Guidance on the operation of Local Authority Housing Revenue Accounts (HRAs) in Scotland

SECTION 9: CHARGING NON-COUNCIL TENANTS FOR THE PROVISION OF SHARED SERVICES AND THE REPAIR AND MAINTENANCE OF COMMON AREAS

Key principle 5

To ensure that, where legally entitled, and subject to a robust proportionality test, non-council tenants living in mixed tenure areas and benefiting from HRA-provided services are charged for goods and services.

119. There are clear situations where the HRA should seek to charge for services provided to non-council tenants who live in flatted blocks containing a mix of council tenants and non-council tenants ( e.g. other social rented sector tenants, private rented sector tenants or owner occupiers). Examples include a number of shared services such as the maintenance of internal common areas, lift maintenance, grass-cutting of common external areas, maintenance of paths around flatted properties, and maintenance of drying areas.

120. The title deeds of individual non-council tenanted properties set out the rights and responsibilities ("burdens") of property owners in relation to the maintenance, repair and management of common areas. However, wide variation is found between the burdens imposed by title deeds across Scotland. Where title deeds include provisions about the maintenance of common property, these should be enforced by councils and observed by property owners. Title deeds are ultimately enforceable in the courts.

121. In some cases, title deeds may be silent or unworkable in relation to common repairs. If this is the case, the provisions of the Tenement (Scotland) Act 2004 ("the 2004 Act") will apply. This Act does not replace the title deeds for properties but is intended to fill any gaps by means of a Tenement Management Scheme. This is a 'default' scheme which ensures that every communally owned property in Scotland has proper rules for management and maintenance.

122. The 2004 Act is intended to make it easier for owners to reach decisions and, ultimately, reduce the number of disputes over the management and maintenance of common property. If the title deeds are silent, are defective or have gaps with regard to the management and maintenance of common property, the Tenement Management Scheme (introduced by the 2004 Act) can be used by local authority landlords to instigate action including obtaining contributions from owner-occupiers.

123. Local authorities are within their legal rights to charge owners for their share of the maintenance of common parts, and, in terms of fairness to tenants and the proper operation of the HRA, they should be doing so. HRA service charges should be implemented to ensure that all residents pay for the services they receive. In doing this, each local authority should be aware of the rights of the homeowners, and not assume a blanket right to levy charges regardless of proper consultation, title deeds, voting majorities, the Tenement Management Scheme and the requirements of the Property Factor Code of Conduct.

Property factoring

124. The Property Factors (Scotland) Act 2011 regulates property factors and provide a more transparent relationship between them and homeowners. It aims to protect homeowners by providing minimum standards for property factors. It applies to all residential property and land managers whether they are private sector businesses, housing associations or local authorities so the Act is fully relevant to the operation of the HRA.

125. Currently, a number of councils appear to undertake factoring work on behalf of tenants of other social landlords or owner-occupied properties. At the time of writing, some 19 out of the 32 local authorities have applied and have been entered on the Property Factor Register and therefore consider themselves to be factors within the definition of the Property Factors (Scotland) Act 2011.

126. Councils operating as a property factor often provide this service to properties that have been sold under the Right-to-Buy. In some circumstances councils will own or share ownership of common parts of a building and they have a duty to protect the condition of their housing stock where there are still council tenants in a block.

127. Councils should charge private owners their share of any works carried out. For repairs, this will meet the criteria stated in the title deeds or the cost agreed in accordance with the Tenements (Scotland) Act 2004. Where owners would experience financial hardship if the full cost has to be paid immediately, the council should discuss and agree a reasonable and affordable repayment period with the owner.

128. As well as ongoing maintenance, some SHQS (Scottish Housing Quality Standard) capital works which would invariably be paid for from HRA funds, will require work to common parts (for example, repairs to building fabric or cavity wall insulation of flatted dwellings). This will require councils to seek to charge owner occupiers in mixed blocks for their share of the cost. If social landlords cannot get owners to contribute to the cost of SHQS capital work, they may be able to justify an exemption from some elements of SHQS. Guidance on this is available in the SHQS Guidance notes (Annex I) from 2011

129. Councils have powers under the Housing (Scotland) Act 2006 to issue works notices to owners to ensure properties are kept in a reasonable state of repair. If the owner fails to do the work the council can enforce the notice. Councils also have a power, under the Act, to issue maintenance orders where the council considers that the house has not been, or is unlikely to be, maintained in a reasonable standard. This requires that the owner of the house prepares a maintenance plan detailing what work will be carried out over a period of not more than 5 years. The 2006 Act also provides broad discretionary powers to provide assistance to owners who have difficulties in carrying out work. Assistance can include financial assistance, such as grants or loans, practical help, and advice and guidance.

130. Councils also have powers to require owners to carry out work to address statutory nuisances, including any premises in such a state as to be prejudicial to health, under the Environmental Protection Act 1990 and to require owners to paint common stairs and passages under the Civic Government (Scotland) Act 1982. These powers contain provisions for recovery of costs from owner-occupiers that could be credited to the HRA.

131. As identified in section 3 there is a greater concentration of income poverty in the council house sector. Seeking to charge non-council tenants for their share of expenditure to maintain and repair the property is both desirable and reasonable to reduce the financial burden on the HRA and council tenants. Councils should fully explore their legal capabilities to charge non-council tenants for both shared service and repairs to ensure council tenants are not burdened with these costs. Being clear on what can legally be charged is an important consideration when planning for the provision of services and maintenance.

132. Councils must scope out the potential costs and benefits of charging non-council tenants and not assume the costs of collection are disproportionate to the revenues. Councils should make this analysis available to tenants/ RTOs should they require it.