Long Leases (Scotland) Bill: Stage 1
The next item of business is a debate on motion S4M-02682, in the name of Stewart Stevenson, on the Long Leases (Scotland) Bill. As we have quite a bit of time in hand for the debate, interventions will be welcomed.
15:27
I look forward with eager anticipation to the thoughtful and helpful interventions that members from around the chamber will make.
The bill that I bring to Parliament today will convert ultra-long leases—that is, leases of more than 175 years that have more than 100 years left to run—to ownership. It will implement the final report in a series of reports by the Scottish Law Commission on modernising property law in Scotland. Previous work included the abolition of feudal tenure.
In its report on the conversion of long leases, the commission outlines why the legislation is necessary. In paragraph 1.1, it says that the report
“seeks to apply to certain types of long lease the principle of conversion already applied to feus by the Abolition of Feudal Tenure etc. (Scotland) Act 2000.”
In paragraph 2.4, when discussing the conversion of ultra-long leases, it says that
“A pseudo-feu should be treated in the same way as the real thing”,
and, in paragraph 2.5, it says that
“In fact the difficulties with leases extend beyond those with feus. Because ultra-long leases are relatively rare, and concentrated within small geographical areas, they are unfamiliar to many legal practitioners. The result is often an increase in transaction costs when the property comes to be sold.”
In its first session, Parliament passed the Abolition of Feudal Tenure etc (Scotland) Act 2000. That landmark legislation affected property throughout Scotland. By comparison, we estimate that the bill will cover about 9,000 ultra-long leases. However, the Scottish Law Commission has said that the difficulties with ultra-long leases are even more significant than those with feus. Parliament has the opportunity to deal with leases that can, in individual cases, give rise to more problems than feus would have done.
I have mentioned a number of the key points in the bill. There are also provisions on compensatory and additional payments to landlords for the loss of rights. It will be possible for some leasehold conditions to become real burdens in the title deeds. Landlords will be able to take steps to preserve sporting rights in relation to game and fishing, and tenants will be able to opt out of converting to ownership, if that is their wish. The bill also deals with long-standing issues around what are known as Blairgowrie leases, which are a perfect example of the particular and localised complexities that arise in this area of our land ownership law.
Will the minister clarify what a Blairgowrie lease is, for the benefit of those of us who do not know what such leases involve?
The Blairgowrie lease is a local form that has a high degree of informality but is nonetheless capable of being implemented in law. Some people have said that such leases have been used for many years as a mechanism for people in Blairgowrie to play mischief with people from elsewhere who make purchases. There is broad consensus that action is needed, and the constituency member, who spoke to me about the matter recently, is anxious for it to be resolved by the passage of the bill.
I turn to the history of the proposed legislation. This is the second time that such a bill has been considered by Parliament. The Justice Committee in the previous session of Parliament published a stage 1 report on the previous bill, but that bill fell when Parliament was dissolved for the Scottish elections in May last year. We have made amendments to reflect that committee’s report. In particular, we added an exemption for harbours, clarified the exemption for pipes and cables—the issue of wayleave—and exempted leases in which the annual rent is in excess of £100. We have also dealt with the issue of variable rental so that we will not catch leases whose value is, in effect, more than £100 a year but in which the rent is paid in a pattern that does not necessarily make that clear.
I am grateful to the Rural Affairs, Climate Change and Environment Committee, as the lead committee, and to the Subordinate Legislation Committee and the Finance Committee, for the scrutiny that they carried out. Paragraph 54 of the lead committee’s report, on leases in which the landlord retains a significant interest, notes that evidence was taken in relation to variable rental. In the light of that evidence, the Government intends to lodge an amendment at stage 2 to deal with certain cases in which the rent has been varied.
Paragraph 84 of the report notes that witnesses made points about updating the land register.
The minister mentioned that a bill was introduced in the previous session of Parliament. The question of registration was addressed in that bill. Why has there been a change of heart in the current bill?
I have a little more to say about that; I will, perhaps, expand on it in the light of Alex Fergusson’s question.
As the report notes, Registers of Scotland has decided not to carry out a bespoke exercise to update the land register as a result of the bill as it now stands, because updating the land register is not required for the bill to work. Section 4 provides that, on the appointed day, a qualifying lease will convert to ownership. That will happen independently of any action that is taken by Registers of Scotland.
It was mentioned in evidence to the lead committee that there should be a mechanism whereby the register is corrected on application, for a fee. In fact, it will be possible for those who have an interest in a lease that converts to ownership under the bill to make an application for the register to be updated, and that application can be made at any time. It is worth saying that Registers of Scotland, too, will undertake work on a related piece of legislation that touches on this issue and to which I will return in a minute or two. It is therefore easier, more practical and of lower cost to deal with the issue in this way.
A number of events may lead to information in the land register being updated. In particular, information will be updated in the land register when a property transaction takes place. That would include a sale, but it could also include the granting or discharging of a standard security over the property. If the property is recorded in the register of sasines, the former tenant could apply for voluntary first registration in the land register and pay a registration fee at the outset.
The Government and Registers of Scotland recognise the value to Scotland and the Scottish economy of keeping the land register up to date. That brings me to the Land Registration etc (Scotland) Bill, which will implement another Scottish Law Commission report and which is designed to improve the system of land registration in Scotland. If Parliament agrees to the general principles of the Long Leases (Scotland) Bill, my officials will work closely with Registers of Scotland on implementing it and will take every opportunity to ensure that the land register is as up to date as possible. The two bills will, to an extent, work in tandem. In dealing with the issue in that way, we will avoid having to make a particular provision in the Long Leases (Scotland) Bill and we will reduce effort on the land register without creating any concomitant difficulties. If Mr Fergusson has further questions, I will be happy to address them later.
Paragraph 85 of the committee report notes that amendments may be needed to ensure that the Land Registration etc (Scotland) Bill and the Long Leases (Scotland) Bill work together. We intend to lodge amendments, which may be made directly to the Land Registration etc (Scotland) Bill where that is the appropriate drafting solution. We have further work to do to ensure that we get that right.
The committee report makes a number of comments on common good land and buildings, following evidence that the committee received. I am told that the issue of common good stems from well back, in an act of James VI, so we are going back a considerable time. Many members will receive representations generally about common good land. There are such issues in my constituency; I discussed them at the weekend.
We will continue to work closely with local authorities on information that they have on ultra-long leases and common good. However, ultimately, common good land and funds are the responsibility of local authorities, which must manage them in accordance with their statutory and other responsibilities. Common good asset registers are a matter for individual authorities. Audit Scotland monitors and will continue to monitor progress on the completion of registers, as part of its audit process.
On a possible exemption from the bill for common good, we have not received clear evidence that converting leases of common good land would have an adverse effect on that land. In addition, an exemption for common good land might increase discussions about whether land is held in the common good or not, which could lead to increased litigation and costs for local authorities. That simply would not be in the taxpayers’ interest. In any event, there are nine parcels of land involved and in almost every case it is about a transfer from one public form of ownership to another, with only a few exceptions. Therefore, to try to legislate on common good in this context would be a formidable challenge.
In the debate on common good, the committee received considerable evidence about Waverley market in Edinburgh. The Government is not reaching any view as to whether the Waverley market is held in the common good or otherwise. However, the committee noted that the case for exempting the Waverley market site from the bill has still to be made. I advise Parliament, however, that since I gave oral evidence to the committee on 7 March we have had an initial look at other legislation that may touch on that or other leases. Both Waverley market and some common good land in Stonehaven are governed by private parliamentary acts. In view of possible issues arising from provisions in those acts from converting leases to ownership, I have asked my officials to undertake further work on the matter, particularly on whether it would be appropriate to amend the legislation that covers the two areas that the leases apply to, or to take other appropriate action. We continue to engage on the issue, because it is of substantial concern to a wide range of people.
The bill is quite lengthy and rather technical, but its aim is straightforward—it will simplify Scots property law by converting ultra-long leases, which are essentially akin to ownership, to actual ownership. The consultations by the Scottish Law Commission and the Government showed that there is widespread support for the bill’s general principles. The committee also recommended that the Scottish Parliament support the bill’s general principles at stage 1. I therefore invite Parliament to support the motion at decision time. I take pleasure in moving the motion that stands in my name.
I move,
That the Parliament agrees to the general principles of the Long Leases (Scotland) Bill.
15:40
As has been noted, the bill will convert ultra-long leases of more than 175 years into ownership. The Rural Affairs, Climate Change and Environment Committee took account of the evidence that the previous session’s Justice Committee heard on a similar bill and focused on new aspects of the bill. I thank the previous Justice Committee for its work.
As well as considering new provisions, the committee heard evidence from witnesses on related policy issues to which the bill does not refer directly. We carefully considered common good and the status of Edinburgh’s Waverley market in the future, on which I will say more later.
The bill takes forward work of the Scottish Law Commission by seeking to convert ultra-long leases into ownership unless the tenant chooses to opt out, with compensation to the former landlord. The ultra-long leases in question are leases of more than 175 years that have more than 100 years left to run. Leases that are granted for such long periods are akin to ownership, so the bill will simply convert such leases to ownership. The Scottish Government estimates that there are about 9,000 ultra-long leases in Scotland, most of which are for 999 years, so few people will be directly affected. The committee agrees with that general principle of the bill, which will meet people’s needs.
As has been said, the bill is largely technical. I will describe some interesting issues that were raised with the committee.
The bill provides for various exemptions, which include making commercial leases exempt from conversion to ownership by having an annual rent cut-off point of £100. Should the annual rent be varied, that would be taken into account in the commercial lease exemption provisions.
The rent payable is the rent that was set out in the original lease, but variations to the annual rent are not necessarily reflected in the original lease. As drafted, the exemption might not include all commercial leases, if variable rents are not captured correctly, so we welcome the commitment in the Government’s response to our stage 1 report to lodge an amendment on that at stage 2.
We considered whether leases for which a single payment, or grassum, was paid in addition to the annual rent would count as commercial leases and therefore be exempt from the bill; for example, a developer paid the City of Edinburgh District Council a lump sum of £6.25 million in 1989 for the Waverley market. We noted the conflicting evidence, but we came to no conclusion.
The committee considered the position of standard securities when long leases are converted to ownership. The bill allows lenders to collect moneys that relate to mortgages on leases once they have converted to ownership.
The number of questions about the potential loss of landlords’ rights when leases convert to ownership is expected to be fairly low. The committee noted that sections 50 to 55 provide for additional payments on the basis of the loss of heritable interest and potential development value. There will be a role for the Lands Tribunal for Scotland to determine the amount that is to be paid to landlords.
The bill relates to the Land Registration etc (Scotland) Bill, which is reaching stage 2 scrutiny in the Economy, Energy and Tourism Committee, as has been said. Concern was expressed that Registers of Scotland does not wish to carry out a specific exercise to update the land register to reflect the conversion of ultra-long leases to ownership under the Long Leases (Scotland) Bill. The committee believes that the land register must be updated, and it called on the Scottish Government to respond on that. I have raised the issue of registration in my speeches in the chamber on the Land Registration etc (Scotland) Bill and the Agricultural Holdings (Amendment) (Scotland) Bill. The need to dovetail those bills with this bill requires a more accurate picture of land ownership in Scotland. Thankfully, the Scottish Government has responded to the committee’s report by stating that both the Government and Registers of Scotland recognise the value to the Scottish economy of keeping the land register as up to date as possible. We welcome the Government’s assurance that it will lodge amendments at stage 2.
That brings me to the other issues that became major focuses of the committee’s work. The bill contains no specific provisions in relation to common good or on whether there should be an exemption for common good land. The committee acknowledges the extreme complexity of common good land law and the lack of robust information being held by councils. Although the numbers are small, such land is of significant importance to the public interest. We recommended that the Scottish Government work with local councils and other professionals to gather and maintain a correct register.
Should common good land be exempted? The committee was not persuaded and neither was the previous Justice Committee. We have acknowledged the legal and administrative complexities in that respect. We were strongly of the view that any financial compensation that would be received by local councils for long-lease conversion must be directed to their common good funds, so we welcome the Scottish Government’s intention to write to local councils to tell them just that.
The most contentious part of our evidence taking was on the status and future of Edinburgh’s Waverley market, otherwise known as Princes mall. First, is it or is it not part of Edinburgh’s common good? It is not for the committee to decide what is, and what is not, common good property. Secondly, should the site have a specific exemption from the legislation? The City of Edinburgh Council insisted that Princes mall is not part of its common good portfolio. It asked us to consider an exemption and we concluded that the case for such an exemption is still to be made. I note the movement in the Government undergrowth on the issue.
Parliament should agree that the bill be passed in order to complete this key part of the Scottish Law Commission’s programme of property law reform. It is time to end the types of ultra-long leases in Scotland that the bill addresses.
15:47
I am pleased to take part in the debate and I thank the Rural Affairs, Climate Change and Environment Committee for its work on the bill. The hours that the committee spent taking evidence and debating the key points make my contribution much easier.
It may be appropriate to thank the previous session’s Justice Committee, because the bill was initially introduced in the previous session. It is welcome that, in reintroducing the bill, the Scottish Government has moved to address many of the issues that were raised in the previous stage 1 report.
I also acknowledge the contribution that has been made by witnesses who contributed to the debate. In many cases they illuminated the technicalities of what is a short but complex bill that will, put most simply, enable the conversion of ultra-long leases to ownership.
I am happy to confirm that Labour will support the bill at stage 1 and look forward to the debates at stages 2 and 3.
I thank the Scottish Law Commission, which has been at the heart of the debate over the legal context for land in Scotland. It has carried out a major review of the structure of land law. That review concludes with this bill, which extends the principle of conversion that was established by the Abolition of Feudal Tenure etc (Scotland) Act 2000. The 2000 act prevents—with some exceptions—the granting of leases, after June 2000, that last more than 175 years. The estimated 9,000 ultra-long leases that will be addressed by the Long Leases (Scotland) Bill were largely generated by large estates from around 1750 to 1930, often with the purpose of encouraging the industrialisation of Scotland. As the minister indicated, such leases tend to be concentrated in particular parts of the country.
As the Scottish Law Commission highlights, ultra-long leases are “barely distinguishable from feus” and carry the same disadvantages. As the minister said, in the case of ultra-long leases the difficulties can be even more significant. The disadvantages are that, by providing a small income stream to the landlord, restrictions and other obligations can be imposed on the tenant, although the tenant is the owner, in the everyday sense of that term. The conditions might allow for an inappropriate degree of control by the landlord. Given the conditions that are identified in the bill—annual rents of less than £100, and more than 100 years being left to run on a lease of more than 175 years—the tenant is in a similar position to that of an owner, and the landlord has little real interest.
The Scottish Government has responded to issues that were raised by the Justice Committee in the previous session of Parliament. I welcome the decision to exempt from the scope of the bill low-base rentals with variable rent, when agreement or order has been registered; leases that include a harbour, either wholly or partly, in relation to which there is a statutory harbour authority, which provision has been included following evidence from Peterhead Port Authority; and leases that are granted solely to allow the installation and maintenance of pipes and cables.
The committee supports proposals to allow for one-off payments to compensate for loss of landlord rights. The minister expects such payments to be modest, and the Lands Tribunal for Scotland will be part of the process. Such matters are complex but relatively straightforward. The bill generated more discussion in the context of its relationship with the Land Registration etc (Scotland) Bill, the role of common good land and how it should be understood in the context of the bill, and the case of Waverley market and whether it should be exempt from the scope of the bill.
The report, as the Justice Committee’s report did in the previous session, talks about common good land. There are a number of issues in that regard. Identification, ownership and use of common good land are complex issues. Although the bill does not address the matter, it will change the ownership of some common good land. Concerns about that were expressed in both reports. The Public Petitions Committee in the previous session also looked at common good funds and identified common problems to do with lack of knowledge of what is common good and how it operates. I do not have the answers, but the issue is challenging. Parliament seems continually to confront the problem without being able to find a satisfactory way of resolving it.
We are faced with practical difficulties, which we must all consider. A case has been brought to my attention in which a very small piece of land was being sold by a council, and it took three days of effort to search through 200-year-old minute books to ascertain whether the land was common good. There are genuine difficulties, in that record keeping was incomplete and common good land is unindexed. We absolutely share the belief that we should try to achieve a better understanding of common good, but we are confronted with practical difficulties, which are historical.
The minister gave a good example of the difficulties that we face in relation to common good land. However, MSPs find it frustrating when constituents come to us with a problem and we cannot find an easy solution. The difficulty to do with our confidence in the records of common good property, particularly in relation to land that will be affected by the bill, is frustrating. The committee is right to think that even though perhaps only a small number of cases will be involved, such cases are important to the public interest.
In its report, the committee made a strong comment about compensation payments for common good land and asked whether payment can compensate for the loss of common good land, saying:
“the Committee believes, with respect to leases of land held under the common good, financial compensation on transfer of ownership is not necessarily adequate compensation for the loss of that land and the loss of greater public benefit.”
The committee went on to welcome
“the Scottish Government’s intention to write to local authorities recommending that the proceeds of any compensation should be directed to its common good fund.”
We will not resolve the issue of common good land through the bill. The issue is, rightly, the responsibility of local authorities. I was initially concerned that the minister, in saying that he would write to local authorities to make recommendations about use of compensation, did not fully appreciate the importance that many people place on common good land, which goes beyond its monetary value. However, I note that the minister indicated a stronger interest in the matter in his formal response to the stage 1 report. We will see how the situation develops.
I anticipate that we will hear more about exemption of Waverley market during the debate. The City of Edinburgh Council argued that the grassum that it received in 1989 represents commercial value that is greater than £100 per annum, and that the council should not lose its interest in a property that is within a United Nations Educational, Scientific and Cultural Organization world heritage site. Other people argue that the site is common good land and should be exempted on that basis. The City of Edinburgh Council does not support that interpretation, and the committee and the Government are not inclined to exempt common good land.
The Scottish Government argued that there is no need for an exemption and that the council would be able to maintain an interest through its role as a planning authority. The committee concluded that there is still a case to be made. It may be that the City of Edinburgh Council has still to convince the committee and the minister that there is a case, but as we look to stage 2, the council must be heard. I am pleased by the minister’s comment in his opening speech that he is actively seeking a solution to the situation. There seems to be a unique set of circumstances—there is no equivalent case—and it seems that no other local authority has raised similar concerns. The Scottish Government must respond in a way that is in the public interest.
Over the years, the Scottish Parliament has sought to tackle the inequalities, inconsistencies and intricacies of land ownership. The process has been, and continues to be, complex, but it aims to deliver transparent, fair and equitable land laws that will deliver for a modern society.
15:55
I am more than happy to take part in this debate, but I come to it from a position of considerable disadvantage, given that the committee’s commendable and thorough investigations into the general principles of the bill took place while I was not a member of it. Therefore, my opening remarks will probably serve more as a memo to myself on the bill. I hope that I will be forgiven for any repetition of what has been said, although what has already been said perhaps proves that there will inevitably be some degree of repetition in a debate of this nature.
It seems to me that the main policy rationale for the bill is that a tenant’s right under an ultra-long lease is akin to a right of ownership. The bill therefore provides for such a right to be automatically converted to a right of ownership on an appointed day, with compensation being paid to the former landlord, if necessary. Broadly speaking, an ultra-long lease is defined as a registered lease of over 175 years that has more than 100 years left to run. That has already been pointed out. The Scottish Government has estimated that there are currently some 9,000 ultra-long leases in Scotland that are eligible for conversion under the bill.
Understandably and rightly, the bill contains certain exemptions to the conversion to ownership for leases that relate to the right to extract minerals, leases in which the annual rent in respect of the lease is over £100, leases for the sole purpose of installing and maintaining pipes and cables, and leases that include harbours for which there is a harbour authority.
Ultra-long leases are essentially a relic of the feudal system, which was abolished in 2000. Indeed, the Scottish Law Commission’s 2006 report states that the conversion of ultra-long leases marks the “final stage” of its structural review of land law. The 2000 act prohibited the granting of any type of lease for more than 175 years and converted other types of quasi-ownership to true ownership. The conversion of long leases can therefore be seen as the final step in the abolition of the feudal system.
So far, so good. However, in researching for the debate, it seemed to me that there are three key areas of interest, if not contention, in the bill, the first of which is the issue of common good. A common good fund is a fund of money and assets that is owned and administered by a Scottish local authority in respect of a former burgh within that local authority area. A prominent policy issue that is associated with the bill seems to be the extent to which common good land and buildings will be affected by the proposed conversion scheme for ultra-long leases.
When the previous bill was introduced in the third session of Parliament, the Scottish Government wrote to all 32 councils in Scotland to ask them to identify ultra-long leases of common good land and property in their area. It has already been said that Scottish Government officials have recently confirmed that nine common good leases have been identified. I think that I am right in saying that that is still a matter of some complexity and that it is still unclear whether that number of common good leases is definitive. I find it quite hard to believe that the number can be so low.
I am not necessarily going to debate the number, but I will make a point that we might think about. The debate about whether Waverley market is common good land relates to a substantial asset, whereas the majority of common good assets that will be affected beyond the nine, if the number has not been identified, are likely to be of very low value, because even 200 years ago, councils would not give away something for a peppercorn rent unless it was of comparatively low value. Although Alex Fergusson’s point is well made, I suspect that, in practice, any undiscovered issues are likely—although I cannot say this with certainty—to be of relatively low importance.
I am grateful to the minister for that intervention. I entirely accept what he has said, but that simply highlights the complexity of the whole area.
Although there remains some concern around the bill’s impact on common good assets, it does not provide for an exemption. The committee report acknowledges the complexities that would arise from including an exemption in the bill, and the committee remains unconvinced by the arguments for the introduction of such an exemption. Perhaps we can return to the issue in closing remarks.
The second issue is variable rent. The bill provides an exemption for properties for which the annual rent is more than £100, in order to exclude commercial properties from the automatic transfer. The bill also provides that a landlord may register an exemption where the annual rent was more than £100 at any point in the five years before royal assent. That reflects the fact—it is, indeed, a fact—that some leases have variable rents. The whole of that aspect seems to me, with my rural mind, to be incredibly complex, so I look forward to hearing further comments on that during the debate.
The bill contains no requirement for Registers of Scotland to update the land register or the register of sasines to show a change in the ownership of land once the ultra-long lease has been converted to ownership. I hear what the minister said in reply to my intervention, but I remain concerned that the land register will wrongly show the original landlord as the owner, and the new owner as tenant. Surely a key feature of Scottish property law is that the registers can be relied on. The minister referred to another bill that is currently going through Parliament as perhaps being the correct vehicle through which to address the issue, but I continue to have some concerns in that regard. Again, we may come to that later in the debate.
I appreciate that time is against me, Presiding Officer. I look forward to the rest of the debate. We will, perhaps, in closing speeches return to the points that I have raised.
We move to the open debate, with speeches of four minutes. There is a little bit of time for interventions, but not too much.
16:02
As the deputy convener of the Rural Affairs, Climate Change and Environment Committee, which is the lead scrutiny committee for the Long Leases (Scotland) Bill, I am pleased to speak in the stage 1 debate.
I make my remarks this afternoon in an individual capacity, and not in my capacity as deputy convener. It is important to point that out before I opine on how nice it is to deal with amendments to Scots law in the Scottish Parliament, rather than dealing with poorly drafted amendments that are treated as an afterthought at the 11th hour and rarely given time to be debated, which was the practice in the House of Commons, certainly when I was a member in that place.
As we have heard, the bill emanates from the considerable work of the Scottish Law Commission and was designed to complete the process of the abolition of feudal tenure in Scotland, thereby simplifying property law and—importantly—bringing it into the 21st century. We have heard that the bill will enhance the position of tenants, as long leases—we have heard about how they are to be defined—will be converted to ownership, so the tenant will gain a clear benefit. Such conversion will be automatic unless the tenant chooses to opt out. The bill will facilitate the tenant becoming the owner of the property: that is in effect the de facto position at present for the leases that will fall within the scope of the bill, which will give that position legal recognition.
At the same time, compensation and additional payments will be paid to the landlord, who will have an entitlement, which is important to point out. We have heard about the exemptions that have been set out, including the threshold of £100 for annual rental; the pipes and cables exemption, which is important; and Peterhead harbour, which—as the committee accepted—is in a unique position.
None of those exemptions was controversial but, as we have heard from several members, two issues arose during our consideration of the bill—one with respect to the common good and one with respect to the Waverley market. In relation to the common good, it became clear during the committee’s scrutiny that there was a significant lack of clarity on what common good land would be covered by the bill and even on what common good land was held by the 32 local authorities in Scotland. It also became clear that there was no easy solution to that lack of clarity. As the minister has explained, the difficulties of compiling a register in a timely and non-resource-intensive manner are not insignificant. That is a work in progress that we must look to in the future.
The status of the Waverley market was the subject of considerable debate. The committee was not hugely impressed with the evidence that was provided on the issue. Indeed, we were disappointed in the quality of the case that was purportedly put forward by the proponents of an exemption. However, I am pleased to hear from the minister that the issue is being considered further and that pre-existing legislation relating to the Waverley market that the bill may have an adverse impact on is being examined. I imagine that that will be welcome news to some of the people who gave evidence to the committee.
16:06
The bill has been a long time coming. As we have heard, it was considered by the Justice Committee in session 3 before it came to the Rural Affairs, Climate Change and Environment Committee. As I am not, like my colleague Annabelle Ewing, a lawyer, I speak with some trepidation, but I will try to reinforce some of the important points that have already been made and to shed a bit of light on some of them.
I am pleased to highlight Scottish Labour’s support for converting ultra-long leases into ownership. I believe that the principle is correct and that the granting of a lease of more than 175 years, in effect, amounts to a transfer of ownership. I agree with the Government that the bill will significantly simplify property law in Scotland.
As we have heard, there are some 9,000 ultra-long leases in Scotland. The committee welcomed
“the new provisions in the Bill to take into account variable rents for the purposes of exempting commercial leases from the Bill”
and the Scottish Government’s commitment to bring forward an amendment on the issue at stage 2.
In relation to additional payments, the committee noted the compensation provisions in the bill and the provision of an additional payment. As Rob Gibson highlighted, it is important that the level of that payment will be set by the Lands Tribunal for Scotland.
The committee heard evidence on the concerns that exist about the land register of Scotland in the context of the bill. The Scottish Government’s recognition of the value to Scotland and to the Scottish economy—which we have heard about—of keeping the land register as up to date as possible is welcome, as is the minister’s recognition that updating the land register is not required for the bill to work. It is important to emphasise that the register should be as up to date as possible.
The recently introduced Land Registration etc (Scotland) Bill will have an impact on the Long Leases (Scotland) Bill. It is reassuring that the minister has explained that that bill will work in tandem with the long leases bill.
The committee acknowledged that the common good is “an extremely complex area”. I am aware of that, not least because I live near the royal burgh of Lanark, which is a good example of a place where common good land gives rise to complexities and sometimes causes tempers to rise.
Beyond the bill, although the committee accepts that the task of compiling a more accurate register of common good assets and funds would be expensive, it
“recommends that the Scottish Government works together with local councils and relevant professionals to identify better ways in which this information could be gathered, verified, recorded and maintained.”
The minister referred to that earlier.
I believe that that is long overdue and will have far-reaching benefits, not just for this legislation, which it will not actually clarify. It has been highlighted that it is an issue that needs resolution. As Claire Baker pointed out, constituents come to us with concerns about the issue. It is in the public interest to have the issue resolved.
The committee recognised that it was the view of the Justice Committee in session 3 not to support an exemption for common good and noted that there was no compelling case in favour of an exemption. However, as other speakers have said, there is further work to be done on the issue. We perhaps need to take further evidence on the issue before stage 2.
As Claire Baker said, although the Scottish Government is not keen to impose statutory guidance on local authorities in relation to where any common good compensation should go, I seek further reassurance from the minister that it is likely that it will be directed into councils’ common good funds. I take the point that many properties will be of low value.
I would be grateful if you could come to a conclusion.
Scottish Labour supports the bill, in our quest for fairness and in consideration of the public interest.
16:11
The Government estimates that 9,000 leases will be affected by the bill, but one has commanded a disproportionate amount of attention: that of Princes mall, otherwise known, from its former use, as Waverley market, which is in the heart of my constituency.
Edinburgh residents have, rightly, been concerned by a stream of repeated claims in the media that land that is owned by the council on behalf of the city, with some degree of special status in law, might transfer to the private developers who currently hold the lease, and that the compensation that is to be received by the council could best be described as trivial. The City of Edinburgh Council has itself expressed its dissatisfaction with this aspect of the bill and has asked for amendment. I am therefore glad that the minister has stated his intention to have officials revisit the issue.
I agree with the committee that the case that has been put forward has not always been the most well-argued case that we have heard, but I am clear that the case exists and should be considered. Clearly, I cannot do it justice in the short time that is available to me, so I would be grateful if the minister could indicate to me, when he sums up, whether he would be willing to meet me, in my capacity as the member for the constituency concerned and as an MSP who has raised the matter with him in writing, to discuss the outstanding concerns with regard to the bill’s impact and the work that he is instructing officials to undertake.
It might be useful if I indicated at this stage that I would be happy to meet the member.
I am most grateful to the minister. Improvements to bills are a natural part of the parliamentary process and should be welcomed.
A number of points have been raised with regard to Waverley market, which is an important location. Many of them go right to the heart of the concerns. The question of its common good status is a technical and legal one. I believe that the council is arguing honestly and legitimately its view that the site is not common good land. After all, if it argued that it was common good land, that would potentially have strengthened the case that it was making for exclusion. That said, the view that Waverley market is not common good land is predicated on the council having made an error in 2005, when it listed it on its register of common good assets. The minister stated in committee that the bill
“has certainly thrown up a wider issue about how accurate information about common good is in the generality”.—[Official Report, Rural Affairs, Climate Change and Environment Committee, 7 March 2012; c 681.]
I whole-heartedly agree with him on that point. That is quite clearly a matter for local authorities, but we might want to revisit it in the Parliament at a more appropriate time and through a more appropriate vehicle.
I am satisfied that the common good status of Waverley market is not an issue for this bill. The bigger question for me, as the member whose constituency contains Waverley market, is whether it would be in the public interest for this particular long lease to transfer into private ownership for a trivial sum.
The status of landlord, which is currently held by the council, confers a qualitatively different relationship to the status of regulator, through being the planning authority.
The policy memorandum also describes long leases as being
“generally granted by large estates from about 1750 to around 1930.”
A deal entered into by a cash-strapped capital city in the Thatcher era, when there was no foreseeable prospect of the lease being converted to ownership, is entirely different from Georgian and Victorian-era attempts to retain and extend feudalism by the back door. Had the deal been made with perfect foreknowledge, I have no doubt that the lease would have been for less than 175 years and would have been outwith the scope of the bill’s provisions.
In light of that, I hope that the minister’s thinking will continue to develop and I welcome the opportunity to meet him in advance of stage 2.
16:15
As we know, long leases are similar to feus; there is little difference in how they work. Following up on the issue of long leases seems to be the logical next step after the implementation of the Abolition of Feudal Tenure etc (Scotland) Act 2000.
Leases and sub-leases are complex, and their conditions may allow the landlord an inappropriate degree of control, including the opportunity to charge for waivers. In the case of feus, such disadvantages were considered sufficient grounds for conversion to ownership, and on that basis the long leases bill seeks to do the same with leases and sub-leases.
The bill closely follows the scheme for conversion of feus that is set out in the 2000 act. The scheme would be automatic, so tenants would not need to do anything, although they would have the right to opt out. On conversion, the tenant would become owner and the conditions contained in the lease would be extinguished, but with some exceptions. For example, conditions concerning maintenance and use of common facilities, or the provision of services, would survive, and there would be an option to the landlord to preserve certain conditions for the benefit of neighbouring land. Special provision is made for servitudes and sporting rights. The landlord would be entitled to compensation, calculated as a multiplier of the rent. In some cases, additional compensation may also be due. In most and possibly all cases, the amount of compensation would be small, but a tenant who was not willing to pay could opt out.
The committee considered all those issues and, generally speaking, there has been little discontent. The committee noted some unresolved issues that relate to common good land. I have some reservations about that aspect when considering long leases. We are talking about the philosophy and principles behind the protection of publicly owned land.
It has been well noted by many that the accurate recording of common good land is not a straightforward or inexpensive process for local authorities to undertake. Nor can it be done overnight. The number of long leases on common good land is said to be small, but nonetheless that number could be more than we think, given that records are not accurately kept. I do not believe that we can simply ignore what could potentially be damaging to the public interest in Scotland.
The issue of the Waverley market site in Edinburgh has featured heavily in this debate and throughout committee discussions. Under the bill, the tenants could become full owners of land worth perhaps £50 million, which currently may be owned by Edinburgh’s common good fund, although there is dubiety over that. If that is correct—and it seems to be so—that would be a strange outcome.
One peculiarity of common good land is that it cannot be alienated and sold off. That may be the very reason why Waverley market and similar plots were let out on long leases in the first place—to enable the land to be used productively. However, it was never the intention that the ground should be sold off entirely, so it seems odd that tenants in that position, who have paid very little rent—perhaps to encourage development—could earn vast amounts of money from what is in fact public land.
It is crucial that the common good land issue is addressed and resolved and I look to the minister for assurances that it will be addressed as the bill progresses.
16:19
I welcome today’s debate. I congratulate the Rural Affairs, Climate Change and Environment Committee, in particular Rob Gibson as the convener of the committee, on the committee’s work on the bill. As a member of the Rural Affairs and Environment Committee in session 3, I can say to Alex Fergusson that I feel no comparative advantage. It was not an issue that we looked at in my time as a member, so I cannot claim detailed knowledge of each of the provisions of the bill. I welcome its broad thrust, however.
It is worth remembering that the legislation was not created out of a vacuum but out of the Scottish Law Commission’s revision and updating of property law more generally to ensure that it is fit for the 21st century. Alex Fergusson was right to point out that the bill builds on the Parliament’s work on updating Scotland’s feudal laws and, in its report, the SLC makes the point that the principle of conversion already applies to feus because of previous legislation, which is essentially the same as what will come about under the bill. As the minister said, the Scottish Law Commission says that a pseudo-feu should be treated in the same way as the real thing. I have to say that the word “pseudo-feu” is not something that I thought that I would ever say in the chamber or, indeed, outwith it. There is probably a first and last time for everything.
The bill also builds on work done in the previous parliamentary session. The session 3 Justice Committee looked at the proposals fairly favourably and I note that the Government has proposed amendments following Justice Committee recommendations; that is welcome. As Marco Biagi said, legislation should develop as it goes through the parliamentary process. That has happened in this case and it demonstrates the Government’s willingness to work with others on the proposals.
Of course, the Rural Affairs, Climate Change and Environment Committee has scrutinised the bill and concluded that ultra-long leases should no longer exist in Scotland. We should also refer to the fact that the bill has widespread popular support outwith the Parliament, as demonstrated in the consultations undertaken by the Scottish Government and the Scottish Law Commission.
We broadly accept that the bill is necessary because of the difficulties associated with ultra-long leases. The bill will simplify Scotland’s land tenure system. The point has also been made that, in effect, ultra-long leases are ownership in all but name, so it makes sense that we consider the matter now.
We should also reflect the fact that owners will, rightly, be compensated, which is all well and good. Mr Hume also made the point that the bill contains no element of compulsion. Any tenant can opt out; tenants are not compelled to become owners. I do not know in what circumstances that would happen, but it is right that there should be no element of compulsion.
Throughout the debate, extensive reference has been made to Waverley market; Marco Biagi was right to say that that issue has dominated the headlines on the bill. I do not have Marco Biagi’s constituency interest, nor do I have the benefit of the experience of looking at the matter in the way in which the committee has, but I note that the committee concluded that the case for exempting the Waverley market has not been made. It sounds as if the evidence is just not there. That said, I understand the concerns that have been expressed. Any one of us would be concerned that a wealthy developer could acquire a site for peanuts and make a great profit out of it. I therefore welcome the minister’s commitment to look at the matter again and, on that basis, I look forward to the bill proceeding to stage 2 and beyond.
16:24
I am afraid that I will repeat much of what has already been said, but I intend to reinforce it.
The bill is similar in nature to the bill that was introduced in November 2010, although it contains some amendments that are based on the Justice Committee’s original findings and recommendations in session 3. Many of the issues in the bill were changed before it came back to the Parliament this session.
The bill aims to convert ultra-long leases to ownerships. The leases are those that are for more than 175 years and have more than 100 years left to run. They will convert to ownership, unless the tenant opts out. The bill will also protect landlords’ rights by providing compensation; clarify the position of lenders; and move away from an unnecessarily complex form of land tenure. As has been said, it is estimated that the bill will affect 9,000 ultra-long leases in Scotland. The committee recommends that the Parliament supports the general principles of the bill, but points out that some issues that were raised in evidence should be considered before stage 2.
Brodies LLP called for clarity on sections 64 and 69, to put beyond doubt what can be included in annual rent. Although the people who gave evidence on that felt that the issue was clear in the explanatory notes, they argued that the same could not be said for the bill.
Another issue is the way in which the bill interacts with the Land Registration etc (Scotland) Bill. There was a call for Registers of Scotland to update the land register to accurately reflect the conversion of ultra-long leases to ownership under the bill. The committee recommends that the land register should be updated to accurately reflect ownership and that the Scottish Government should respond to that concern. I thank the minister for clarifying that individual owners can apply to have the land register updated. The Long Leases (Scotland) Bill might need to be amended at a later date, depending on the way in which it interacts with the Land Registration etc (Scotland) Bill.
Every member who has spoken has raised the issue of common good land, although it is not directly related to the bill. There does not appear to be a comprehensive list of common good assets that local authorities throughout Scotland hold. The committee noted that it would be a complex task to compile a register that is 100 per cent accurate. It would be expensive and time consuming to produce a list of all common good properties, but that should be considered. I hope that officials will work with local authorities on that. During the evidence taking on the bill, the small number of common good properties that we are aware will be affected by the bill more than doubled, from four to nine. As common good leases are in the public interest, the committee calls on the Scottish Government to work with councils to find better ways to collect information so that we better understand the effect that the bill will have on common good properties.
The committee took evidence on the City of Edinburgh Council’s request for the Waverley market site to be exempt. That is a complex case. Based on the information that was provided, the committee decided that the case had not been made and that we could not say whether the Waverley market should be exempt. I am glad to hear that the minister is investigating ways of addressing the issue.
The committee urges the Parliament to support the general principles of the bill and to allow it to progress, but calls on the Scottish Government to investigate further the issues that have been raised in the debate, some of which do not arise directly from the bill.
16:28
I thank the Scottish Law Commission for its hard work in producing the template from which the bill has come. I note once again that, in previous years, we have not been very good at implementing the commission’s work. I hope that we will get better at that.
I thank Rob Gibson and Claire Baker for their comments on the previous Justice Committee. I think that I am the only member in the debate who was on that committee. Our consideration of the previous Long Leases (Scotland) Bill was interesting. Members have noted that we brought up issues to do with Peterhead harbour, which have been dealt with, but I also remember an interesting discussion about pipes and cables, which did not figure much in the recent investigation. Last time round, there was considerable debate about whether a lease for a pipe or cable even existed as a lease because, apparently, if it did, the area of land was a seam underneath that never reached the surface. I refer members to that interesting discussion.
I want to pick up on the common good issues. As Stonehaven is in my constituency, I ask the minister whether he will spare me some time to ensure that we get the Stonehaven recreation grounds issue sorted properly, not least because, as the minister well knows, the town is short of spare space, so we need to ensure that the centre of the town is correctly laid out.
That is one of the two leases that we have identified that are covered by a Government act. It is covered by a private act that went through Westminster in 1902, which ties that piece of property to be used in perpetuity for recreation. We understand that the transfer that would be caused by the bill, if it became an act, would leave the use of the piece of land unchanged, and it would then be in a public trust rather than a local authority—it is not a question of the property passing into private hands. That is our current understanding, but it is always subject to further review if more information comes to hand.
I thank the minister for clarifying that. That brings some relief, although all such things are subject to further clarification and we must ensure that we get it right.
Blairgowrie leases have come up before. My recollection is that they are verbal, annual rolling leases that became locally deemed to be perpetual leases even though they were never actually renewed. That is a bit of local law, but it is honourable law. Nonetheless, it is an opportunity for mischief these days.
I return to a point that others have made about the registers. When one goes to look in the registers, one should get the right answer—surely, that is the basic principle. I do not dispute that the law can change instantly and the registers can catch up later—of course, that is the case. Nonetheless, we should have the correct information in the registers as far as possible, and now is a good time to ensure that. Given that the housing market is at a historic low point and is not likely to pick up any time soon, this is a good time to do the work. I am concerned that we should not miss the opportunity.
There was some debate in the committee about the European convention on human rights issues relating to the bill. Government officials said that those were a matter of huge importance to them and felt that they had been covered. I am not going to argue that the registers are an ECHR issue, but the question arises whether one of my rights as a citizen is the ability to go to a register and get the right information. I have a suspicion that, even if the ECHR does not say that it is, we could readily recognise it as such.
I raise another concern, although to what extent this matters is another issue. Richard Blake of Scottish Land and Estates said:
“I do not think that it will be a huge issue. In my practising career, I have not come across any examples of long leases in which sporting rights have been reserved.”—[Official Report, Rural Affairs, Climate Change and Environment Committee, 22 February 2012; c 628.]
It may be theoretical whether any funds that change hands will have to go back to any common good fund, as they will probably be so small that they will not matter.
The final issue that I raise is the bill’s interaction with the Land Registration etc (Scotland) Bill—an issue that we considered in the Subordinate Legislation Committee. How the two bills interact is fundamentally about the timing of transactions and registrations. Officials now understand that—we are getting indications that they are clear that that needs to be worked through—and I hope that the work can be progressed satisfactorily.
16:33
I declare an interest as a councillor on the City of Edinburgh Council.
The reasons why we have long leases in Scotland are largely historical. They were created because feuing was not permitted on a particular piece of land or because the long-lease option was sometimes cheaper or just normal practice locally. I support the principle behind the bill because, following the abolition of both entail and feudalism, it makes sense for the Government to produce legislation to abolish historical long leases, many of which can be described as “feus in disguise”.
There has been much debate over how the bill affects the lease on Waverley market, in my region, which is the site of the current Princes mall shopping centre. As the bill is drafted, the Princes mall site would be transferred from public to private ownership for the not-so-princely sum of 40p, and the council would relinquish a massively valuable asset that should be available to benefit future generations when the lease runs out.
I have campaigned on that issue for some time, as a councillor and now as an MSP. Rob Gibson mentioned movement in the Government’s undergrowth, and I welcome the minister’s willingness to explore the options for excluding land that is already subject to statutory provision. Given that Waverley market is subject to a significant amount of statutory provision—the City of Edinburgh District Council Order Confirmation Act 1991 and three other statutes that I have here all relate to it—I suggest that the easiest and most certain way to deal with the issue is to exempt from the bill land that is under such existing statutory provision.
The problem with Waverley market, and potentially with other sites, is that not all long leases are feus in disguise. Some are more like commercial leases, in which the landlord receives a non-nominal rent. The bill that was considered in the previous parliamentary session would have converted such leases to ownership. However, as a result of lobbying on behalf of property interests, such long leases are exempted from the bill that is before us on the basis that the landlord has a continuing interest in the land.
The argument for exempting Waverley market is also based on interest. The council’s continuing financial interest in the ground over the period of the lease is nominal: it gets a penny a year. However, the interest that it sought to retain by issuing a long lease was the power proactively to manage the site as the owner for the benefit of Edinburgh’s citizens, as opposed to the solely negative powers that it has as the planning authority. On top of that, the council sought to retain the right to regain the valuable land in the future for the benefit of the citizens.
On top of that, there is the difficult issue, which I have already mentioned, that Waverley market is subject to substantial existing statutory powers. That is the issue that the minister has recognised needs tackling, and I look forward to seeing what comes of the exemption that he is exploring.
The City of Edinburgh District Council Order Confirmation Act 1991 contains special provisions to help to protect and promote the whole of the Waverley valley. Paragraph 35 of the schedule to the act enables the council to erect and maintain new buildings on Waverley market. The bill does not repeal that provision, nor was the repeal of that existing statutory regime part of the consultation. If the bill is passed as drafted, I am not sure where that will leave the 1991 act. It will certainly be stranded in limbo.
The Waverley market site is subject to existing statutory provision that is not repealed by the bill. It is valuable public land that should not be transferred for the measly sum of 40p. I am pleased at the minister’s willingness to iron out problems with the bill and I ask him to confirm that exempting from it land that is under existing statutory provision would exempt Waverley market. I would welcome the opportunity to join him when he meets Marco Biagi.
16:38
I had to smile slightly at the minister’s opening remarks. If I picked him up rightly, he said, “If Parliament agrees” the bill. The reason for my slight smile was that that is a highly likely outcome, given the majority that the Government enjoys. I have no objection to that likely outcome, although I find myself voicing a note of caution as we proceed towards stage 2.
Almost all members have raised common good in general and Waverley market in particular. I continue to have concerns about the somewhat inexact nature of the evidence base behind the relevant part of the bill. As Claudia Beamish said in her speech, it is in the interest of the public to have those matters resolved. I agree entirely. When it comes to Waverley market, I have to raise the white flag of surrender in the face of the legal complexities that surround it. I came across the phrase “cumulo rent” in the Scottish Parliament information centre briefing, although not in the context of Waverley market. I had always assumed that the word “cumulo” related to cloud formations, and I am afraid that that is exactly what envelops my brain when trying to address that issue. Therefore, I am delighted that the minister will meet Marco Biagi and, I hope, Alison Johnstone to try to sort out the matter. If they succeed in that, they will have my backing as well as my congratulations.
On a more serious note, I cannot help but feel that those matters and others reflect the degree of uncertainty—indeed, cloudiness—that surrounds the bill. Some of those other matters relate to the variable rents issue that I mentioned briefly in my opening remarks, but they are definitely in evidence when we consider the issue of registration. As I said earlier, if the bill is not amended, the land register will wrongly continue to show the original landlord as the owner and the new owner as the tenant. As I understand it, it is a key feature of Scottish property law that the registers can be relied on, and I am far from convinced that we should be party to a piece of legislation that might be seen in any way to undermine that principle. I believe that the bill should include a provision that compels either the keeper or the new owners of property to rectify that inaccuracy.
Annabelle Ewing mentioned her time at Westminster—for a moment, I thought that I detected a tear in her eye as she recalled those happy days—and its poorly drafted Scottish legislation. I entirely agree with her about the need to avoid poor legislation. We must heed the evidence that several members of the legal profession gave to the committee during its deliberations, some of which was mentioned by Margaret McDougall. It is not often that one is offered free advice from members of the legal profession and, under some circumstances, I might be hesitant to accept it but, on this occasion, we should look carefully at the evidence if we are to avoid passing poor legislation. Westminster does not have a monopoly on that. Accuracy is vital.
I am happy to confirm that we on the Conservative benches will support the bill at stage 1 but, as it proceeds, I will want to be sure that we do not run the risk of having to review the legislation in three or four years’ time because we have got it wrong.
16:41
I am pleased to be closing for the Labour Party. The debate has been wide ranging and complex. I particularly liked Alex Fergusson’s description of the bill in his opening speech as dealing with a relic of the feudal system.
Members covered a number of issues and provided examples from their constituencies and regions. Some members, including Claudia Beamish, focused on the bill’s relationship with the Land Registration etc (Scotland) Bill, which is also going through Parliament. These parallel bills interact with each other and, as the minister acknowledged, there might be a need for amendments to the Long Leases (Scotland) Bill at stages 2 and 3 in response to any changes to the Land Registration etc (Scotland) Bill.
Concerns were expressed to the committee that Registers of Scotland has made it clear that it does not intend to carry out a specific exercise to update the land register to reflect the conversion of ultra-long leases to ownership, and that it will therefore not be possible to rely on the register to be accurate and correct. In the committee, the minister replied that the updating will take place the next time the land register is updated in respect of ownership, and that that will be more economical and effective.
We can all appreciate the attraction of that approach, particularly in the current financial circumstances, but there were concerns that that was not a satisfactory response. The committee recommends that the land register should be updated to accurately reflect ownership. Alex Fergusson discussed those concerns this afternoon. Scottish Land and Estates encapsulated the problem when it said in evidence to the committee:
“this would seem to be a very good opportunity to catch some land that might otherwise stay under the same ownership for a long enough time before it triggered first registration.”—[Official Report, Rural Affairs, Climate Change and Environment Committee, 22 February 2012; c 627.]
However, I welcome the further comments from the minister in his response to the stage 1 report, and his recognition of the value to Scotland and the Scottish economy of keeping the land register as up to date as possible. The minister’s comment that Government officials will work closely with Registers of Scotland on implementing the bill is welcome, although he might want to clarify whether it relates to both of the bills that are going through Parliament.
As we have a land registration bill going through the Parliament, it seems incongruous that we have a parallel bill that looks as though it will add to the inaccuracy of the land register. The Economy, Energy and Tourism Committee is calling for further information on plans to complete the land register and a target date for its completion. That chimes with the Rural Affairs, Climate Change and Environment Committee’s concerns about the accurate inclusion in the register of long leases once they are transferred to ownership.
A few members discussed the Waverley market issue, particularly those with an interest in Edinburgh, such as Marco Biagi and Alison Johnstone, although it was clear that all members found the subject of interest. I was particularly interested in the committee report’s reference to the issue of grassum. Following the evidence taking, the committee did not take a firm view on grassum, but it noted the conflicting evidence on it. Part of the City of Edinburgh Council’s argument for exemption for Waverley market is that a grassum should be taken into consideration when the lease is of a commercial nature. It argued that, because a grassum of £6.25 million was paid for the market, the low annual rent does not reflect the true nature of the lease. The minister argued that that was not appropriate because a grassum is not a substitute for rent and that such an approach would misapply a grassum.
I appreciate and understand the minister’s point. However, has there been a common misapplication of grassums? Has it been common practice to have a grassum operating as an element of commercial rent? Will the exclusion of a grassum lead to the transfer of land that, it could be argued, is outwith the bill’s scope? Alternatively, is it the case that other leases that might be relevant were agreed several hundred years ago, so their grassums can justifiably be discounted, and that the case in Edinburgh is exceptional?
We must consider the consequences of the bill, which I imagine were not envisaged when the lease arrangements for Waverley market were entered into in 1989. Marco Biagi described the economic circumstances and decisions that faced the City of Edinburgh Council at that time and gave some insight into why the council took the path that it did on Waverley market. That might have been short-sighted, but we must respond to the conditions and the circumstances that we face now. I welcome the consideration that the minister is giving to the issue. It would be helpful if more details on the issue could be provided to members as soon as it is available.
Members also raised the issue of compensation payments for long-lease common good land that will transfer to the tenant under the bill. Annabelle Ewing talked about the lack of clarity about common good land and the difficulty in gaining proper information about it. Margaret McDougall highlighted that the committee initially thought that four sites were involved, but now it seems that nine sites are affected. Alex Fergusson asked how much confidence we can have in that figure.
I was intrigued by the minister’s statement in evidence to the committee that
“the test is whether the asset and its availability for public good would be affected by what is in the bill.”—[Official Report, Rural Affairs, Climate Change and Environment Committee, 7 March 2012; c 683.]
That suggests that it is not about who owns the land but about how it is used and its availability. I apologise in advance if that is a misinterpretation, but that is my understanding of what the minister said. In his speech, Jim Hume outlined the principles that would challenge that view.
It would be helpful to have further detail on how far access to and activity on common good land will be maintained if it is transferred. Perhaps the minister can say more about that in his closing speech. It is expected that nine common good land sites will fall under the bill, but only limited information was provided to the committee on the sites. Does the minister have any idea of the value of the sites? I refer not just to their financial worth but to their community value and contribution. The leases in question in Dumfries and Galloway were created in the early 1800s—there is an example there of a lease that has changed tenancy—and the leases in Glasgow include three parkland sites. Is the minister confident that those leases are appropriate and that the loss of those sites will not have an impact on local communities?
It has been an interesting debate, with many insightful contributions, and it will no doubt provide plenty for us to consider at stage 2.
16:48
The debate has been interesting if somewhat technical. It carried with it the danger of being that kind of political debate that is over not when everything has been said but only when everyone has said it. However, we managed to avoid falling into that trap. Right up to the very last moment, we were hearing about new aspects of the issues around the bill, which was very welcome.
Alex Fergusson referred to the word “cumulo” as an issue and to clouds in that respect. Perhaps I should draw to his attention the fact that one of the variants of cumulo clouds is, of course, cumulonimbus clouds, which are thunderclouds. Perhaps he might be on to something in dealing with the issue. I know that he just wanted me to make that particular point.
Claire Baker asked whether we would look at this bill and the Land Registration etc (Scotland) Bill, and I can say that we will.
The issue of grassum is complex. In legal terms, it is not a substitution for rent but a transfer of value.
I listened carefully to Alison Johnstone’s detailed comments on the bill that was taken through Westminster on behalf of the City of Edinburgh District Council and I will study carefully what she said. Mr Biagi has indicated that he would be happy for all three of us to sit down and discuss the issue, and I would be equally happy to do that. I ask the members to use my private office to make that happen.
Claire Baker talked about the three Glasgow common good sites that are among the nine common good sites that will be affected. Of the three Glasgow sites, it is interesting that one is Balloch country park. The bill will transfer ownership of that site from Glasgow City Council to West Dunbartonshire Council, which is the tenant. In principle, that should not greatly concern us. The other two sites are recreational areas in Pollok park and, because of how things work, their tenant will remain unchanged in practical terms.
We have talked about the site in Stonehaven—Nigel Don referred to that.
One site is a tiny bit of land at Stevenlaw’s Close in Edinburgh that provides long-established access to somebody’s house. In Ayr, a little bit of Rozelle house—an ancient house that is looked after by a public trust—is common good and would fall under the bill. Reference was made to the three pieces of land adjacent to Sanquhar that were subject to lease between 1800 and 1810. In practice, the effect of the bill on the nine leases that are known to be common good will not really be of great concern.
Claudia Beamish made a number of references to common good, as did many other members. It is worth saying that the Local Government (Scotland) Act 1973 provides that common good funds do not form part of general funds. That is a more recent provision. It is therefore naturally assumed that, if common good assets are sold, the proceeds cannot be transferred simply on a whim to the general fund. Without giving a definitive legal opinion—I would not want to appear to do that—I think that what we are discussing would remain in the public area.
Rob Gibson talked about registration, as did many other members. One provision in the bill covers one of the tricky issues, which is leases that may or may not be registered. We will look further at section 65 in relation to that.
Variable rent has been mentioned. There is uncertainty because the existence of some leases is uncertain or unknown and owners might be dead. We have to deal with much bigger issues in Scotland’s land tenure system.
We heard further comments about Blairgowrie leases as we went through the debate. They are essentially 99-year leases that can be perpetually renewed, but they are not necessarily written down—that is where much of the mischief has come from.
Marco Biagi made a reasonable point about the context in which the Waverley market lease was written—it was almost a gun-to-the-head job on the part of Edinburgh. On that basis, it differs from the overwhelming majority of leases that the bill will affect. I will certainly take forward with officials the complex legal issues that the existing legislation raises. I am certainly motivated to deliver the kind of outcome on which views are broadly shared across the Parliament.
Nigel Don raised the issue of ECHR. I assure him that we have looked at the issue very carefully.
I repeat that we will not take a view on whether or not Waverley market is common good. The lease was entered into in 1992. It was originally for 125 years. Through a complex process of sub-leasing and transfers of interest, the money associated with the asset that went to the City of Edinburgh Council was £6.25 million and other people received £23 million. The lease is a peppercorn rent. I do not believe that the penny is collected, for obvious reasons, as it would be rather difficult to justify the economics of doing so.
As members have said, sections 50 to 55 of the bill provide for reversionary payments. Ultimately, that can be a matter of agreement between the tenant and the landlord or it can be determined by a tribunal. In the case of Waverley market, the lease expires in 2188. On that basis, it would be open to the council to consider claiming an additional payment.
It is certainly likely that any assessment by a tribunal of the residual value that might be due on the return of the asset to the council in 2188 would take account of the grassum that was paid. My own back-of-an-envelope calculations suggest that a 7.5 per cent discount rate on £6.25 million takes us to £25 million today, which is probably there or thereabouts. It may well be that there is not much residual value.
I acknowledge the points made by the City of Edinburgh Council, Andy Wightman and Margo Biagi about Waverley market. The council briefly mentioned the City of Edinburgh District Council Order Confirmation Act 1991 when it gave evidence to the committee, but that act focuses on issues such as the height of Waverley market, which can be controlled by the planning system. We must look at the interaction between the bill that is before us, which I hope will become an act, and other acts. We will take that extremely seriously.
The whole debate around common good is one that is worthy of revisiting in another context at another time. We cannot legislate away some of the practical problems that may exist, but the debate has certainly thrown some of the issues into public view.
I have been grateful for the help that we have had from local authorities in providing information on common good land that might be affected by changes to ultra-long leases. That has been very helpful. We expected the number of such leases to be low, and it is, as we believe that the figure is nine.
When the Justice Committee considered the previous bill, James Kelly asked Andy Wightman,
“Do you therefore accept the view that the number of ultra-long leases of common good property is limited?”—[Official Report, Justice Committee, 18 January 2011; c 4036.]
He responded, “Yes.” There is a shared recognition that we expected the figure to be low and it is.
To date, we have not received from the City of Edinburgh Council a terribly convincing argument that helps us to see how we can deal with Waverley market differently. However, the work that we are now doing picks up some important issues.
Paragraph 135 of the committee’s report
“welcomes the Scottish Government’s intention to write to local authorities recommending that the proceeds of any compensation should be directed to its common good fund.”
Albeit that it will not be very much money, I will write to the authorities again if Parliament passes the bill.
On the land register, we will certainly see how best to achieve what needs to be done. We believe the current proposals to be proportionate and we will work with the Registers of Scotland. Ultra-long leases are concentrated in particular areas of the country, so we will target those areas.
I am delighted to have the privilege of bringing forward this law reform measure. The principles of the bill have been widely accepted and I urge members to agree to the motion at decision time.