Good morning. The first item of business is a debate on motion S3M-5872, in the name of Patricia Ferguson, on factoring services. We have a little flexibility, and I can give all members an extra minute of speaking time at this stage.
I call Patricia Ferguson to speak to and move the motion. You have up to 14 minutes.
09:15
It is some time since I had quite so long to speak. I will try to make the most of it.
I am grateful to have this opportunity to discuss with colleagues a subject that troubles many of our constituents across the length and breadth of Scotland. I say troubles but, for some, the unsatisfactory management of their property is more than just troublesome. At best, it can cause great concern and, at worst, it can cause real financial hardship and distress.
The purpose of factoring is to make life simpler for the individual owner and to make it easier for them to co-operate with their neighbours to have common repairs and maintenance carried out. The irony is that, for many, the reality is very different. I am sure that colleagues who take part in the debate this morning will tell the Parliament of the experiences of their constituents.
It is clear to me that the Scottish Government’s action in this area is well intentioned, but I hope that the debate will explain to the minister why legislation is necessary and convince him of the merits of legislating. I will set out what the legislation that I propose would achieve. Before I do so, however, I will talk about a few constituency cases that have passed across my desk. I have changed the names of the individuals, because the circumstances demand that I do so.
Mr and Mrs A are being sued by their factor for almost £3,000. They have been sued several times over the last few years by the company, each time for several hundred pounds that is, ostensibly, due for administration charges, compound interest and legal fees. Their factors are, in my view, nothing more than debt farmers who grow vulnerable customer’s debts on a weekly basis by applying excessive administration charges, compound interest and expenses. In this case, decrees prevent the family from opening a bank account. Their elderly and frail parents were sued by the same company and were made bankrupt. The family had to find £5,000 to pay the factor, even though the bulk of the sums that were due were for not the original debt but for administration charges, compound interest and legal fees.
Mr and Mrs B have the same factor. He has registered a notice of potential liability against them that prevents them from making a mortgage-to-rent application or from selling their property, because any purchaser would have to pay off the full debt. Mrs B owed the firm £4,500 in 2008 and, in spite of the fact that the factor no longer manages their property, it is now pursuing Mrs B for £12,000. Mr and Mrs B have tried hard to speak to their factor, but he simply will not listen. Their next-door neighbour is £2,500 in debt to the same factor, for an original bill of £600.
I will talk about the practice of this particular factor in detail. The company sends out reminder letters about unpaid bills every week at a cost of £17.62, which means that debts grow by £70.48 every four weeks. The firm calls that sum “administration charges” and applies 33 per cent compound interest on it. The arrangement means that, over the space of a year, a £10 debt could grow, in theory, to as much as £1,200, with 52 letters at £17.62 each, plus interest of around £300. That is a mark-up of 12,000 per cent on the original sum owed. The factor can then sue the owner for bankruptcy.
The experiences of these people are not unique, and, while their situations might sound extreme, the fact that they can exist in Scotland today surely demands our attention. In fact, it demands that we use the powers at our disposal to legislate.
In 2007, my colleague, the then Labour MSP for Glasgow Govan, Gordon Jackson, indicated his intention to introduce legislation that would regulate the factoring industry. Unfortunately, Gordon was not returned to the Parliament and could not pursue the idea. Having had experience of cases in my constituency, I was pleased to take over responsibility for the work. The consultation that I undertook showed the scale of the problem, with 87 per cent of those who responded indicating support for legislation. That was borne out by a market study that was undertaken by the Office of Fair Trading, which found that almost one third of consumers thought their factor provided a poor service. More than half of all consumers had some complaint with that service and 67 per cent of those who had lodged a formal complaint said that they did not believe that it had been adequately resolved. Although my consultation and the OFT’s study found similar problems, our conclusions were different. The OFT believes that a voluntary scheme is required, while I am convinced that we need legislation to underpin the changes that must now be made. As we know, the Scottish Government has so far indicated that it also favours a voluntary scheme. It is my sincere hope that today’s debate will persuade the minister that legislation is needed and will demonstrate that this Parliament backs that approach.
My proposed bill will require all property managers to be accredited and to meet some minimum operating standards. Many of the problems that are faced by their clients are about the basics, such as the availability of accounts and difficulties with communication and receiving quotes for work. Having a simple minimum standard would iron out many issues before they develop into problems. Having passed such a test, the property manager would be required to register with a body authorised by the Scottish ministers that would also supervise the accreditation system. With regard to deciding which body should carry out that particular function, I suggest that Consumer Focus and the Property Managers Association Scotland should be statutory consultees.
When disputes occur, there is little that an aggrieved owner can do, other than go to court to defend or raise a claim. Going to court can be very difficult for home owners, because many of the cases are under £3,000 in value, and no civil legal aid is available for home owners. The legal and factual complexity of disputes is often beyond the abilities of lay-representatives, and factors will often engage solicitors, making it a very one-sided contest. That is why my bill also proposes accessible and legally binding dispute resolution that will not require legal representation and will avoid the need to go to court and be exposed to court charges and legal expense. Such a system is already in place under the private rented housing committee for private sector tenants who have repair disputes with their landlords.
I believe that that raft of measures would make a huge difference to home owners up and down the country.
One of the problems that was identified by the ministerial working group was the financing of its proposals for voluntary accreditation. The group has recognised that a voluntary scheme is not a popular concept and that, if accreditation is to be financed by those seeking to be accredited, it might be difficult to accrue enough funding to enable it to work. A statutory scheme would not have that problem, as a registration fee would have to be paid by all factors. I would, however, want to ensure that that cost was not simply passed on to the customer through higher management fees.
There is one other group that I believe that this bill will help. I have outlined the bad practice of one particular factor, and we will no doubt hear of others, but there are also good factors who take their responsibilities seriously. They, too, encounter problems while carrying out their job.
For many people, buying a home or a flat is a daunting experience, as there are many things to consider and a great deal of money to be spent. Money goes on the purchase, on legal and removal fees and on buying new furniture. Amid the sheer excitement of having one’s own home, particularly if it is one’s first home, arrangements must be made with the companies that supply the utilities to the property, friends must be told of one’s new address and so on. The cost of factoring is sometimes overlooked in all of that, and can come as a bit of a shock.
I hope that, by debating the issue, we are raising its profile and reminding solicitors and developers that they, too, have a role in advising clients of the extent of the liability that they will incur.
I am listening carefully to the member’s speech and I support her approach. She talks about property development and property maintenance, but, living in Inverness, my main concern is the maintenance of grounds and open spaces. Will the member confirm that, when she talks about maintenance, she includes the maintenance of land and open spaces?
Yes. If a property management company operates in that way, the proposed legislation would cover that, too.
In these days of buy to let, it can be difficult to persuade an absent owner—even if they can be found—of the need for communal repairs or maintenance. In Glasgow, relatively new properties have reached the point at which they have no factor, as companies understandably had to call it quits when the outstanding fees and communal utilities bills had gone unpaid for so long that the buildings were on the brink of having no communal lighting, lifts or pumped water supply. That situation was not of the factors’ making—indeed, they lost out on thousands of pounds in income and debt. I therefore firmly believe that property managers would benefit from the proposed legislation, too.
I know from talking to property factors that many of them recognise that their industry is not highly regarded, often because of the activities of a few unscrupulous characters. They, too, want to restore their industry’s reputation and they would welcome the opportunity that a bill would afford.
As I draw to a close, I will thank several people. I realise that it is Oscar season, but I will try to cut the list down to just a few. I thank the non-executive bills unit for its advice and, I hope, for its on-going support. I also thank Mike Dailly of the Govan Law Centre for his unstinting support and for his hard work in the courts to support people who are being exploited by unscrupulous property managers. I also thank my constituency office colleagues Susan Smith and Isobel Tait, and particularly Chris Kelly, who has been so helpful to me in the work. My thanks also go to the Evening Times and The Herald, which heard of the problems that their readers were experiencing and, in true investigative style, decided not just to highlight the problem, but to lobby for change.
We owe it to the factors who want change to support them with legislation but, more important, we owe it to Mr and Mrs A and Mr and Mrs B and all the others whom we will no doubt hear about to change the system and to enshrine that change in statute. There is clear support for such reform across the length and breadth of Scotland.
I move,
That the Parliament notes that the Office of Fair Trading market study into the property management market found that the market is not working well for consumers in Scotland; welcomes the recent cross-party support for proposals to require property factors to register and to make provision for an accessible form of dispute resolution between homeowners and property factors, and further welcomes this positive progress toward the introduction of legislation to ensure better accountability of property managers for their standards and the services that they provide.
09:28
At the start of a speech in a members’ business debate, we congratulate the member on securing the debate. It is unusual to do that in a party-political debate, but I congratulate Tricia Ferguson on securing the debate, because the subject is worthy of the time that it has been allocated and the seriousness with which I think all parties intend to address the situation.
The Scottish Government acknowledges the cross-party support for action. We all accept that the status quo is not an option. I support the outcomes that Tricia Ferguson is trying to achieve through her proposed member’s bill. I have already indicated to the member that the Government will approach her bill empathetically. When we have the details, we will consider our position on the bill, but our approach will be from the standpoint of trying to do everything that we can to address the problems, which we all acknowledge. Passage of the proposed bill would of course include consideration of how the Parliament might legislate to provide the appropriate authorities with effective powers to make a real difference on enforcement. I look forward to seeing the final details of the bill. I have a meeting soon with Tricia Ferguson to discuss how we can proceed.
Can we take it from the minister’s remarks on Patricia Ferguson’s proposed bill that the Government’s official position is no longer to support an accreditation scheme, which is what the Government said that it supported in response to the OFT report as recently as May 2009? Has the Government’s position changed so that it now supports a statutory measure, rather than a voluntary industry-led initiative?
I will spell out the Government’s position on exactly that point if the member will give me an opportunity to do so.
I emphasise how important the issue is to the Scottish Government. Improving the condition of the common parts of housing in the private sector is one of our key policy priorities. More than one third of Scotland’s population lives in a flat, maisonette or apartment, and properties of that type have been identified as being more likely to suffer from a lack of maintenance. As a result, arrangements for the management of communal repairs are critical to the condition of a large section of our private housing stock.
Property managers have a crucial role in maintaining and improving the stock condition. At the same time, we want to support property owners to take on more responsibility for the condition of their homes. It is important that owners are aware of their responsibilities, that they understand the various services that are available, and that they enjoy access to quality and value-for-money property management services. Ultimately, the customer must have trust in the services that their property manager provides.
As Tricia Ferguson articulately outlined, the quality of service that some residential property managers provide is a matter of concern. It is a concern to the Government and the Parliament, and it was a concern to previous Administrations. The housing improvement task force recommended in its final report in 2003 that a national voluntary accreditation scheme for property managers be established. I think that Margaret Curran was the minister at the time. In July 2008, we announced plans to work with the property management industry to support the establishment of a national accreditation scheme. However, at that time, the Office of Fair Trading, as Tricia Ferguson said, was about to conduct a study to establish whether the market for residential property management services was working effectively in Scotland. We therefore decided to await publication of the OFT report before entering into discussions with stakeholders.
In February 2009, the OFT published the report on its market study, which concluded that some form of self-regulation was desirable, backed up with better information for consumers to improve the efficiency of the market and the quality of services. The OFT recommended that the Scottish Government should take the lead in ensuring early implementation of a self-regulatory scheme and that it should review progress of the scheme. It also recommended that, if a voluntary scheme did not prove to be effective, the Scottish Government should take steps to introduce a scheme on a statutory basis.
As Mr McLetchie pointed out, we accepted those recommendations. To date, they represent our main work in the area. We have been developing a national voluntary accreditation scheme with the industry and other stakeholders. The aim is to help property management businesses build a better reputation and gain the trust of consumers, and to ensure that the industry takes ownership of finding the solution to its image problem. That approach has the potential to raise standards above the legal minimum that might be afforded by statutory regulation approaches to control the market.
Let me be absolutely clear that, although the voluntary scheme is important, we are open to the possibility of the need for legislation. I have already indicated that we are prepared to sit down with Tricia Ferguson and consider the detail of her proposed bill. Particularly in light of the work that the Public Petitions Committee has done in relation to Govanhill, we are certainly of a mind to consider whether legislation is needed, whether or not the voluntary scheme is successful.
The issue is that the roughly one third of property managers to whom Patricia Ferguson referred are giving the other two thirds a bad name. It may be that those property managers who would participate in a voluntary scheme are not from the third who make up the problem. We have an open mind on the issue.
I have listened carefully to the minister’s comments and would welcome the Government moving towards the idea of legislating. Does the minister accept that the issue is not the property managers’ image but their practice and the problems and difficulties that the people who contract them to work on their behalf experience?
That is precisely why I am making my remarks today.
Statutory regulation in itself may not be a guarantee of achieving outcomes and carries some risks. If done wrongly, it could create barriers to entry to the market that might stifle competition and reduce choice for the consumer; we want to avoid that. We also want to ensure that there is flexibility, so that we can respond to changes in the market over time. We must ensure that whatever legislation is framed does not have unintended consequences.
Many of us have concerns about the emphasis on competition as a high-level objective. Competition is important, but does the minister accept that, given the number of operators, the real issue is raising standards? We do not want people with low standards to come in.
I agree with Robert Brown, but in some areas there is undoubtedly a local monopoly, which is driving down rather than driving up standards. As with every proposed legislative measure, we must consider the possibility that it may have unintended consequences. However, I emphasise that we are approaching the matter with an open mind and in the knowledge that we need to deal with the Govanhills of this world. I have made that absolutely clear.
Is the minister aware of the experience of older home owners in retirement complexes, who are particularly vulnerable to exploitation or bullying by management companies? That problem is rife throughout the sector. Older people do not want to make a fuss—they live in such properties because they want a quiet life—and they are vulnerable. Some form of dispute resolution mechanism with property management companies is needed. What is the Government’s view on the issue?
It happens that I am dealing with a constituency case in Bothwell on that issue, so I am very aware of it. One of the residents concerned is a former Secretary of State for Scotland, so I am keen to ensure that I deal with the matter as effectively as possible.
Self-regulation is being pursued in the form of the development of an industry-led voluntary accreditation scheme. At this stage, legislation and voluntary accreditation are not mutually exclusive, because legislating inevitably takes time.
There are issues relating to the borderline between devolved and reserved responsibilities. The regulation of professions is a reserved matter, so we need to talk to our colleagues south of the border about the powers of the Parliament, to establish what legislation we can legitimately pass under the current constitutional arrangement.
Given that you are aware of the issue, have you spoken to your colleagues at Westminster about how matters can be taken forward?
We are in constant touch with people south of the border—especially John Healey—on a range of issues. We have also had on-going discussions with the OFT.
This started as a consensual debate; I hope that it remains one, as I have made it clear that the Government is determined to work with Patricia Ferguson on the detail of her bill. We do not yet have that detail, and I cannot give an absolute commitment to support something when I do not know the detail of it. I have given an undertaking in principle to work with Patricia Ferguson and have given a clear steer this morning that, although we will progress the voluntary accreditation scheme, the Government has an open mind on the need for legislation. When we look at the situation in areas such as Govanhill and the work that Mike Dailly, the Public Petitions Committee and many others have done, we recognise the challenge and we are facing up to it. With all due respect, when Johann Lamont was a minister, nothing was done about it.
We intend to move ahead on the basis of trying to reach a consensus in the chamber. We will consider legislating, if necessary, but in the meantime we will continue to progress the voluntary scheme and try to make it as effective as possible. Any decision on whether we will legislate or support the detail of Patricia Ferguson’s bill will be determined by the persuasiveness of the arguments, by the evidence and by the need to ensure that any legislation that is proposed will deal effectively with the problem, without having unintended consequences.
I move amendment S3M-5872.1, to insert at end:
“, and seeks to ensure that the appropriate authorities are given the powers necessary for effective enforcement of any new legislation.”
I remind members that they should speak through the chair and not directly to each other. There seems to be a growing tendency to do that in the debate.
09:41
I thank Patricia Ferguson for giving us the opportunity to debate this issue, given that it appears that little action has been taken since Trish Godman’s members’ business debate in September 2007, when the minister responding was Fergus Ewing. Today we have a change of portfolio and a change of face; hopefully, much more action will be taken.
The Scottish Conservatives agree that factoring is a major problem for householders. There is widespread dissatisfaction, and many individuals and residents associations are unable to resolve the issues. Companies such as Greenbelt Group have got away with their practices for so long because no one has challenged their position and/or the conditions and burdens that developers impose on homes and properties. Although trading standards has been sympathetic, it appears totally powerless to bring pressure to bear on factors to meet their obligations of maintenance and land management.
I sent a copy of my speech to one of the main campaigners on the issue in Scotland, who will, I am sure, be known to members. Whatever we do today will not go far enough to achieve what many people seek but, out of courtesy, I will read out a couple of lines from an e-mail that I received from him. He states:
“Scottish and UK Government have done everything possible to avoid bringing developers and maintenance companies within the framework of existing consumer protection legislation whilst promoting the benefit of the Greenbelt Group Management scheme to Local Authority Planning officials.”
He continues:
“They operate in a completely uncontrolled market with impunity and laugh at any attempt by hard pressed consumers to attempt to obtain a contracted level of service!”
Many home owners in Scotland have a monopoly contract that they contend is illegal under the Title Conditions (Scotland) Act 2003. The issue is being pursued in Perth sheriff court, with a ruling against Greenbelt Group due on 4 May. Hopefully, that will set a benchmark for other, similar companies that are operating in Scotland. People seem to have an unfair contract, with no redress, and are faced with constant threats and bullying from factoring and management companies. That cannot be acceptable.
The motion notes
“that the Office of Fair Trading market study into the property management market found that the market is not working well for consumers”.
I make it clear to Patricia Ferguson that all my experience—both personal and with constituents—is with land management and maintenance issues.
I hope that my intervention is on cue; it is intended to be helpful to Ms Scanlon. I said that my bill will address the issue of land management. However, when Greenbelt Group is involved, the situation is different, because it owns the land. My bill will not address that issue, because we cannot usefully help in such situations.
One problem that we face is that the situation becomes much more difficult where property factoring companies own the land. Whatever provisions the bill contains, I hope that the ministerial team and the bill team will address that serious issue.
We very much favour an accreditation scheme, rather than a register and we would prefer a voluntary approach, at least in the first instance, prior to considering legislation. The establishment of a voluntary accreditation scheme is supported by Consumer Focus Scotland, which I understand is represented on the Scottish Government’s working group. I appreciate that many residents associations believe that a voluntary approach will not work—and I do not blame them given their experiences over the years—but, nonetheless, we feel that a voluntary approach ought to be tried. An accreditation scheme would, I hope, establish good practice standards and provide an advantage to those firms that can prove that they can meet those standards. We are aware that the consumer will ultimately foot the bill for either an accreditation scheme, a register or any further legislation, so we owe it to householders to act in their best financial interests as well as the other interests that we are considering today.
Improved information and advice to consumers is another important issue on which we need a commitment from the Government. When I see properties for sale in the estate in which I live, I see no mention anywhere on the schedule that the property owner will be required to pay up to £200 a year in ground-maintenance charges. That cannot be right. When I bought my property 15 years ago—a detached house in Inverness—the deed of conditions and the title deed made no mention of the need to pay the annual charge. That led me to establish a residents association and to set up Inverness south community council. The issue pitched neighbour against neighbour, because those who paid the charge found that they were paying for all the non-payers. One can imagine how heated some discussions became when pensioners on a fixed income and people on low incomes found themselves paying for the charges of others. At one point, I received a sheriff’s letter demanding that I pay the charge despite the fact that I had not even received a bill. Many residents worried about their personal credit rating. However, we now get an annual statement that tells us who pays and who does not—it seems that we are into naming and shaming. Therefore, although I welcome the “Consumer Code for Home Builders” that Homes for Scotland has promoted, I can confirm that house purchasers are still not being given enough of the pre-purchase information to which the code refers, such as
“a description of any management services and organisations to which the Home Buyer will be committed and an estimate of their cost.”
We may now have a consumer code for developers, but we do not have a consumer code that is beneficial to purchasers.
All members should take a look at the websites of the campaign groups Greenbelt Group action and Peverel action, which are very interesting. I quote one example:
“My father lives in a complex (7 flats) in Kilmarnock ... For seven months I have been trying to get an explanation for an electricity rise from approx. £200 to £1800 for lighting and heating”.
Peverel also traps home owners into monopoly insurance for homes for elderly people. Another message on the website was from a home owner in Kemnay in Aberdeenshire who stated that the grass in their estate had been cut only once in 20 years. Where such land and properties are not maintained, that can undoubtedly lead to a fall in the value of the properties. Indeed, I understand that Aberdeenshire Council has written to all major developers in the region to ask them to consider not transferring ownership or management of open space to Greenbelt.
As Patricia Ferguson said, it seems to be difficult to switch factor when the land has been sold to a company such as Greenbelt. That company has not covered itself in glory over this sorry saga, but it is not the only company that has failed to fulfil its obligations to home owners.
I think that I know the developer to which Kenneth Macintosh referred, but I will not mention its name as I have said enough. I am aware that new developments for elderly people have caused serious anxiety and worry for people who are looking for a stress-free existence at the end of their lives. Residents can find themselves facing ever higher bills for fewer services with no consultation, reason or redress.
Finally—I am coming to a close, Presiding Officer—I thank all those who have campaigned on the issue for taking the time to bring information to the attention of members of the Parliament. The issue is complex, but I firmly believe that the Government must do more. In the previous debate in September 2007, I said that we must
“protect consumers from such unfair contracts of sale, enable consumers to change to an alternative provider, and force maintenance providers to comply with the terms and conditions of their agreements with individual property owners”
and ensure that
“the contracted company must be fit for purpose or competent to undertake its obligations.”—[Official Report, 6 September 2007; c 1571.]
Two and a half years later, we have still not achieved those aims, but I hope that today’s debate on Patricia Ferguson’s motion will help to move us in that direction.
I move amendment S3M-5872.3, to leave out from “for proposals” to end and insert:
“to debate proposals to require property factors to register and to make provision for an accessible form of dispute resolution between homeowners and property factors, and considers that an accreditation scheme should be given time to work before further legislation is considered.”
09:50
I begin with the point about the complexity of the issue that Mary Scanlon made towards the end of her speech. I agree that today’s debate is on a very complex area that has many interlinked issues, as we will see as the debate develops. I pay significant tribute to Patricia Ferguson, whose work on her member’s bill proposal has helped us very much to focus the issue by bringing it before the Parliament. I also welcome the minister’s desire to move forward on a non-partisan, cross-party basis, which I think is entirely right.
The financial crisis has brought considerable change to some aspects of the housing market. I will say a word later about problems with the buy-to-rent market, which are causing considerable difficulties in many parts of the wider Glasgow area that I represent. However, the problem with factors is of long standing. I can remember significant public concern about the quality of factoring when I first joined Glasgow District Council in 1977, which is a long time ago.
Like many MSPs, I have had a series of casework issues relating to disputes over the charges levied by factors, the quality of the service that they provide, or both. Some problems arose because factors did not have enough powers to act, either because of the need for agreement among the owners or because of the need for up-front funding for larger repairs.
Legislative change since 1999 has brought some improvements, but factoring remains a complex and difficult area and on-going problems remain. Other complaints arise because factors assume too much power and provide too little transparency and because people have no satisfactory mediation scheme. Common complaints relate to hidden commissions, unspecified charges, lack of competitive quotes for work, the extortionate rates of interest that we heard about earlier, administration charges, overcharging and errors in bills. I think that many of those complaints would subside if the bills were more comprehensive and informative in the first place.
I also point out—
I am sorry, but Mr Brown’s microphone seems to have stopped working. [Interruption.] It now seems to be working again.
I also point out that the problems arise not just in the private sector, as there have also been issues with the Glasgow Housing Association’s factoring services across Glasgow.
The word “factor”, if I recall correctly, comes from a Latin root and means literally “doer”. One difficulty is that some factors are perceived to be non-doers of any significant services, but it should be remembered that their status is essentially that of an agent for home owners whom they can, subject to the provisions in their title deeds, get rid of or change.
It is worth defining the things that people want from their relationship with their factors: block insurance that is provided at a competitive price; the carrying out of common repairs swiftly, efficiently and at a competitive price; the proper looking after of common parts, such as grassed areas, lifts, agreed passageways and closes; a good-quality service that provides a clear statement of the factor’s obligations and charges; and an economic method of resolving disputes. Many householders do not get those things from their factor, so the issue is the framework that should be put in place to ensure that householders get a fair deal.
Patricia Ferguson’s member’s bill proposal would put in place a requirement for registration of factors, a fit-and-proper person test, minimum standards and, possibly, an accessible form of dispute resolution. Those are some of the necessary pieces of the jigsaw. For the moment, I point out only that there is a debate to be had over whether such functions can be given to the private rented housing committee. I think that there is some merit in the argument that the committee would not have the proper skills, but, equally, it might readily acquire those skills.
A question mark has been placed over whether the arrangements should be voluntary or compulsory. However, we are not dealing with a new issue in relation to which the industry has not had a long time to get its act in order. We are dealing not just with regulating well-intentioned factors but, frankly, with removing from the market some bad, rogue, cowboy factors who cause many home owners considerable difficulty.
The Liberal Democrat amendment calls on the Scottish Government to look further at introducing a mandatory accreditation scheme for factors. That is a key issue.
Last May, after a pretty long delay—Alex Neil has explained the background to that—the Government decided to support a voluntary accreditation scheme.
I am not clear how far that has progressed, but I share the view of the Office of Fair Trading that people have no effective means of redress if things go wrong. At the very least, a statutory accreditation scheme should be ready to go if an effective voluntary scheme is not put in place quickly. I accept that the arguments can get a bit technical, but at the end of the day an accreditation scheme is about standards and about ensuring that owners routinely get a proper service from their factor and easy redress if they do not. It is proper that we should register factors, but that must be accompanied by effective, industry-wide arrangements to define and raise standards. I hope that the work that has been done in the background thus far lays the basis for that, whether the scheme is voluntary or compulsory.
Will you please clarify—
Please speak through the chair, Ms Mulligan.
I am sorry, Presiding Officer.
Will the member clarify the reference in his amendment to “voluntary sector property managers”?
I had in mind the Glasgow Housing Association, although there are significant issues with other housing associations. We could end up with a realm of double regulation. That needs to be avoided. There is an issue there; the member is right to raise it. We should not understate the level of dissatisfaction with the Glasgow Housing Association, which goes right back to factoring arrangements under Glasgow City Council.
I support the statement that Alex Neil made last May when he said:
“there will be no hiding place for cowboy property managers”.
However, we are nearly a year on from that statement, and they still have plenty of hiding places.
At the outset, I touched on the issue of buy to rent, which is an increasingly common phenomenon, particularly during the economic downturn. Many buy-to-rent flats are put into the hands of letting and management agents that also act as factors, or in a way that is similar to factoring. The quality of many letting and management agents leaves a good bit to be desired; their management skills are often well below par. The consequence of that and of uncaring landlords and tenants who do not live up their responsibilities can be severe decline in the quality of an area. The minister mentioned Govanhill, but such decline is a feature of some new-build flats in Rutherglen and Cambuslang. It is also a growing problem in the new Gorbals development at Crown Street and a challenge in Croftfoot, as some members who represent Glasgow constituencies know. I am not sure that the issue of substandard letting and management agents can be tackled in the context of factoring, but it raises many of the same difficulties. The problem will undoubtedly get worse.
There is a need for a comprehensive review of the interlocked issues that affect residents in multi-ownership buildings, whether traditional tenements or new-build blocks. The issues include residents who do not look after their properties and annoy their neighbours, inadequate factoring and maintenance arrangements, absentee or incompetent landlords, and bad management agents.
As we have said many times in the chamber, a house is not just bricks and mortar; it is a home and the centre of family life. The arrangements that surround it need to be sound, but, in many respects, they are not. By giving us a chance to highlight the issues, the debate is useful.
I move amendment S3M-5872.2, to insert at end:
“, and calls on the Scottish Government to give consideration to the introduction of a mandatory accreditation scheme to cover private, public and voluntary sector property managers.”
09:58
I whole-heartedly welcome the debate and fully support the motion in Patricia Ferguson’s name. By the end of the debate, I hope that the minister will be persuaded that legislation is a must. If we do not proceed on the principle that a statutory framework—a legal framework—is the only way forward, the debate will not continue to be consensual. The Scottish Government saying that it will support legislation is not enough. Indeed, a statutory scheme should not put off good factors from entering the market. If they are good operators, they will not be put off. I agree with the minister that we are talking about the art of framing legislation that is practical and does what we want it to do. That is where we should be, and very soon. Things are moving fast in this field. There are too many examples of people being exploited. We must assert the authority of the Scottish Parliament and set the terms that will enable us to act in this session.
Those who live in shared properties or tenements or on estates where there are common grounds need to agree on how to take decisions about the common parts of those properties. It is pretty hard to achieve such agreement without involving property management of some kind. For the vast majority of people in such properties, a good factoring system is a necessity. I believe that there is an urgent need for reform. Some owners undertake factoring themselves, but in most cases, properties are factored by a company. Patricia Ferguson is absolutely right to say that there are good factors operating in Scotland, but some have poor operations and others could provide better services—frankly, they just need to pull their socks up. Mary Scanlon highlighted some notable examples of bad factors—companies whose practices border on the criminal, in that they exploit and extort money from vulnerable people.
Factoring is not an easy line of business. Who would be a factor? For example, there is the difficulty of getting owners to pay their bills on time. However, there are too many examples of factors not being transparent about their decision making in arriving at the repair bills that they issue. Many have exploited the lack of regulation. Indeed, some have made a small fortune from doing that.
I commend Patricia Ferguson for the work that she is doing. I hope that all of us will build on it. I will continue to campaign hard for the Government to show that it supports fully the introduction of legislation in this parliamentary session. I do not think that a voluntary code will do. The right to a fair complaints mechanism, the right to an adequate explanation of unfair charges and the right to protection from factors who overcharge are basic and fundamental. Those are the basic requirements.
The OFT was wrong to reach the conclusions that it reached, but the time is right to move on from that. We have to renew the faith of property owners who have had a bad experience of the system. If someone has a choice of property, such experiences will put them off buying a tenement property, particularly if they view the system as overly cumbersome. Good factoring is important for the upkeep of tenement properties. If owners and factors become frustrated with a system that they think is unworkable, people and the housing system will suffer. If too few factors act when they should, buildings will become neglected.
Seventy per cent of constituents in my Glasgow Kelvin constituency live in tenement properties, and a high proportion of them have factors because they live in buildings that have common parts that need to be maintained. As Patricia Ferguson pointed out, the responsibilities and costs that go with looking after those common parts are very much the hidden aspect of buying a property. The purchaser will be shocked to find out the huge additional costs of living in their property if those costs are not explained to them by their lawyer.
Someone who lives in a top-floor flat with a leaky roof, as I have done, will care about the state of the roof, but they have to accept that a neighbour on the ground floor may not be so interested in the situation—the water is not literally falling on their neighbour’s head. We need to have a system that is fair to both parties. Factors are crucial in making people live up to their responsibilities. It is important to note that.
We have made a lot of progress in the Parliament in the area of the private housing sector, with the Abolition of Feudal Tenure etc (Scotland) Act 2000—can members remember that?—and the Tenements (Scotland) Act 2004. Those pieces of legislation are important, but they are not enough.
Like other members, I know of many cases, and councillors who knew that the debate was taking place have written to me to point out more. For example, factors are charging £30 for an ordinary letter that tells someone that they are a few days late in paying a bill. Where do factors get the powers that enable them to do that? The answer is that, in the absence of a statutory framework, factors can do what they like. I hope that the minister will take on board the point that the absence of a statutory framework is allowing a system in which factors can charge what they want. Factoring is an unregulated commercial practice with few obvious standards. The absence of a statutory framework means that there is nothing in the system for owners and good factors.
Robert Brown mentioned absentee landlords, who are not easy for either factors or owners to deal with. In Garnethill in my constituency, absentee landlords outnumber those who live in the area. Tenants continually lose out because of that, as they do not get improvements to their properties. Absentee landlords do not want to spend money on those properties, because they do not live in them.
There are further issues around the GHA, which is a factor and a housing association. Because of the bizarre rules, many owners in my constituency who do not live in a block where tenants live have not benefited from regeneration, whereas owners who live in a block where there are tenants get the benefit of regeneration. There are many anomalies in the system that are worthy of discussion, although they do not relate to Patricia Ferguson’s member’s bill proposal.
I fully support the motion, and I hope that the Government will act.
10:05
I am pleased to speak in this debate on factoring services. As someone who has signed up to Patricia Ferguson’s proposal to require property factors to register with an appropriate body and to develop an effective dispute resolution scheme for home owners and property factors, I believe that it is important to debate and consider these matters. I am sure that Patricia Ferguson will agree, however, that it is impossible for members to give a blank cheque to any future factoring bill, in particular because the precise details of the bill remain to be published and robust parliamentary scrutiny must be undertaken before the Parliament makes any final decisions. I have spoken to Patricia Ferguson about the matter and, on a one-to-one basis, I have given my support for the bill proposal.
Patricia Ferguson and I have heard similar complaints from constituents in north Glasgow about factoring services. We perhaps even share some of those constituents. Many constituents seek the maximum representation when dealing with their factors and the problems that arise; in itself, that provides a significant indication that there is a problem with poor-quality factoring. Constituents often feel helpless in their dealings with factors.
I have direct experience of just how unclear the factoring system can be. I stay in a tenement property in Maryhill. If one of my neighbours highlights to the factor that there is an issue with the lock on the secure entry door at the front of the close, I will find out about it during the following billing period, when I will have the privilege of receiving a bill for it. However, I am likely to be unaware of whether the door was given a cursory glance by a handyman or whether a specialist attended to the fixing of said front door. I will be well aware of the bill for the pleasure of having someone come out to have a look at it, although I will not know any details of what has been done. Similar situations often arise when light bulbs need to be replaced in the common close, or when something in the back court needs to be attended to—or when a number of other apparently minor matters arise in or around properties.
There is a feeling that best value is not always a consideration for factors. The more a customer is billed, the greater the management fee that is applied, so many people feel that there might be a disincentive to seek best value.
I should be clear that most factors seek best value for customers, are not cowboys and do not exploit. However, perception can be everything, and a move towards regulation could provide reassurance for householders and defend the reputation of good, decent factors. Good factors have nothing to fear from statutory regulation, and everything to gain. Their reputations will be enhanced. Regulation will be an incentive to factors to make their billing systems as transparent as possible and to achieve best value for the customer. Regulation could chase the cowboy factors out of town.
Much of my constituency casework involves disputes between owner-occupiers and factors, many of whom are social landlords. In many cases, that means the Glasgow Housing Association. I do not intend to use my speech just to hammer the Glasgow Housing Association as I might have done in the past. Indeed, the association is improving, and the Minister for Housing and Communities, Alex Neil, and the new chief executive of the GHA, Martin Armstrong, should take some credit for that.
Although the GHA is improving, it started from a dreadfully low and poor base. I will give two examples of the GHA’s work as a factor. Owners who dispute bills for major works find it virtually impossible to get a full breakdown of how bills were arrived at by the GHA or a specific scheme of works for their own properties, with appropriate costings. One of my constituents got a retrospective scheme of works—in other words, it was drafted following the completion of the works, rather than in advance of any of the works commencing or taking place. When the GHA was asked about how costs were arrived at between itself and City Building (Glasgow), it hid behind commercial confidentiality.
A second issue that I am dealing with relates to home owners whose properties are factored by the GHA. Each home owner has paid £6,000 to have their home cladded to improve energy efficiency and address fuel poverty. There now appears to be a serious damp problem in those properties, which has to be investigated. We will see whether the GHA, as the factor, has let down those home owners.
I thoroughly agree with the dispute resolution approach. Because of the Conservatives’ right-to-buy policy, many people who now own their home could never have afforded to own and maintain a home previously. We must consider credit solutions for home owners who cannot afford to pay for the upkeep of their properties.
This has been a positive speech so far, but what is Bob Doris’s position on whether there should be a statutory framework or a voluntary code?
I said at the start of my speech that I favour a statutory framework. However, I will have to see how that would work in practice, which is why I cannot give a firm commitment to any bill. Clearly, however, I favour a statutory framework.
We need credit solutions as well as dispute resolution, as many home owners avoid maintaining their properties because they simply cannot afford to do so.
The minister made a point about local monopolies. Perhaps we need to reconsider the GHA framework, which has a local factoring monopoly for many properties that are owner-occupied. Regulation can improve minimum standards.
We should consider a couple of other issues that might involve unintended consequences. A number of constituents have contacted me about self-factoring. How will people in closes and blocks who have to self-factor deal with regulation? There might be some unintended consequences in that regard.
Will the member take an intervention?
Sorry—it is too late to intervene.
Apologies to Ms Ferguson.
I will finish off by praising The Herald and the Evening Times, which, we all agree, have outpaced all the politicians in addressing the issue. No major political party had proposals in this area in their manifestos in 2007, but we are now coming together to address it as a Parliament.
I have no concern about a turf war in relation to addressing the issue. Whether through a member’s bill from Ms Ferguson or through one of the two pieces of proposed housing legislation from the Scottish Government, let us deal with the problems.
10:13
Although my profession—that of the solicitor—has been very heavily regulated by the Parliament in response to consumer complaints, in the course of which self-regulation by the profession was heavily criticised, my natural inclination as a Conservative is to view statutory intervention as a last, not first, resort in the marketplace. I believe that Governments and the Parliament should involve themselves only when there is demonstrable market failure and no ready means of redress, particularly through the exercising of choice, for customers, clients or consumers. We should reflect on the fact that, for any business, the most effective sanction by far is the loss of business.
It is an inevitable fact of life that attention is invariably focused on customer complaints, rather than customer satisfaction. Before we talk any more about what is wrong, let us remind ourselves about what is right. In that context, one of the key findings of the Office of Fair Trading study was that most people—about 70 per cent—were happy with their property manager.
They said that they found it easy to get repairs carried out and felt that the services that property managers offered represented value for money and were of good quality. Let us praise the property managers and factors who do a good job, as Patricia Ferguson did—fairly—in her speech, and reflect on the fact that those who do a good job will be as concerned as anyone about their profession’s reputation and the activities of the minority who let it down.
I underline the point that, as my colleague Mary Scanlon said in her speech, the Conservatives are not necessarily opposed to Patricia Ferguson’s bill. We will give it fair consideration and view it against the alternative of an accreditation scheme. As the minister reminded us, the OFT study recommended that the Scottish Government should take the lead in ensuring early implementation of such a scheme and keep its progress under review. It also recommended that, if the scheme did not prove proved effective within two years, the Parliament should legislate to introduce a statutory scheme to provide appropriate redress. Alex Neil reminded us in his speech that, in its response to the OFT report, the Government said that it would support and facilitate the establishment of such a scheme while stressing the importance that it be industry led.
The clock is ticking and the ball is very much in the Government’s court. Although the Conservatives are prepared to cut the Government some slack—we recognise that such schemes cannot be magicked into existence overnight—we are not prepared to sit back indefinitely, and we expect substantial progress to be made. The Government, property managers and factors should be in no doubt that Parliament is very much on their case and will support a statutory scheme if an appropriate self-regulatory scheme is not up and running in the near future and proving its worth by dealing with some of the serious complaints that have been made, which have been well articulated in the debate.
Despite the minister’s best rhetorical efforts—I welcome him back to the chamber—I did not sense any urgency in his remarks. Indeed, uncharacteristically, he sounded a wee bit defensive to me. I would be interested to hear in his closing speech exactly what has been done with the working group since May 2009 and when the accreditation scheme will be published as part of the group’s report. All members would be interested to know the timetable for action because, most decidedly, we all want action of one form or another to be taken.
Property managers come in all shapes and sizes. There are private sector property managers, many of whom are members of the long-established Property Managers Association Scotland. There are housing associations that not only manage properties in their own developments but are now competing for property management business in private developments—my son works for such an association. There are management services that are performed as adjuncts of other businesses, such as letting and estate agencies.
We have a very complex marketplace with a number of different participants, so a statutory scheme would be complex to devise and administer because it would have to reflect the nature of the players in the market. It would also have to include de minimis provisions so that it applied only to those who were involved in managing whole estates, developments or blocks of flats, rather than to those who manage collections of miscellaneous individual properties, because the bulk of complaints relate to the inability of groups of owners to hold their factors or property managers properly to account and to obtain redress.
I have always believed that the exercise of choice in a marketplace is what drives up standards of customer care and levels of customer satisfaction. In that regard, the findings of the OFT study that there is a low level of switching in the property management market and little evidence of active competition between property managers are of concern to me. We should examine whether statutory interventions are appropriate to enable informed choices and switches to be made. In some respects, that may mean overriding existing provisions in title deeds or deeds of conditions where those operate as a restrictive practice to preserve a local monopoly that fails to provide property owners with good-quality services and value for money.
The speeches in the debate so far demonstrate that there is a great deal to be done. Robert Brown gave a good summary of the interlocking issues that are involved and which require consideration. There is a great deal to be done and we must get on with it.
10:20
I speak in the debate because of the large number of concerns that constituents have expressed to me about factoring services. Those concerns have not come from the large number of people who live in traditional tenements in my constituency, because traditional tenements in Edinburgh have never had factors; they come from residents in the large number of new-build flats that are being built in various parts of my constituency, particularly—but by no means exclusively—at the waterfront.
Like other speakers, I will concentrate on the problems that have been raised with me. However, I will make two other points to start with. First, we are not talking about all factors. Various speakers have recognised that there are good factors. To give an example, I had a meeting two months ago with one factor who supports Patricia Ferguson’s proposed bill. I recently spoke to another—and will meet him later this month—who has complained about the fact that no independent body regulates his profession.
My second point is that not all constituent concerns have been about factors. Quite a large number of residents from one development have complained about people not paying because they are concerned that the factor may walk away from their development. I believe that that has happened at Kingston quay in Glasgow and in one or two places in my constituency. I have written to the minister about that issue, which we must recognise as well. As Patricia Ferguson said at the beginning of her speech, there are sometimes good reasons why people do not pay but, in most cases, people clearly ought to pay. There are issues with absentee landlords who do not live in the UK and do not pay.
I make those points at the beginning of my speech to put the rest of it in perspective.
The concerns that have been expressed to me overlap to a considerable extent with those that the OFT research highlighted. It highlighted significant dissatisfaction in relation to many issues, including lack of information, poor value for money, inadequate complaints handling and frequent failure to arrange repairs or supervise them adequately when they are arranged.
I spoke a few days ago to a constituent who complained about a continuing repair problem that had not been dealt with, although, interestingly, he pointed out one repair that the factor had done and for which the residents had been billed that ought, in fact, to have been done by the builder. That feature—the relationship between what factors are responsible for and what builders are responsible for—has not come out in the debate. The other enormous issue in the new builds in my constituency is snagging problems, some of which can be dealt with only by the Westminster Parliament rather than this Parliament.
The OFT report also highlighted the low level of switching. David McLetchie referred to that, but there are significant difficulties with switching. First, there are problems with title conditions. Perhaps we need to revisit the Title Conditions (Scotland) Act 2003, because residents often cannot change their factor for five years or until the last house in a development is built and sold, which may be nearer to 10 years in the current economic circumstances.
Secondly, there are often enormous problems when residents change their factor. In another horrific recent example that was brought to my attention, residents have changed their factor following persistent overbilling and other incompetence on the factor’s part but the sacked factor is refusing to deal with refunds or any of the other outstanding issues. That factor also refuses to return the float, which makes the handover to the new factor difficult because people are understandably reluctant to pay a second float. All those issues must be addressed, too.
Other residents perhaps foresee those problems, cannot switch anyway because of the title deeds, or suspect that a new factor may not be much different and, therefore, try to come to the best arrangement that they can with their existing factor.
However, I should mention that another residents association—obviously, I am referring to a large number of such associations without naming them—has kept its factor but has taken over many of the factor’s activities, thereby greatly reducing the residents’ bill. That Is an interesting model that is open to others to use, although it presents some difficulties. The residents involved decided to get new quotations for insurance and have ended up with a premium that is half what it used to be and with an excess of only £100 rather than £1,000. The issue of insurance highlights an on-going concern whereby the higher the premium, the higher the commission for the factor. That insurance example highlights the issue of costs, and many of the complaints that we receive are about the escalation of costs and lack of information about what the costs are.
One of my constituents from another development suggested that there should be independent annual auditing and even an independent auditing authority. Independence is a key concept, which contrasts with relying only on the Property Managers Association Scotland. There is also an argument for independence in complaints handling, because the only recourse at present is—again—to the PMAS. A key demand is independent redress as part of a quality control system with auditable standards.
Patricia Ferguson’s proposed bill offers many elements that are at the heart of my constituents’ demands. It proposes a dispute resolution mechanism, using the quasi-judicial infrastructure that we already have through the private rented housing committee. In addition, and crucially, it proposes a registration system that is based on a fit-and-proper person test and adherence to set standards. Although that is an excellent foundation, I would probably add things to the bill; it will be possible to propose additions, given the procedure for members’ bills. I certainly do not believe that a purely voluntary system will address the serious problems that should be clear to all from the debate.
10:26
I welcome the debate, which highlights many issues that are addressed in Patricia Ferguson’s proposal for a member’s bill, to which I have signed up. I hope that it will provide protection for home owners and raise standards in the property management industry. Indeed, many of us will recall debating this issue in a members’ business debate last year. I believe that today’s debate provides an important and welcome impetus for Patricia Ferguson’s proposal and for taking the issue forward.
I have always supported the Liberal Democrats’ long campaign to establish, as the amendment in Robert Brown’s name states, a
“mandatory accreditation scheme to cover private, public and voluntary sector property managers.”
The scheme would include definitions that would focus on improving standards rather than setting minimum levels of acceptable performance. Many of the problems with factoring companies have arisen since the mid-1990s, when private developers chose to undercut their competition by no longer paying the in-perpetuity, up-front maintenance fees to the local authority; instead, developers sought to reduce their costs by imposing the financial burden for the maintenance of properties on the buyer, which was done by writing into title deeds the need to engage a property factor. That would be all well and good if factors performed their obligations at a reasonable cost and with reasonable quality, as many members have said, but in too many cases they do neither.
As many members are aware from their casework, it is extremely difficult to progress a dispute between a factor and owner-occupiers, who can find themselves in a no-win situation. It can be very difficult to get out of a contract with a property factor whom the residents consider unsatisfactory. Such issues affect many of my constituents and many others across Scotland. Indeed, some areas in my constituency have no factors and no maintenance is done on, for example, children’s play areas and green spaces; with no one to sue, no resolution is possible for such constituents.
Previously as a local councillor and now as an MSP, I have spent many hours trying to resolve difficulties between residents and residents associations, and factors. It is sometimes impossible to query with a factor the need for repairs or improvements. There have been issues with unclear invoices, excessive charges, high rates of interest and penalty charges. If a property management dispute cannot be resolved between parties, there are only three options: first, to sack the factor, but that decision must be agreed by nearly all householders on any given estate; secondly, to go to independent arbitration; or thirdly, to raise court proceedings. All those options are time consuming and costly, to say the least, and are beyond many people.
There are some good factors in Scotland, as other members have said. I have examples of those in my constituency. However, many of us have encountered difficulties with certain factoring companies over the years. One of the most contentious is Greenbelt, to which Mary Scanlon and Patricia Ferguson quite properly referred. Greenbelt maintains open spaces and stairwells, but it first purchases the open spaces from the developer and then charges residents an apparently uncontrolled fee to maintain the land that Greenbelt owns. If that is not an insult to home owners, I do not know what is. Mr McLetchie seemed to have missed that situation when he suggested that self-regulation is the answer. I welcome moves to regulate the industry and provide an accessible form of dispute resolution. However, is that enough?
The Government’s plans—at least at this stage, as the minister said—for a voluntary, industry-led accreditation scheme for property managers simply do not provide the necessary clarity for our constituents. The Government has stated that it will impose statutory measures, if they prove to be necessary. However, I hope that the minister will consider, as he said he would, the detail of Patricia Ferguson’s proposed bill and look more favourably on it, because I believe that it is the only solution for many of our constituents around the country. It is clear to many members that mandatory measures are required now in a scheme that would
“cover private, public and voluntary sector property managers.”
As I said previously, the scheme would include definitions that would focus on improving standards rather than setting minimum levels of acceptable performance.
I do not believe that the solution lies with the Government’s plans. Patricia Ferguson’s proposals are a step in the right direction, but I believe that we should be looking at a more radical proposal that would, in some ways, see a return to the maintenance of public open spaces being carried out in perpetuity and the cost of that being part of the purchase price of a home; only in that way will future Scottish householders be able to get away from the difficulties that are caused by poor factoring, which have affected nearly a quarter of a million people to date.
Patricia Ferguson’s proposed bill will help the situation by driving up standards and moving towards a better regulatory system for existing home owners. However, it will not resolve all the difficulties that home owners have had to contend with over the years. I therefore believe that we need to go further. Ultimately, there should be a way of giving local authorities the power to adopt a maintenance scheme, albeit with an increased adoption fee, to ensure that future consumers have an accountable, in-perpetuity maintenance scheme in place for their housing schemes.
10:32
The debate is welcome, because its subject matters enormously to many people. As we have heard throughout the debate, many of our constituents have raised concerns about factoring issues. It is telling that we could all easily recount examples of the scale of the problems that we face in that regard.
I, too, congratulate Patricia Ferguson on bringing forward her proposed bill.
I am pleased that cross-party support for it is growing. For those of us who have been in the Parliament since its beginning, factoring is one of many issues that we have commented on. It is pleasing to garner support on such an important issue and see that members are prepared to lay aside their differences on key points. Factoring is perhaps not a huge ideological issue, so it affords an opportunity for cross-party work.
It seems to me that the emerging issue in the debate is the need to move from a voluntary to a statutory framework—that is where opinion is galvanising. Certainly, the Parliament has an opportunity to reflect that by getting behind Patricia Ferguson’s proposed bill. I hope that we seize that opportunity. As is evident from the work of Govan Law Centre and from reports in the Glasgow media—for example, the Evening Times and The Herald—the worries, concerns and frustrations around factoring are significant and widespread. That is certainly the case in the city of Glasgow. Patricia Ferguson’s proposed bill provides an opportunity for us to do something significant about that.
Like other members, I have received representations from across my constituency that express concerns about factoring. I am pleased that shopkeepers will be covered by the proposed bill, because I know of shopkeepers who feel strongly that they have been left out of the decision-making process, that decisions are stacked against them and that their interests are not properly recognised when decisions are made.
Like other members, I have examples of ordinary families and couples who find it extremely frustrating that they have no means of tackling the issues that they face in their daily lives. Only this week, a young aspiring couple who clearly want to maintain their house came to my surgery because they are having trouble with young people gathering outside their front door, which is constantly being kicked in.
There is also graffiti in their close. The most eminently sensible thing to do would be to get a better, stronger door, but despite the fact that they have made repeated representations to their factor to that effect, the factor will not comply, and they have no means of communicating effectively to resolve the issue. It is obvious that other avenues such as policing need to be pursued, but it seems that a sensible property management measure that would tackle the issue is not being adopted. It is concerning that the couple have come to me in desperation to ask what they can sensibly do about the problem. We do not have a proper commonsense answer, which is why we need to look to legislation. It is clear to me that there is an issue to be addressed.
I recognise that there are many good factors, but although I am pleased that only a third of respondents to the OFT survey articulated difficulties with the service that they receive from their property manager, in my experience a higher proportion of residents seem to experience such difficulties. That said, a third still represents an important number of people and indicates that there is a substantial problem. There is no doubt that, as ordinary people know from their daily experience, money is wasted, responses are not provided and there is a lack of proper redress. The problem is big enough and important enough for us to take action on it. The fact that we could spend the entire debate talking about individual problems serves only to illustrate the point that, as Patricia Ferguson and Robert Brown said, standards are at the centre of the issue.
I want to focus on the Parliament’s opportunity to take action. The minister properly laid out some of the history that underlies the present situation. I do not want to be defensive, but I think that previous Governments have taken action on the private housing market. However, we are at a point at which voluntary efforts to work with the industry have failed or have not worked properly. Given that we are approaching the final year of the parliamentary session, it is vital that we do not lose the opportunity that Patricia Ferguson’s proposed bill presents.
I noted David McLetchie’s questions to the minister about what has been done since 2007 and what the timetable for action is—we are all extremely interested in that. I also noted that the minister said that it was time for consensus. I will not comment on the rumours in the Parliament that Alex Neil calls for consensus when he knows that his back is against the wall and that he is losing the argument—I am too much of a lady to do that. I will leave those rumours to one side and welcome the Government’s action.
However, it is clear from our constituents and from what members have said in the debate that an appetite exists for change. The central point is the need to move from a voluntary to a statutory scheme, which will afford our constituents the protection that they require. In particular, they need protection for their resources and they need access to redress. Patricia Ferguson’s detailed proposals give us an opportunity to provide that. The proposals will be properly scrutinised through the parliamentary process. We have one final year. Let us not waste that time; let us seize the moment and get behind the proposed bill, because it will allow us to take effective action for our constituents.
10:39
I welcome the debate. It is to Patricia Ferguson’s credit that she lodged the motion.
There are many issues that we can all argue about in Parliament and, dare I say it, there have been and will be occasions when all sides’ engagement in partisan party politics gets in the way of real discussion of an issue. Sometimes there can be too much bluster and shouting in the chamber just for the sake of it, but the majority of the comments that have been made during the debate have been much more measured. The debate has been more reasonable than some that we have. Some of the comments that were made earlier made me worry that we would fall into the trap of engaging in party politics again but, thankfully, we have not done that too much.
I will be frank and admit that I have been contacted by constituents on factoring issues, but I have not been inundated with people raising such issues. However, that does not mean that there is not a bigger issue across the country.
I have lived in flatted accommodation, albeit briefly. I did so for a short time while at university and just after I got married, when I stayed in a flat in Greenock, which had no factor. There were six flats in our section, 12 flats in the block and numerous blocks in the street. To my knowledge, there was no factor anywhere in that locality. Between our six flats, we decided to club together and get some basic maintenance tasks undertaken. That was fine—the process was not too onerous, but there was still the issue of approaching the neighbours and asking them to contribute money.
If we had had a factor, things would have been much easier for everyone who stayed in the block. That would have involved taking major decisions about how to proceed with selecting a factor, and there would eventually have been the added cost burden of employing one, but a benefit of the factor system is that the factor organisation is charged with collecting any moneys that are due, which was not the case in the situation that I was in a few years ago.
I rent a flat here in Edinburgh. Recently, residents and owners decided to change the development’s property factor—I think that they were sick and tired of the fact that although bills would come in and the costs would increase continually, they saw little in the way of upkeep of the development. The process of change appeared to take quite a long time. Many things happened—various meetings were held, letters kept coming through the door and one night I got a visit from one of the folk involved, who wanted to progress matters. I am a tenant, so I passed on all the information that I received to the landlord, because it is the landlord who receives the bills and pays the factoring charges. The process appeared to be fairly seamless, but at the same time it was quite drawn out. I am aware that that situation will not be replicated across the country, and I will return to the issue of changing a factor. However, I am quite confident that the owners of those flats will have a better outcome in due course.
The number of tenement properties and flatted developments in Scotland means that property factors are essential.
I have listened carefully to what the member has said, but although I appreciate that there is a problem with factoring in flatted properties and tenements, there is an enormous and serious problem in new housing estates the length and breadth of Scotland and in the islands. I have no experience of flatted properties, but I have been inundated with people telling me of problems with all the new housing developments around Inverness. The issue is about land management and ground maintenance, as well as flats.
I fully accept the member’s point. I did not want to give another example from my own experience. We went through a process of changing the land factor for the house that I stay in in Greenock only two years or so ago, so I am very much aware of those issues.
The challenge that faces us is to decide whether to legislate or whether to have a voluntary accreditation scheme. I am sure that members of all parties agree that both options have merits and must be considered fully. As far as the legislative approach is concerned, it is difficult to consider what could happen and what the consequences could be without seeing the detail of Patricia Ferguson’s proposals. That said, it is extremely difficult to disagree with the sentiments of Patricia Ferguson’s motion.
The voluntary accreditation scheme approach is the route that the Scottish Government, alongside numerous partners, including Consumer Focus Scotland, has taken to providing a solution to the existing problem.
The easy option and sometimes the greatest political hit is to call on the Government of the day to introduce legislation. I am not for one minute suggesting that Patricia Ferguson has taken that route. The fact that Ms Ferguson held a consultation in October 2007 shows that this is a genuine attempt to solve a problem, and she should be commended for that.
I feel that legislation can sometimes be a blunt instrument and that every possible option should be considered and introduced, when justified, before legislation. Both the OFT report and the Consumer Focus Scotland briefing are interesting, and two points in the OFT report stand out for me. The first is that one third of consumers feel that they do not get good value for money, and the second is that there are low levels of switching. I gave the example of the flat that I rent here in Edinburgh. I am confident that switching will prove to be beneficial, but it was a long and drawn-out process. There may be people who do not want to participate in such a process, so I can understand why there has been a low level of switching in the past.
If we consider the economic situation and the uncertainty about future budgets coming to the Parliament and the subsequent knock-on effects to wider Scotland, I hope that those two points—the lack of value for money and the low level of switching—will change in the coming months. Every penny will be a prisoner, and I am sure that owners of tenement flats will exert a stronger voice and act accordingly. I am sure that greater emphasis will be placed on value for money and, as a consequence, there will be more switching.
Wind up, please.
I welcome the minister’s openness on Patricia Ferguson’s proposal and his willingness not to reject it out of hand. The consensual approach allows for a greater outcome and better deal for owners who deal with factors.
10:47
I should probably declare an interest as I stay in a factored property. Indeed, on Tuesday night I attended a residents meeting, where this debate and Patricia Ferguson’s proposed bill were discussed. At some points, the meeting was quite heated, so I will not name the factor or its other properties, but I will give members a couple of examples as I go along.
I know that, basically, there is consensus on the issue. There may be dubiety about how we go about tackling it, but there is certainly a consensus that the people of Scotland need better factoring. The debate is about how we get that.
As has been mentioned, there are good factors and bad factors, and we must remember that there are good factors that support Patricia Ferguson’s bill as we do. They want legislation to get rid of the rogue factors, and they are very supportive of action.
Speaking about legislation, I should say that I do not believe that voluntary regulation will work in this case. However, I will quote from Consumer Focus Scotland’s briefing for this debate, which we should consider:
“Voluntary and statutory approaches to regulation are not mutually exclusive, and both have advantages and disadvantages from the consumer perspective. CFS believes that the cost of regulation must be weighed carefully against the benefits.”
That is fair.
“In most cases, it is the consumer”—
that is, the tenant—
“that foots the bill for the costs of regulation through increased prices. Citizens can also pay indirectly, through taxation, if the public sector is to bear the cost of regulating an industry. Any regulation of this market must therefore be developed to ensure that there is real benefit to consumers and taxpayers to justify increased prices”.
In making that valid point about costs, does Sandra White accept that the cost element will exist whether the arrangement is statutory or voluntary? The cost has to be met somewhere, and in practice will probably land on the consumer. It is the value that is important.
I quoted the briefing only to put the debate in perspective. I do not believe that voluntary regulation will work—it must be statutory—but I wanted to mention the view of CFS, which spoke to people. Those are the answers that it got back, and we have to look at everything. CFS makes a valid point, which is why I wanted to raise it.
Like others, I have spoken to the minister, and I know that whether any system is statutory or voluntary is not set in tablets of stone. We have to take into account everybody’s ideas on the proposed bill. As Malcolm Chisholm mentioned, there may be various amendments as the bill goes through Parliament. We have to consider everything. Although there is a cost, we are dealing with people’s lives. As Margaret Curran mentioned, we are talking not just about property but about how people live their lives.
I want to give some examples of good and bad practice. One issue is a lack of information when people move into a tenement property or, as Mary Scanlon rightly said, a new-build property. People do not know how much maintenance will cost and what the factoring fees will be. Malcolm Chisholm’s example was one of the best—when the residents shopped around, they were able to save hundreds of pounds on their insurance bill. As I know to my own cost, factors never tell people that they can save that amount of money. That is why it is important to address the lack of information.
There is also an issue with the difficulty in having repairs carried out. Even more so in some cases, there is difficulty in finding out whether repairs have been carried out. People get a bill and pay it, but then they think, “I didn’t see anyone come out to do the work. Who let them in?” When they phone the factor, they cannot get any answers or a breakdown of the bill, and yet in some cases they are paying thousands of pounds. There is sometimes no proof that repairs have been carried out—there is no receipt or breakdown—but people have to pay for them.
Of course, when people query the bill and say, “I’m sorry, but I don’t see that the repair work has been done and I’m withholding payment until I see evidence of it,” the next thing is that they get a letter from a sheriff officer saying that they are being taken to court. That is an important issue—people are very dissatisfied with how things are dealt with.
Another issue is that when people query a bill and ask factors to get quotations from other builders, joiners, gardeners or other maintenance people, factors never seem to do it. As Malcolm Chisholm’s example showed, people can save hundreds of pounds when they shop around, but when they ask the factor, “Why didn’t you do that?”, they reply, “Well, it’s not my job.” Factors are not being proactive; they are basically just collectors of money. They are not doing anything for the tenants.
I am talking about the bad factors, which are mostly in the private sector. I must admit that I used to get most complaints about the GHA, but, as others have said, Martin Armstrong and the minister seem to have improved things there, so I get a lot fewer complaints about the GHA than I did before. I mostly get complaints about private factors.
Mary Scanlon mentioned other areas, but as a Glasgow MSP I get most of my complaints from tenement properties and the residents meetings that I attend. The complaints are both worrying and annoying for people. Most of the people I represent are working and are not in during the day, so they cannot prove that things have been done—even changing a light bulb, as was said. We would think that it costs a couple of pounds to buy a light bulb, but people can get a £300 bill for changing one light bulb and cannot even prove that it has been done.
We have to regulate those problems. I look forward to the bill going through the parliamentary process. We agree that something needs to be done, but we may want to lodge amendments to toughen or slacken the bill, and there will be an opportunity to do that.
I congratulate Patricia Ferguson on bringing forward the proposed bill, and I thank the minister for lodging his amendment, which should be acceptable to members. I hope that we can move forward in consensus, because people who live in factored buildings—myself included, I must admit—are having to put up with problems day after day, week after week. I look forward to the bill going through the process.
10:53
I welcome the debate. The common theme in the speeches from throughout the chamber is that we need urgent action, and we all agree that we need to use Patricia Ferguson’s member’s bill to get effective legislation to identify the solutions to the problems of property management. The issues are complex, and are part of a continuing programme for the Parliament. We have looked at feudal tenure and the law of the tenement; a review of factoring is a crucial part of the process, and we need to turn our attention to it.
There are different traditions and practices across the country and in the cities. In Edinburgh tenements, there is not the same tradition of factoring as in Glasgow. People tend to manage properties themselves, spurred on—I must say—by statutory notices from the council. The law of the tenement has been helpful, although it has not resolved all the issues: there is still more to do.
Issues such as fair shares, and the effective management and affordability of repairs are relevant to new properties, too. At issue is not just the physical state of the building but the land around the building and the security of the property. Those issues are crucial and, in Edinburgh, they tend to be led by factors. I will focus on rising costs, the lack of transparency, the need for registration proposals and the need for effective dispute resolution. Those things will all be dealt with by Patricia Ferguson’s bill, which provides us with the vehicle to set the right framework. Towards the end of my speech, I will also focus on the particular vulnerability of older residents, for whom the lack of dispute resolution is a major social justice problem.
Lots of residents have reported to me the rising costs of maintenance, utilities and insurance; the difficulty that they have in challenging estimates from factors; the difficulty in getting to see the bills as they come in; and issues around having proper transparency. One of my constituents challenged the factor and the utility company when a change from one utility company to another was proposed. The resident pointed out the reason why they used a specific utility company and the need to check that the tariff was right because of the nature of the property’s heating system. The factor completely ignored my constituent and changed the utility company. Months later, after a process that was not at all transparent, my constituent was able to get that changed because the factor had chosen the wrong tariff and a company that could not deliver the right tariff given the nature of the heating system in the block. My constituent was not given access to the utility company, which refused to talk to him because he was not the factor. The factor also refused to talk to him. Then, following months of upheaval, after the factor had changed back to the previous utility company, my constituent was sent a series of hostile letters.
We need to reassert some balance and get a level playing field. A publicly available and transparent register would help, and the ability to get information from factors is crucial. One of the helpful suggestions in the OFT report was to have a good code of practice. That could come along with a proper regulatory system through the Parliament. People need to know what they should expect from a factor and, to be fair, the factoring companies need to know what they are expected to provide. Everybody must be clear about that.
Malcolm Chisholm raised the issue of deeds when somebody buys into a new property. In one case, the developer has avoided dealing with a leak in the roof that has been there since the start of the development. The developer has also been able to avoid the setting up of a residents association by specifying in the deeds that there can be no residents association until every property in the development is sold. The developer has held on to the last flat, deliberately not selling it, so that there cannot be a residents association and, until there is a residents association, the residents cannot debate getting rid of the factoring company. Those things are tied together, which is why the situation is complex. However, that is why we need a debate in the Parliament about the legislation.
Thousands of our constituents would be glad if we began to deal with the matter. Dispute resolution needs to be part of the process. It is vital in getting proper remedy. Pursuing a legal remedy can be very expensive and time consuming, even through the small claims system, and if someone is not au fait with how the law works it is difficult for them to know where to start. At the moment, it is difficult to switch factors, so I am not surprised that many people do not do so. That cannot be used as evidence that the system works.
I have given the example of people being tied to a factor through their deeds. When they start to receive increasingly threatening letters from their factor and face hiked-up bills, that disempowers them, and it is a social justice issue. A large number of older people in my constituency have deliberately downsized from leaky, inefficient, expensive properties. They have freed up the larger properties, which is good for society, and have bought smaller, newer properties with the expectation that they will be able to manage their financial affairs more easily. However, it has become a financial nightmare for them and a real social justice issue. Those people are vulnerable. They are intelligent and articulate and they are able to write letters to us, but they are not able to deal with lots of threatening letters from factors. They should not have to deal with such letters. We should have a fairer system.
David McLetchie asked whether we need a proper system now or whether we should opt for a voluntary system. He accepted the fact that things are not moving fast—a year has passed since the OFT report was published. The minister needs to listen to us all across the chamber. Let us address the fact that a third of factoring companies are seen to be unsatisfactory. If there were a voluntary scheme, two thirds of the companies would sign up but a third would not, and after a couple of years we would be back here having the same debate. Let us cut to the chase and use Patricia Ferguson’s bill to have a proper debate, consult everybody, examine the detail and get it right. Let us not wait two or three years for a new Government to start the process all over again. I know that the minister wants to consider the voluntary approach first, but we have had debates in which we have talked about going voluntary but also about using the force of the law if necessary. Let us regulate the sector transparently and properly, with a good debate, and let us get it right.
We still have a year and a quarter left of this session. Let us use that time wisely to think about the problems that our constituents face and get the proper remedy. There is enough cross-party support to get it right.
11:01
I will return to the issue that Mary Scanlon raised. As members will recognise, there are two different areas to the subject: how flatted accommodation is factored and how external, commonly owned parts of a housing estate are factored. I will concentrate on the second area.
Planning advice note 65 generated a desire for estate builders to ensure that their external land—the common areas—was owned and managed by somebody. Two ways emerged in which that could be done. The first was to get the local authority to take it over, although at a cost. The second was to sell the land or, possibly, to give it to a land management company, which would have the right to receive payments from the house owners. That is where the problem to which Mary Scanlon and Jim Tolson referred has arisen.
If the factor does not perform, there are a couple of things that the house owners can do. They can engage with the contractor and try to get it to get it right, or they can withhold payments with the expectation of being sued—and some are doing that. However, we have heard many times that our constituents want a quiet life. Although withholding payments and waiting to be sued might appeal to the average MSP, it does not appeal to the average constituent.
The Title Conditions (Scotland) Act 2003 was designed to deal with the problem. Section 3(7) states:
“Except in so far as expressly permitted by this Act, a real burden must not have the effect of creating a monopoly”.
It is quite clear that that statute was designed to deal with the situation that I have described and enable the owners, in one way or another, to change the factor under those circumstances as well as many others. Unfortunately, it appears that it does not do so. Section 63 relates to manager burdens, which one would have thought to be relevant, but it turns out that it is essentially about the temporary situation during the first five years when the aim is to sell the property. Section 33 allows a majority of the landowners to change community burdens. However, the factor will be one of the land owners and will have a right to object and to take the matter to the Lands Tribunal for Scotland.
Section 122 of the 2003 act defines “service burden” as
“a real burden which relates to the provision of services to land other than the burdened property”.
Facility burdens involve the maintenance of areas such as common areas for recreation, private roads, private sewerage and boundary walls. However, any application to discharge one of those burdens must also be heard by the Lands Tribunal, with consequent risk and expense to the house owners.
The 2003 act affords other ways of changing or removing a factor. Section 28 allows a majority of the owners to dismiss the property manager, although that can be overridden by a clause in the deed of conditions. Section 64—”Overriding power to dismiss and appoint manager”—looks more promising. It states:
“(1) Where a person is the manager of related properties, the owners of two thirds of those properties may—
(a) dismiss that person; and
(b) where they do so, appoint some other person to be such manager”.
Unfortunately, time does not allow me to go through section 66(2)(c), which relates to various issues about what is a related property, but the net result is that I have seen an advocate’s opinion that the section does not apply to the situation that concerns us. The result is that an act that was intended to cover this situation apparently does not, or it is at the very least uncertain. We know that uncertain law is of no use whatever to our constituents; it may appeal to academics, because they can wind-up their students, and it has some appeal to lawyers, because it keeps them in business, but it is no use whatever to our constituents. We should do something to change that uncertain law and provide some certainty.
I have consulted the Property Managers Association Scotland and individual factors, as I am sure many other members have done in preparation for this debate, specifically on this problem. We are clear that home owners who are paying for land management services should have the right to decide who provides that service. I think I hear Patricia Ferguson saying that she feels that the matter will not be covered by the proposed bill. Given that it could have been, and I think was intended to be, covered by the 2003 act, it seems at the very least to be within the Parliament’s competence to address the issue. Whether it should be annexed to the bill is not for me to say, but I seriously ask the Government to consider whether that is possible and to find a way of resolving the problem. I think that we are clear that it requires legislation.
11:06
This has been an interesting debate. In closing for the Liberal Democrats, I must say that there is something musty and Dickensian about the whole issue of factors. We want a breath of modern Scottish Parliament fresh air, as it were, to be blown through the whole area.
I was struck by a couple of Sarah Boyack’s comments, which were particularly relevant. One was about the greater impact, in some ways, on older people, which is a valid point. We all know examples of older people who have moved to flats or other accommodation—sometimes nice new flats with ground around them that is maintained—that has considerable management costs attached.
The other point was about the two thirds/one third business, which echoes with me. There is no question but that the issue has been around for a long time. The industry has had a long time to put its house in order, if it wanted to do it. At this point, it is not only a matter of raising standards among good factors and well-intentioned factors who want to run a decent business; it is a matter of driving out of business some factors who ought not to be factors in the first place.
There has been a lot of interest in retirement flats this morning. I remind the member that the issue is not only management and maintenance costs; home owners are also subject to an insurance provider monopoly—they cannot even shop around for buildings and contents insurance.
I am well aware of that. It comes back to a point that I made previously and want to repeat, which is about the complexity of the matter. Dealing with this area effectively and comprehensively is not easy.
Mary Scanlon began by making a point—Jim Tolson, Nigel Don and other members have echoed it—about maintenance issues, whether involving the Greenbelt Group or others. We have discussed the buy-to-rent aspect, which I touched on, and also, of course, factors. Malcolm Chisholm correctly pointed out that there are undoubtedly issues with some home owners, for example home owners not paying their share is a significant problem. Ken Macintosh mentioned retirement homes—I have had the same experience in my own constituency—and Margaret Curran rightly mentioned shopkeepers. We might want to deal with a wide range of people and circumstances in the proposed bill.
The debate has, to a considerable extent, centred on standards and whether there should be a voluntary or statutory arrangement. I very much take the view that we require a statutory framework. Margaret Curran talked about the lack of such a framework being the important issue that underlies the debate.
I should clarify the Liberal Democrat amendment, which refers to “voluntary sector property managers.” It has been suggested that that is intended to apply to self-help arrangements, but it is not. Either such arrangements should remain unregulated or we should deal with them in a different way if the issue arises. Such arrangements are more in the co-operative field than the field that we are talking about in this debate. However, voluntary sector property managers certainly include the GHA and perhaps also the community-based associations, although I also touched on the need to avoid overregulation in that respect.
David McLetchie made the point that statutory regulation can be complex, but so can voluntary regulation. The minister referred to the difficulties caused by a local monopoly, which is also a valid point. I do not accept the implication that the issue can be resolved voluntarily. We must take action to deal with the debt farmers to whom Patricia Ferguson referred and with the cowboys in the field, and bring in reputable people who will do a proper job and are prepared to be regulated properly within a system, whether it is voluntary or statutory.
I liked Pauline McNeill’s phrase that it is necessary to
“assert the authority of the Scottish Parliament”.
That also lies behind our approach to the issue.
Whatever the end result, the work that has been done on the voluntary scheme will no doubt be helpful. I guess that the issue can be tackled on various levels. David McLetchie mentioned the Law Society of Scotland, which is fairly heavily regulated, although, in effect, the regulation is accomplished by the Law Society itself. I have no doubt that there will be an element of self-regulation in any scheme.
Standards are important. We should note the point that residents and good property managers benefit from standards, as does the general community.
Some issues have been raised that can be tackled in other ways. Jim Tolson rightly touched on the maintenance of common areas, such as grassed areas and open spaces, and the fact that planning bonds used to be common but have now given way to factoring-type arrangements. As he rightly suggested, there may be other ways of tackling that issue. Malcolm Chisholm mentioned the big issue of builders and snagging problems, which overlaps with factoring.
Finance is another issue. We should not disguise the fact that, whether the regulation is statutory or voluntary, a cost will be involved. On the other hand, regulation could take out some costs. For example, there could be benefits from there being better competition for insurance premiums. Regulation could lead to a better service at a more appropriate cost, which is what we seek.
Like yesterday’s debate on regeneration, this has been an excellent debate, because people largely know what they are talking about. In his response to the debate, the minister has to tell us more about the timetable, because I am not clear how many meetings of the ministerial working group have taken place, how far it has got, when the minister expects proposals to come out the other end and what the timetable is. We have to get that information at the end of the debate so that there is clarity about where we are going. This is an important debate. I very much support the motion and, in particular, obviously, the Liberal Democrat amendment.
11:13
I thank the Labour Party, and in particular Patricia Ferguson, for bringing the debate to the chamber and for affording us all the opportunity to explore, in considerable detail, some serious concerns.
I gave my backing to the initial consultation stages of the proposed bill in order to build on concerns, which have been expressed during the debate, and on comments that had been made by my colleague Mary Scanlon, who in September 2007 made it clear that there are too many loopholes in the existing legislation. We have heard from all parties this morning that we have evidence of situations, in more or less every constituency in Scotland, in which residents have encountered difficulties with factors. There can be no doubt that in many cases, although by no means in all cases, those residents are from older and perhaps more vulnerable groups, as both Sarah Boyack and Ken Macintosh said. Therefore, the issues deserve full parliamentary scrutiny.
Before I sum up our party’s overall position on the matter, I have to say that we recognise that many factors do an excellent job and provide first-class facilities across the board. Of course, that in turn means that we have to be mindful that we support those factors and do not design new legislation that would be overbureaucratic or which would restrict either them or—as important—the consumer’s choice.
As Mary Scanlon and David McLetchie have already made clear this morning, we want three specific concerns to be addressed: first, how we strike the right balance between accreditation, regulation and quality assurance; secondly, as Margaret Curran highlighted, the absence of effective complaints procedures against factors who default; and thirdly, the need for greater transparency in obtaining relevant financial information about the managing company’s accounts.
Let me summarise our position on each. We fully appreciate the calls for better quality assurance and a level playing field across Scotland. Currently, as Malcolm Chisholm hinted, there is often a big contrast between conditions in older title deeds that make almost no provision for common decision making, and newer title deeds in which such provisions are much more extensive and comprehensive.
Although we understand the calls for mandatory regulation, which were made particularly strongly by Patricia Ferguson and Pauline McNeill, we need to keep an open mind about what that would mean, and we need to begin by listening to the arguments about whether the approach should include compulsory registration or whether the problems would be better solved by a system of voluntary accreditation. I have listened to and understand the reasons behind the strong calls for the need for more than a voluntary system, but we want to explore the arguments a little more. In that respect, I echo the request that was made by Robert Brown and David McLetchie to the minister to tell us his current position with regard to seeking additional information. After all, there are arguments on both sides, but the key principle must be to ensure that consumers have effective choice, that they will not be restricted from switching and that changes will not involve unnecessary and expensive red tape.
On the second point, we are absolutely clear that there must be an effective complaints procedure that leaves no scope for the difficult factor to manipulate a situation or to discriminate against the consumer. There must be clarity about the respective roles, responsibilities and legal rights of the managing company and the owners and residents body.
We believe that there must be much greater financial transparency to ensure that owners and residents can see clearly what their money is being spent on, and the value for money that they are getting every time they are asked to pay a bill. On that point, we also seek clarification about trading standards and whether any related issues involve purely reserved legislation and might therefore bring into question the Scottish Parliament’s competence. We note in particular the Scottish Consumer Council’s concern in its submission to the Office of Fair Trading that, in too many cases, consumers find it very difficult to exercise collective choice and switch. That can act as a considerable constraint on suppliers and prevent consumers from getting best value for money.
The relationship between the property manager and the owners in a shared property is defined by complex legislation, property deeds and agreements, so many consumers do not understand their rights and obligations. Likewise, consumers often fail to understand the processes that are involved in switching; in any case, there is no effective mechanism for pursuing complaints, which allows dishonest factors to play the system even more. We also note the calls to set down the minimum requirements for best practice so that complaints can be investigated against clear standards.
In short, we will support measures that increase consumer choice, that provide a level playing field of quality assurance, and which weed out the bad factor. We will oppose measures that might tip the balance in favour of too much bureaucracy rather than self-regulation, and which might raise barriers that stifle competition and eliminate diversity of provision. As I say, we have a very open mind on whether a statutory approach needs to be taken. The arguments have been very well presented from various parts of the chamber: for that reason alone, the debate has been more than worth while.
11:19
As other members have said, this has been a very good and wide-ranging debate on a serious issue that affects many people. In my closing remarks, I will emphasise a number of my earlier points, deal with some of the points that have been raised in the debate and issue an invitation to members.
I want to make the Government’s position absolutely clear. First, we regard this as a priority issue that needs to be dealt with. Secondly, we believe in the need for urgent action. Thirdly, we will support Patricia Ferguson’s motion at the vote at 5 o’clock. As I said in my opening remarks, we are taking a very empathetic approach to Ms Ferguson’s proposed bill. Once we see the detail, we will sit down and consider it with her and, if we believe that the bill can achieve its objectives, we will give very serious consideration to supporting it.
There are certain wider issues that need to be addressed but which might not be covered in the bill. To some extent, the debate has been dominated by arguments over whether there should be legislation or a voluntary scheme. In fact, landlords and, as Robert Brown pointed out, the legal profession are dealt with by a combination of legislation and voluntary codes. I believe that we need more legislation to enforce landlord standards, although we have, nevertheless, in recent years made significant progress not by choosing between legislation and a more voluntary approach, but by introducing a combination of both, with legislation playing an important role. In that respect, I liked Robert Brown’s comment that legislation would provide a statutory framework within which a voluntary code could work.
A number of members asked about the detailed timetable for publication of the accreditation standards. I am pleased to be able to tell Parliament that they will be published next month, which indicates the importance and urgency with which we are dealing with this issue.
Does the minister accept that there must at the core be a statutory requirement for people who operate in this field to be subject to the voluntary code, scheme or however it might be described?
That case has been very well made this morning by Robert Brown and others. As I said, we have a very open mind not only on that issue but on the wider issues that Patricia Ferguson’s proposed bill might not necessarily deal with.
That brings me to my invitation. Given the fact that across the chamber there is broad consensus about what we are trying to achieve, I invite each of the parties—including the members of the Green party and Margo MacDonald, who are not present this morning—to a meeting that I, as minister, will convene in order that we can try to map out and agree together the way forward in dealing not only with all the issues that have been raised this morning, but with many other related issues that have not featured in the debate, but which need to be addressed. If we, as a Parliament, can move forward together and agree a critical path for the proposed legislation, the voluntary framework and the other bits and pieces that we need to deal with in addition to the issues that would be tackled in Patricia Ferguson’s proposed bill, we will not only make the measures more effective and ensure that they cover everything that needs to be covered, but will help with the timetable of implementing these actions. It is, after all, a lot easier to move forward if we have cross-party and all-party consensus. As a result, within the next week or so, I will issue my invitation, which I hope will be accepted by all parties in the spirit in which it is offered and allow us to map out a way forward together.
Robert Brown is absolutely right to say that this area is very complex. Some of the issues that have been mentioned will not, as I have said, be covered in Patricia Ferguson’s bill or, indeed, by the voluntary code. For example, Sarah Boyack and Mary Scanlon highlighted the situation in certain new developments, in which the developer-appointed factor cannot be replaced by the residents for five years or until the last house is sold, whichever happens earlier.
I know from experience that problems often arise in the period immediately after a development has been completed. It is often the critical time when many issues that relate to the developer and on-going management and maintenance have to be dealt with. We need to consider that area, and whether we need to reform the law that relates to new developments and offer greater flexibility.
Members need to consider seriously and urgently several other issues that have been mentioned.
Will the minister commit to considering that factoring issue and whether there is a way we can deal with it through Patricia Ferguson’s bill? Sometimes the issue is how we define what we are trying to do. If one word is used, something cannot be done, but if another word is used, it can be. Will the minister commit to at least considering that?
Absolutely. I hope that we will consider it together as part of the joint approach that I have suggested. A holistic and comprehensive view must be taken.
We must ensure that a voluntary or a legislative scheme should not be overbureaucratic, as Elizabeth Smith rightly said, and that it does not, as an indirect or unintended consequence, undermine good factors and the work that they are doing. We should be extolling the virtues of good practice among the bulk of factors, but we must also be determined not only to root out slum landlords—I said to the Public Petitions Committee the other day that we should be determined to do that in Govanhill—but to root out rogue factors. That is the issue. Those people can make people’s lives a misery.
As Mary Scanlon and Elizabeth Smith in particular highlighted, the peace of older people who have moved into factored accommodation and are looking forward to enjoying their retirement in comfortable surroundings is often disturbed. I am dealing with such constituency cases, in which people have sleepless nights and worries as a result of their factor’s bad practice. That is unacceptable. We have called the Parliament the people’s Parliament, so it is the Parliament’s job to rectify that situation. If voluntary action is required to do so, let us ensure that it happens; if legislation is required, let us ensure that it happens.
I think that the mood is that we should work together to try to seriously advance the issue this year. I will therefore issue an invitation to all the parties, including to Margo MacDonald and the Greens, so that we can, I hope, put aside any party-political considerations, put the interests of our constituents and our people above any narrow political considerations, move forward, and see real progress this year.
11:12
As is customary, I begin by saying that we have had a positive and thoughtful debate. Indeed, it has even resulted in an invitation from the minister. What more could we ask for?
I congratulate Patricia Ferguson on lodging the motion and on pursuing her bill proposal, despite the reluctance that there has sometimes been to support it. Her experience in her Glasgow Maryhill constituency has showed her that legislation is needed. As we have heard, many members share her experience, which is why there is cross-party support for her bill. Even the Scottish Government is now moving solidly in that direction.
Some members—Mr McLetchie is among them—have frequently said that the Parliament has taken on too much legislation. I suggest that that has not been the case recently. I will return to the Conservative amendment. I agree that we should legislate only when there is no alternative, but members will agree, having heard about the experiences of many people, that legislation on the issue in question is clearly necessary.
The consultation document that Patricia Ferguson issued listed a number of questions, and the responses to those questions show why legislation is necessary. We have heard other comments on that this morning. I will refer to the questions that were asked and then address the amendments.
The consultation document asked:
“What type/category of property managers should be registered?”
The overwhelming majority of respondents believed that all types and categories of property managers should be registered, but questions were asked. Should registrations include housing associations that are already registered? Members have also asked that question. Housing associations often establish a separate arm to carry out factoring responsibilities; in such cases, there is perhaps still a need for them to be registered. If the management role is taken on by one or more owners, there should be no need to register. I think that Bob Doris raised that issue. It is not the intention of the proposed bill to include such people in registrations.
Another question is whether registration should be extended to include land management companies—for example, those that both own and manage land. Mary Scanlon and Jim Tolson, among other members, raised that issue. I, too, have experience of the matter in my constituency, predominantly in the towns of Armadale and Bathgate. New-build estates are being maintained by the Greenbelt Group, which has been mentioned. We have debated the role of that company and others before. I have been as critical of its performance as any member. However, it is only fair to say that it has responded to criticisms and sought to make improvements. I will not criticise it today, but I still believe that it would have been helpful in resolving owners’ difficulties if it had been registered and, more particularly, if there had been a clear system for dispute resolution.
A number of examples have been given that show why we should regulate. Members have given examples of extremely bad practice. I should acknowledge that some factors operate and provide a good service, but it is clear that there has been bad practice. I have heard of cases in which factors have been known to use exceptional attachment orders for debts of just a few hundred pounds. Members will know that that process is the modern-day equivalent of warrant sales, in which household goods are forcibly removed and sold to pay a debt. Factors can also use the notice of liability procedure under the Tenements (Scotland) Act 2004 for very small debts. If a person has a £25 bill, for example, the factor can threaten to register a notice of liability in the land register. That would cost about £30, and would be billed to the person and would show up when they tried to sell their flat or property. That could put off buyers, as any purchaser would inherit the debt. Housing campaigners fear that too many of those notices are being used.
That brings me to dispute resolution, which is the second major theme of Patricia Ferguson’s proposed bill. As we have heard, the only route for resolving disputes at the moment is through the courts. It is clear that that is unsatisfactory. Most law-abiding people instinctively shy away from the legal process, which is also, as we have heard, expensive and complex. In the responses to the consultation, the most popular suggestion on financing the costs of dispute resolution was that property managers should pay them, either through their registration fee or an additional levy. The other most popular suggestion was that the costs be publicly funded by the Scottish Government. If the minister wants to reply to that suggestion at some stage, I am sure that members would be interested to hear his comments.
The minister started his opening speech by saying that the status quo is not an option. I agree with that.
He referred to the OFT report from February 2009 that proposed self-regulation with the possibility of moving to statute. The problem for us is one that other members have raised: the delay in coming forward with any proposals. The minister also expressed concern that the proposed bill might have unintended consequences that might stifle competition among factors. Given that most of us accept that two thirds of property factors behave responsibly, I do not think that we can say that there would be a lack of competition. However, that third of factors is a significant number who need regulation.
I am sure that the member agrees with me and many of her party’s back benchers that one of the problems is the difficulty that people have with the complex process that they have to go through to change their factor. That is a competition issue. We want more choice so that it is easier to change a factor that is not providing the service.
The minister is absolutely right that choice of factor should be taken into account.
We heard an important example of that from Sarah Boyack this morning. She told of a factor who was abusing the legislation that is already in place by holding back one flat so that residents could not establish a residents association and therefore follow the available procedures to change that factor. That should convince us that we need either to make amendments to the present legislation or introduce the proposed new legislation.
Other members, Patricia Ferguson among them, suggested that there is an issue around people being aware whether a factor is in place, particularly in new properties. One clear reason why registration would be helpful is to ensure that that factoring responsibility is known about.
My final point is about the responsibility of builders and developers and the factors who then take over from them. Malcolm Chisholm spoke about that area of contention in relation to new builds, but it is also an issue in older tenements where a major repair project has taken place and the bills might be large.
Today we have a bill proposal from Patricia Ferguson that has brought about a great deal of consensus. Labour will support the Scottish Government’s amendment because it does not say anything with which we can disagree, but I suggest that Mr Neil follow his own advice on registration of private landlords.
Will the member make it clear whether she accepts my invitation?
I am coming to that—all good things are worth waiting for.
Labour will not support the Conservative amendment. Although the Conservative contributions to today’s debate give us heart, further delay is unnecessary and we wish to proceed with legislation. Labour will support the Liberal Democrat amendment, given Robert Brown’s clarifications.
We have in front of us an opportunity to do something that will address the concerns of people in Scotland. The proposed bill does not shilly-shally and hold back, but would take action to protect a lot of people who, as we have heard this morning, have been affected by bad practice among some property factors. I am more than happy to meet the minister to discuss further options in relation to property factors. However, I urge him to be brave at this stage and to support Patricia Ferguson’s proposed bill. We are always happy to consider further matters, but that should not delay what we have in front of us today. I understand that the minister will even support our motion. I urge him to take the logical step to support the proposed bill too.