recovery powers, and the general point of the bill is to bring about an improvement in the current situation.
As has been stated, an overall theme is coming from discussion on the bill on the need to ensure that work takes place to tackle repairs, rather than simply make buildings safe and secure. Importantly, the principles behind the bill would provide certainty to local authorities that the debt should and will be recovered.
Although evidence that was given to committee centred on expenses, as reflected in the committee’s report, there are issues regarding the repayment period. The repayment period in the bill was deemed by some to be somewhat restrictive, principally with regard to costs being repaid annually. It is worth noting that charging orders are not a risk-free option and some respondents raised matters associated with their reintroduction. For example, charging orders are a long-term solution to debt recovery, especially when the period of repayment could be 30 years. That highlights my comments on flexibility.
In addition, a charging order will place a legal burden on the building, which may well impact on the sale of a property. There will no doubt be amendments at stage 2, as David Stewart and the minister intimated, which will take on board points about creating flexibility on the recovery of expenses, so that it is not overly prescriptive.
I thank David Stewart for bringing forward the bill and I commend the consensual manner in which it has been discussed. I look forward to the Local Government and Regeneration Committee’s consideration of amendments at stage 2. I thank everyone who assisted us in considering the bill at stage 1, including those who gave us written and oral evidence, and I thank members for the manner in which they conducted themselves during that stage.
We turn to the closing speeches.
15:07
We have had a good, constructive debate and found a great deal of consensual support for David Stewart’s bill. We are all agreed on the bill’s merit and necessity and most comments have been on the detail over its implementation. In that respect, it has raised a number of broader issues to do with repairs. However, David Stewart and the committee are right to recommend that we resist some of the suggested amendments and expansion of the scope of the bill.
One of the most obvious cases of that type of proposal was from Susan Torrance of the Scottish Federation of Housing Associations, who noted the appeal of the bill and suggested broadening it to offer some sort of power to local authorities to pursue costs on behalf of housing associations—a point that Sarah Boyack raised. Although David Stewart and the committee understandably rejected that proposal, given the taxpayers’ resources that would need to be used, it is easy to see why the SFHA suggested such a power.
Never far from any discussion on the Local Government and Regeneration Committee is the issue of finance and in particular the fact that resources are scarce for councils at present. The bill is, of course, designed to improve the rate of recovery of funds, but in order to be recovered they have to be spent in the first place. That led some councils to argue in their submissions for a dedicated fund for the purposes of repairs—that is, to argue for ring fencing. That would add a whole new dimension to the bill regarding extra resources and it is not a matter that should be addressed by the bill.
Linked to that issue, COSLA suggested that the powers could be used retrospectively. However, that struck me as something that would be quite a complex addition to the bill and I note the minister’s comments on the competency of such a provision. Evidence from Alistair MacDonald of North Lanarkshire Council highlighted the administrative costs that would be associated with retrospective charges, and that point cannot be ignored.
The bill’s overriding aim is to give local authorities another tool for recovering the cost of repairs, which is a very welcome and effective proposal. However, the bill understandably attracted a number of suggestions on how it could be tweaked or slightly expanded to address the many other similar problems that go with recovering the cost of repairs. Of course, the danger with such proposals is that if we begin to accept them, the scope of the bill immediately expands and we encounter all sorts of other, unforeseen problems. What starts as a straightforward proposal quickly evolves into a substantive and more far-reaching bill. Accordingly, I commend David Stewart for retaining his narrow focus on the issue of charging notices in relation to dangerous and defective buildings. The bill has exposed the need for a wider look at the broader issues, but for the moment we should support this bill, as it will give some welcome new powers to local authorities.
15:09
I, too, thank David Stewart for his hard work over the past four years to bring his bill to Parliament.
This stage 1 debate has been short, purposeful and very consensual, and I particularly welcome the very supportive comments that have been made by the Minister for Local Government and Planning; Kevin Stewart, the convener of the Local Government and Regeneration Committee; and Cameron Buchanan. Given the issue of local government finance that Sarah Boyack highlighted, the chamber must unite to support and implement the bill. With councils under severe pressure as a result of cost cutting, it is only right that they have the powers to recoup moneys for repairs to buildings for which owners take no responsibility. Indeed, ensuring that such owners do not profit from work that local authorities undertake is one reason why I fully support the bill.
The Local Government and Regeneration Committee’s very thorough and helpful stage 1 report on the bill raises concerns about the period of time for repayment, but I am happy with the broad agreement on the need to review the bill’s overly inflexible drafting.
On the issue of cost recovery, I agree with the evidence suggesting that the fixed-term repayment period is inflexible, and I am keen for that part of the bill to be reviewed. As a result, I welcome the remarks that David Stewart made on the matter in his opening speech. With the average cost of repairs coming in at under £3,000, it would be more beneficial for councils to base their terms on circumstance and the amount owed. I would certainly find it bizarre if someone who owed less than £3,000 had to pay 30 years of annual charges. Given the warning by the Institute of Historic Building Conservation that many one-off repairs costing £3,000 might require further intervention in future, it might, in the interests of public safety, be more beneficial to carry out full works in the first instance. Indeed, as the bill could also have beneficial effects in my area and help to transform and regenerate town centres such as Paisley—I am sure that the minister agrees with me on that point—I hope that things advance and that we get the repayment period right.
Local authorities have quite rightly indicated that without payments from owners their budgets for undertaking work are limited, and they have suggested the possibility of establishing a national loan fund. I hope that the minister will continue his dialogue with local authorities to find a practical solution to this problem. It might well be a result of the economic climate that more and more buildings are being classed as dangerous or defective but, given that councils are recovering only 50 per cent of costs, the Government must make it a priority to find a way of funding repairs without having a detrimental effect on vital services. The SFHA has suggested that housing associations and local authorities collaborate on recovering costs but, like Gillian McCarney of East Renfrewshire Council, I am apprehensive at the use of taxpayers’ money to recover costs for associations.
That area needs to be further explored, as does the question of who can issue a charging order. Moreover, the bill does not address the issue of buildings whose owners are not known, and I look forward to amendments at stage 2 to remedy those points. Similarly, I am unsure where the bill sits in relation to councils and missing shares, and I hope that that, too, will be clarified as the bill progresses.
We fully support the bill and hope that the chamber will do the same. It will be a vital tool in ensuring that our buildings are kept in good repair.
I call Derek Mackay. Minister, you have six minutes.
15:13
That is slightly longer than I had expected, Presiding Officer.
The debate has been very consensual, without much disagreement. Mary Fee was correct to say that, like the bill itself, it has been short, purposeful, consensual and clear. Indeed, I think that David Stewart and I share those attributes: we are both short, purposeful, consensual and clear in what we want to achieve.
The chamber is united on this issue. In fact, if there is any challenge, it might come from the Opposition spokesperson, Sarah Boyack, who, for good public benefit reasons, wants to expand some of the bill’s provisions. However, the bill has been drawn in a very tight way to achieve its expected outcome.
My concern is partly because I know that there may be further legislation coming down the tracks from the Scottish Government. The key problem for our constituents is that having to refer to different acts becomes a legal minefield. It would be useful if we could do simple things, without widening the focus too far, which Cameron Buchanan talked about, or if we could at least have a discussion about that at stage 2, so that the minister could reflect on issues that could be picked up in other pieces of legislation.
The member makes a valid point about emerging legislation. I want to be entirely clear, though, that the bill has a clear focus and we engaged with professionals to get the focus of the legislation—both the member’s bill and what was proposed in the community empowerment bill—right, so there may be other opportunities to do what Sarah Boyack suggests.
Kevin Stewart rose—
Can we have Kevin Stewart’s microphone switched on?
Thank you, Presiding Officer, although, as some of my colleagues are saying, I probably do not need it.
The simplicity of the bill is extremely good. It is when we get overly complex that we run into difficulties. It is perhaps the complexity of the 2003 act that led to charging orders disappearing from statute.
That is a fair point, but the bill will be focused and will make the necessary amendments. I will return to the details of those in addressing the points that have been made this afternoon and in the Local Government and Regeneration Committee.
I liked Cameron Buchanan’s clarity in welcoming the opportunity to participate in a debate with sincerity. I am sure that that is the case. It is not the case, however, that the Government is hijacking the bill. Actually, it is a case of great minds thinking alike. Everyone recognised that we needed to do something about this, and I commend David Stewart for taking the opportunity to tackle an issue through a member’s bill that we were dealing with through a community empowerment bill that I absolutely want to get right. We will, of course, reflect on the member’s suggestions and continue to work with him on the necessary amendments. However, the bill will still have the Government’s conditional support if the areas that we have identified can be addressed. We are happy to continue to support the bill and, indeed, offer the support of our officials to get it right, because the recovery of expenses that councils incur in dealing with defective and dangerous buildings is a serious and significant issue. We need to create a culture of proactivity in local government so that councils take the necessary action in the knowledge that they will be recompensed, where that is appropriate.
A wider issue around resources has been raised. I point out that we have made a major effort to de-ring fence resources—the amount that is ring fenced has fallen from £2.7 billion to just less than £200 million—and I do not believe that there is an appetite in local government to return to greater ring fencing of funds by creating a loan fund or something similar, even if the purpose is a good one. I believe that local government would welcome having the financial flexibility to take the approach that is appropriate in each local area, with the checks, balances and safeguards that Sarah Boyack mentioned in her speech, being very mindful of the circumstances in Edinburgh.
The bill has the potential to raise standards, to create a culture of enforcement and proactivity, to give the necessary reassurance and to challenge people. The guidance will be incredibly important in ensuring that there is clarity in the legislation and in the implementation. Again, I say that we look forward to working with David Stewart on amendments on issues such as the term of the charging order, so that there is flexibility, because it would be preposterous for some charges to be stretched over 30 years, where that is inappropriate. We do not want to unintentionally create avoidance and avoidance mechanisms. It would therefore be welcome if the bill could be amended to allow liability for costs to be registered as early as possible, to prevent the possibility of avoidance.
I am mindful of the Local Government and Regeneration Committee’s view on the retrospective allocation of expenses. The member is aware of the Government’s position on that, as well.
The community empowerment bill will proceed without any element of the work that is contained in the member’s bill, which will, we hope, deal with the issue with which it is concerned. That will enable the community empowerment bill to focus on the other areas that I have highlighted.
Once again, I commend David Stewart for the four years’ hard work that it has taken to get the bill to this stage. I think that it will meet with the approval of members across Parliament. The power that the bill deals with is a necessary one. The lack of the power has been a missed opportunity and its restoration will, I think, be welcomed by local government and the people of Scotland.
15:20
My friend Councillor Jimmy Gray, who is the convener of Highland Council, first drew my attention to the hazards that buildings can pose to the public if they are not maintained properly. He had been unfortunate enough to experience at first hand the danger that is posed by a building in a state of disrepair when he was almost struck by a flying piece of masonry when out walking along Stephen’s Brae in Inverness. Thankfully, he was unhurt. However, that prompted me to investigate this matter further with building professionals and local authorities. I readily acknowledge that there are many wider aspects of dangerous and defective buildings that need to be addressed. As a back-bench member, I cannot go as far as ideally I would have liked, though I believe that my bill is an important first step and will make a significant difference to local authority cost recovery powers.
The response from the Edinburgh Conveyancers Forum to the committee’s call for evidence sums up the position well:
“Whilst the charging orders proposed are not a full answer to these specific issues in themselves they would hopefully offer a welcome first step to developing a system that can protect our built environment to the advantage both of the population at large and also to individual owners whilst shifting the financial burden back to the owners themselves.”
I thank members for all their positive contributions and their hard work in analysing the bill. I share Kevin Stewart’s view that it would be wrong for the bill to apply retrospectively. Certainly, the legal advice that I have taken is that it would breach the European convention on human rights if it did, and I share that view. I also share Kevin Stewart’s views about the national fund and the housing associations. Although I am very sympathetic to Susan Torrance’s position, the point for me is that what she wanted was out of the bill’s scope, not that it was incorrect. Obviously, I am keen to do anything I can to look at the notice of liability at stage 2, as I said to the minister earlier.
I share Derek Mackay’s views and thank him for the offer to provide Scottish Government officials to work with me on amendments at stage 2—I will certainly do that. The only thing I query is his sizeist comment earlier, although I remember that my friend Bill McAllister, a well-known Highland journalist, once introduced me at an event by saying, “David Stewart is not old Labour and he is not new Labour—he’s just wee Labour.”
I also liked Sarah Boyack’s contribution. There is a much longer answer to make on the issue of apportionment and I am happy to write to her about that. As members know, Edinburgh has different legislation that went through Westminster. We would generally look at cost recovery according to what the title says, but I would like to make a much fuller response to Sarah Boyack and I shall do so in writing.
Cameron Buchanan also made an excellent contribution. He is quite right to say that charging orders are not there so that they can be used in every single case; that would be nonsense. Clearly, it is a joint decision by the building control officer and the legal team in the local authority. However, these orders would not work in a situation of negative equity or an unclear title. The line about raiders of the lost titles, which I think John Wilson coined, was a good one, and legal assessment is required on that point.
I agree with John Wilson about the worries about offshore ownership. I think that Stewart Stevenson spoke to the committee on that point. I would like to see repayment periods being relative to the amount of funds outstanding. I will certainly pursue that issue.
Mary Fee also made some excellent points. Clearly, with so-called orphaned buildings, where owners are unknown, a charging order would still work if there is a clear title, even though the owner may not necessarily be found. That is important, given that the order would attach to the title of that individual building.
In the few minutes that I have left, I will in summary recap the advantages of charging orders. If there is still time, I would like to mention the case that Stewart Stevenson cited to the local government committee, which was very interesting.
The advantages of charging orders are that they add to the local authority cost recovery toolkit to meet the varied circumstances of debtors. They secure the debt over the property, which creates a priority for the debt that it would not otherwise have as an ordinary, unsecured debt. It also includes a provision for recovery of expenses that are incurred over and above the basic cost of undertaking the work. That is very important indeed; it refers to local authority administrative costs, registering and discharge fees and, of course, interest. I emphasise that it would be for each local authority to have a mechanism for assessing what interest it would be charging, which would be based on the current bank rate.
As the order is against the property, it avoids the need to pursue an individual in the civil courts, which can be time consuming and costly and, depending on the sums involved and whether the owner is traceable, may not be a viable option.
The charging order would also provide a greater guarantee of the costs being recovered; it would also enable a person who cannot pay a lump sum to make instalment payments. In addition, the charging order would act as an incentive to make those who are liable pay rather than incur the additional costs. Furthermore, the normal requirement to clear the charging order prior to the sale or transfer of the property would give an incentive for property owners to make payment of the outstanding sums to facilitate a sale. It is also likely to be much better to have had repairs carried out and a charging order placed than for a property to fall into further disrepair. Finally, charging orders have an advantage in that their existence and the sums charged are easy to establish from the land register at the point of sale.
Presiding Officer, do I have time to quickly mention the very interesting case that Stewart Stevenson raised at the Local Government and Regeneration Committee evidence session on 26 February?
I will give you an extra little bit of time.
Thank you.
The case illustrated both the difficulties and the costs involved in attempting to trace the owner of a derelict building in a village in the north-east of Scotland. After five years of attempts to confirm ownership, it turned out that the property was owned by a registered company in Panama, which would deal with the council only through correspondence in Spanish. I understand that the council incurred additional costs because all correspondence had to be translated into either English or Spanish.
Under my bill, local authorities dealing with a defective or dangerous property such as that would have the option of registering a charging order, which would enable the debt to be secured on the property, rather than pursuing an individual or company through the court. When it became apparent that the owner was not traceable or refused to pay, a council could pursue a charging order and thereby reduce its outlay at the outset. If in the future the property was sold, it is likely that the proceeds would go some way to covering the council’s costs.
My bill will improve local authorities’ cost recovery powers. I hope that, come decision time, the whole chamber will unite to take a small but important step in the right direction for the built environment in Scotland.