Justice Committee calls for review on complex property factor legislation

05.06.2013

Complex legislation may be acting as a barrier for both homeowners and property professionals to switch property factors and enforce common repairs, according to a new report from the Justice Committee.

The Committee's report published today follows an inquiry into the effectiveness of the Title Conditions (Scotland) Act 2003.
 
While the Justice Committee accepts the need for protection to be in place to ensure maintenance of properties, the Committee believes the provisions are not working in practice and should be reviewed. It was particularly concerned by the provision in the 2003 Act on manager burdens which allows a single property factor to be appointed for a period of 30 years but does not always have sufficient recourse for home owners dissatisfied with the factoring services provided.

Justice Committee Convener Christine Grahame MSP said:

“Our Committee recognises the aims of the 2003 Act and the importance of an effective system to keep Scotland’s housing stock properly maintained. However, our inquiry has shown that both homeowners and property factors are experiencing practical difficulties, with often complex legislation. In particular, the relationship between homeowners and land-owning maintenance companies is not clear.

“We believe there is still room for significant improvement in terms of achieving a better deal for homeowners who are seeking to switch or challenge the costs of property factor services.  Equally, there is a lack of communal repair culture in Scotland that also needs to be addressed by all homeowners. People on the ground- floor need to realise they may be just as responsible for roof repairs as those on the top floor. Local authorities also have a role to play in over-seeing the long-term maintenance of green space around new developments. Homeowners should be aware when they purchase on a new development that they may also be liable for maintenance of green space, otherwise they might walk out their door and be knee-deep in overgrown grass.”

The Justice Committee’s report also raises the following issues:

  • The Scottish Government should raise awareness of homeowner responsibilities and encourage the establishment of residents’ associations to deal with common maintenance. Solicitors and developers should also highlight these responsibilities during the property purchasing process.
  • The Scottish Government should look at establishing a mediation service in relation to homeowners and disputed bills with property maintenance services.
  • The Scottish Government should consider the Committee concerns that the expenses liability (where the loser pays the expenses of their opponent) may deter individual homeowners from using the Lands Tribunal to pursue, for example, a test case on land maintenance burdens.
  • The legal basis on which the relationship between homeowners and land-owning maintenance companies is based can make it difficult for homeowners to deal with any problems arising from the maintenance services provided.

Background

The Title Conditions (Scotland) Act 2003 regulates the obligations (or “title conditions”) which may appear in the title deeds of a property.  The 2003 Act can affect how property factors are appointed and dismissed.  Competition and service quality may be inhibited because the provisions of the Title Conditions (Scotland) Act 2003 can limit homeowners’ ability to change property factors.  In addition, none of the Act’s provisions appear to deal effectively with the situation where homeowners are unhappy with the services provided by a land-owning maintenance company. 

The Property Factors (Scotland) Act 2011 came into force in October 2012.  It aims to improve standards within the property management sector.  The legislation introduced a compulsory registration for all property factors, introduction of a code of conduct and a dispute resolution route for homeowners.

Real Burdens
One of the matters dealt with in the Title Conditions (Scotland) Act 2003 is “real burdens”.  Real burdens can cover a number of situations, for example, preventing business use of a residential property, requiring all properties in a tenement to contribute to roof repairs or limiting the height of garden buildings and extensions.  They can also control how a property factor may be appointed. 

Manager Burdens
Under the 2003 Act, the developer of a new building or housing estate is able to appoint a factor for up to a period of up to five years (or up to three in the case of retirement accommodation). A registered social landlord dealing with an estate where properties can be purchased under “right to buy” legislation is able to appoint a property factor for 30 years, although affected homeowners can vote by a two-thirds majority to replace the factor during the 30-year period.

It is estimated that around 36% of the population in Scotland (780,000 households) live in a tenement flat, maisonette or apartment and around 50% of people living in privately owned flats and apartments have a property manager.  SOURCE: SPICE, http://www.scottish.parliament.uk/Research%20briefings%20and%20fact%20sheets/SB10-42.pdf

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