The land of Scotland and the common good: report

Section 22 - Existing Housing

1 As has been referred to above, the housing challenge facing Scotland is both complex and multi-dimensional. Our ability to effectively address issues such as homelessness, access to the housing market (particularly for young people and working people on low incomes), dampness and disrepair, housing investment and finance, negative equity for owners and house price to earnings ratios will have a profound impact on the sustainability of communities, economic development and social stability. Clearly, a fairer and more stable housing market is at the heart of a successful Scotland. It is beyond the scope of this report to comprehensively address all these issues in depth, but in addition to the issue of housing supply, land reform can provide some useful insights, and possibly offer some potential remedies, to other aspects of housing in Scotland.

22.1 Common Property

2 Land reform is not just about vast tracts of rural land. Around 37% of households in Scotland live in flats, and therefore share with other households common elements such as entrances, stairwells, structural walls, roof and communal gardens. Flats are physically and financially inter-dependent. As a consequence, the actions, or inaction, of one or more owners can impinge directly on the safety and security of a neighbour's property. To ensure the proper functioning of this type of housing, there is the need to have a robust legal framework in place.

3 Tenure arrangements (rights, obligations and responsibilities) of flat ownership are markedly different from those associated with house ownership, and in the interests of all flat owners, there is a need to have a system of rights and responsibilities which covers both the individual ownership and collective governance of such property.

4 In legislative terms, the Abolition of Feudal Tenure (Scotland) Act 2000 was the core element of a three part reform of Scotland's property laws. Abolishing feudal title demanded reform of title conditions, or 'real burdens'. This was addressed in the Title Conditions (Scotland) Act 2003, following which common law was then reformed under the Tenement (Scotland) Act 2004. With these 3 Acts in place, feudal tenure was finally abolished on the 28 November 2004.

5 While these reforms have gone some way to improving the ability of flat owners to better control governance matters within the common elements of the building, the main change has been that they now allow for more appropriate title revisions to be made. However, these reforms did not seek to challenge the fact that an infinite variety of title deed provisions would continue. While the basic provisions in the Tenement Act could be incorporated into title deed provisions, this seldom happens in practice, with solicitors continuing to draft title deeds which are specific to a development, often on the instructions of the developer.

6 In comparative terms, the current arrangements in Scotland for managing, maintaining and improving common property are relatively weak in relation to other European countries. Bailey and Robertson point out that the approach taken in Scotland to accommodating individual ownership and collective governance is in stark contrast to that adopted by other countries. ^[1] Rather than persist with pre-existing property ownership arrangements, other countries have set down new legal arrangements that acknowledge both the individual and collective aspects of ownership within flats, and other types of multi-owned housing. Under such arrangements, individual ownership of a flat carries with it an obligation to be a member of an owners' association which either owns, or has the responsibility for, the governance of the building's common elements. Legal statutes and associated regulations set down the associated rights and responsibilities of the owners, and provide for a standardised organisational structure.

7 There appears to be a generally held view in Scotland that the 3 Acts have effectively addressed many of the anomalies for flat owners. However the fact that the Scottish Parliament has seen fit to introduce further provisions in the Housing (Scotland) Act 2006 and in the current Housing (Scotland) Bill suggests that we do not, as yet, have a sufficiently comprehensive and robust legal framework in place. While all the additional measures are welcome, they are by nature incremental and piecemeal, and common property owners now require this process to be completed.

8 The Review Group recognises that it is now 10 years since the Abolition of Feudal Tenure etc (Scotland) Act, 2000, the Title Conditions (Scotland) Act 2003 and the Tenements (Scotland) Act 2004 were introduced. The Group recommends that the Scottish Government introduces a more comprehensive legal framework for common property, which clarifies and modernises the rights and responsibilities of both the individual ownership and the collective governance of such property.

22.2 Empty Homes

9 It is estimated that there are around 23,000 long-term empty private homes in Scotland. ^[2] This represents a considerable potential source of 'new' housing, along with the prospect of increased council tax revenue for local authorities. In response to this situation, the Scottish Government-funded Scottish Empty Homes Partnership, co-ordinated by Shelter Scotland, help local authorities work with empty home owners to bring their properties back into use. To date this has mainly involved the use of persuasion, providing information and signposting, practical help with refurbishment and renovation, and the use of various incentives.

10 Whilst at a relatively early stage in its development, the Scottish Empty Homes Partnership has brought around 200 properties back into the housing market. Shelter expect that the number of empty house being returned to the market will begin to accelerate as various projects increase and mature, and as further local authorities come on board. It is however recognised that there are limits to what can be achieved through voluntary engagement alone, and this has led Shelter to propose a new 'Housing Re-Use Power' ( HRP).

11 The HRP draws on experience from England which demonstrates that providing information, advice and incentives works best when accompanied by a backstop power. The HRP is, however, a measure which has been specifically tailored to the Scottish context. The process would involve a number of stages. If attempts to engage with the owner fail, the local authority could declare the property 'long term empty' and apply for an order to secure the property for re-use (for either rent or sale). At this point a final notice would be sent to the owner. The local authority would then bring the property up to specified standards, and use the subsequent sale price or rent to recover the costs of this work. The owner would be entitled to any financial balance. The process would include an opportunity for the owner to appeal.

12 It is important to recognise that the introduction of this kind of statutory power would not, directly, deliver a huge number of empty homes back into the market - its main strength is that it would encourage many more owners to engage with the Scottish Empty Homes Partnership on a voluntary basis, and give some much needed 'teeth' to the subsequent negotiations. Having said this, the potential usefulness of having a specific mechanism which would enable local authorities to bring particular and problematic long term empty homes back into use, should not be under-estimated.

13 Given the identified need for new housing the Review Group believe that there is significant merit in giving local authorities a HRP, and that in defined circumstances for particular properties, to address local blight and / or to meet specific local housing need - there is also a case to be made for local communities, or appropriate community body, having a right to trigger the HRP.

22.3 Private Rented Sector

14 The private rented sector ( PRS) is a housing tenure with properties owned and let by private landlords on the open market. There were an estimated 267,000 households in the PRS in Scotland in 2011, accounting for 11% of households. ^[3] Despite being numerically less significant, the highest percentages of PRS are to be found in rural Scotland, which is one of a number of fairly distinct market segments within the PRS. These also include executive housing, student accommodation, social / quasi-social housing and urban market rent. In commenting on the private rented sector, some consideration needs to be given to specific and local market conditions.

15 The current tenancy regime in Scotland originates from the Housing (Scotland) Act 1988. Most tenancies in the PRS are 'assured' tenancies with the vast majority of lets being 'short assured' tenancies (tenancies which run for a minimum of 6 months).

16 Until recently, the PRS in urban Scotland was in general viewed as a tenure most suitable for those seeking flexibility in their living arrangements. In this sense, it was regarded as a 'transitional' housing option - on the way to owner occupation or social housing. However, a major consequence of the credit crunch is that the PRS is increasingly being considered as a longer-term housing option. Younger people in particular are finding it increasingly difficult to enter the housing market and research by the Joseph Rowntree Foundation predicts that by 2020, the private rented sector will house 37% of all young people in the UK. ^[4]

17 In 2013, the Scottish Government embarked on the development of a new strategy for the PRS, which constitutes the first review of the PRS tenancy regime since devolution. ^[5] The document recognises that the tenancy regime is central to the efficient functioning of the sector, and states that " a key component of a quality private rented sector is a tenancy regime that is fit for purpose". The Scottish Government's PRS Strategy Group identified two key issues: security of tenure (a tenant's right to remain in a property and the circumstances in which the landlord may seek to regain possession of their property), and length of tenancy. The Strategy Group recognise that a balance will have to be struck between those people who will continue to look for flexibility from the PRS and the increasing number of people who are now looking to settle in the sector for the medium or longer term.

18 No consensus was reached on these crucial issues within the PRS Strategy Group, nor within the consultation responses received. The Scottish Government subsequently established a stakeholder-led PRS Tenancy Review Group to examine the suitability and effectiveness of the current tenancy regime and make recommendations to Scottish Government Ministers.

19 Sprigings points out there are significant changes taking place within the housing market, and observes that as long as policy makers and politicians fail to recognise the long-term expansion and changing nature of the PRS, the less discussion we will have as a society about the kind of PRS we want and need. ^[6] Prior to the economic crisis in 2008, the PRS experienced steady growth across the UK - from 9.7% of private housing stock in 2001 to 14.7% in 2008. ^[7] However since the onset of the crisis, the growth of the PRS has increased sharply, with recent research showing a 98% increase in the number of households renting privately over the last 5 years. ^[8]

20 As with the rest of the UK, Scotland is currently experiencing a significant change in the demand side of the PRS market. For many people looking to access housing, the shortage of houses and the unavailability of suitable mortgages mean that the PRS is increasingly their only realistic option. A large proportion of them are young couples, looking to set up home for the first time. They require long term housing security in an effort to integrate employment, transport, childcare and schooling arrangements. A number of years ago the vast majority of this cohort would most likely have become new home owners. The character of this new demand contrasts sharply with the minority of problematic tenants who get into rent arrears, damage properties and give rise to the nervousness which PRS landlords display when discussing tenure change.

21 These trends would suggest that we are at a critical juncture in the development of the PRS in Scotland, which has the potential to play a far greater role in meeting housing need. Shelter point out that currently 272,653 Scottish households live in the PRS - but by 2020, one in five UK households is expected to rent privately. ^[9]

22 We are witnessing a significant and growing number of people seeking a longer term housing option within a market previously characterised by transition. This demands that we create a private rented sector equipped to address current and future housing need. As Shelter point out "we want to see a form of private renting that can offer a home, with all that implies - dignity, security and stability."

23 The Director of Shelter Scotland believes we can learn from the German housing model. " In Germany", he points out, " more people rent than own their own homes. Renting is seen as a normal and long term choice, with landlords equally seeing investment in rented property as a long term investment. Tenancies are usually for unlimited periods of time". The Joseph Rowntree Foundation ( JRF) recently proposed a Four Point Housing Plan which included a demand to create a better alternative to home ownership. ^[10] The JRF acknowledges that there is no one answer to this challenge, but claims that " a rental sector with sensible rents and decent-length tenancies is a good start".

24 The Review Group considers that, to address housing need and the changing nature of the private rented sector, a change is required in the nature of tenancy arrangements within the sector. The Group recommends that the Scottish Government introduces longer and more secure tenancies in the private rented sector.

22.4 Social Housing Tenants Right to Buy

25 Following a statutory consultation, the Scottish Government introduced the Housing (Scotland) Bill to the Scottish Parliament in November, 2013. Within the Bill, the Scottish Government is intending to end the Right to Buy ( RTB) entitlement which exists for social housing tenants. If passed, the RTB will end 3 years from the date on which the Bill becomes law.

26 During the last 40 years, Britain has witnessed a dramatic change in the nature of property ownership, and this has been mirrored, to a large extent, in Scotland. In particular, the significant shift from council renting to owner occupation is perhaps the most fundamental and best known change. The 1979 Conservative Government's flagship RTB policy has transformed housing tenure throughout the UK and significantly influenced public attitudes towards home ownership.

27 The legislative basis for the RTB is the Housing (Scotland) Act 1987, with subsequent reforms introduced in the Housing (Scotland) Act 2001 and Housing (Scotland) Act 2010. These reforms covered discounts, qualifying periods and exemptions, and in general, introduced a range of measures which, in direct response to pressure on both the social housing stock and budgets, limited the scope and operation of RTB.

28 Despite these restrictions to RTB policy in recent years, and whilst sales have fallen to historically low levels, the Scottish Government point out that since its introduction, over 450,000 houses have been sold through the scheme. This represents a huge loss of capacity in the social housing stock in Scotland, and has placed increasing pressures on housing providers. RTB has also had a profound and detrimental effect on many communities, with the policy contributing to the even greater degree of marginalisation which many of our disadvantaged areas are now experiencing.

29 It has pointed out while all these public sector homes have been sold off through RTB, around 157,000 individuals and families are on council lists, waiting for a home to call their own. Scottish Government figures show that between April and June 2012 alone there were almost 11,000 applications for homelessness assistance, often from some of the most vulnerable people in society. Whilst current RTB sales are at a relatively low level, the longer term impact of abolition on supply nationally is still significant. The Scottish Government estimate that over the next decade up to 15,500 social houses will be protected from sale with the phasing out of RTB.

30 The Review Group considers RTB to be an obstacle to developing a coherent housing policy in Scotland, and a mechanism which acts as a barrier to providing sufficient social housing to meet the housing needs of some of the most disadvantaged people in society. At the start of this part of the report, attention was drawn to international human rights legislation which obliges all governments to " take steps to ensure and sustain the progressive realisation of the right to adequate housing, making use of the maximum of its available resources" ^[11] The continued funding of RTB would clearly be an inefficient use of public resources and there seems little doubt that RTB discounts benefit individual households at the expense of the wider public interest.

31 The Review Group supports the proposal within the Housing (Scotland) Bill to abolish the RTB.

22.5 Mobile Homes

32 Mobile homes, often known as 'park homes', are used by their owners all year round as their permanent home, and are situated on a residential 'park'. For various reasons, not least the lack of a clear definition, it is difficult to be precise about how many households in Scotland live in mobile homes. A 2007 Scottish Government report conducted a local authority survey which identified 4,121 residential mobile homes. ^[12] A more recent investigation by Consumer Focus Scotland identified 92 park home sites in Scotland, housing an estimated 3,314 mobile homes. ^[13] While there are no figures available with which to accurately project the trend in mobile home ownership, it is generally thought that the underlying trend is upwards.

33 The rights and protections of mobile home owners are covered by specific legislation for mobile homes; residents are not covered by general housing law. This is because mobile home residents own their home, while a site operator owns the land it stands upon, and residents pays ground rent or a 'pitch fee' to the operator. This tenure arrangement means that mobile home residents, while owner-occupiers, are generally dependent on their site operator for their electricity, gas and water supplies and all park maintenance and improvements.

34 Scotland has a separate legal framework governing mobile homes to that of the rest of the UK. In response to a perceived lack of security of tenure for mobile home owners, the Scottish Government established a Residential Mobile Homes Stakeholder Working Group, and in September 2013, introduced a revised Scottish Statutory Instrument ( SSI). ^[14] This gave mobile home owners who live permanently in their homes a number of new rights and responsibilities, including security of tenure (reflecting the site owner's own tenure position) and the right to sell without approval of the site agent. The SSI also gives mobile home owners the right to pass on their home to a member of their family without paying commission to the site owner.

22.6 Hutting

35 A hut in a Scottish context can be defined as a small and simple building providing informal accommodation in a rural location. Its function is to enable individuals, families and groups to relax and enjoy the countryside away from the stresses of modern living and work. In a general sense, hutting involves a mode of living which, by contrast to conventional urban living, is simpler, closer to nature, smaller in scale and which utilises less energy, space and materials.

36 The largely working class tradition of hutting developed in a fairly organic and fragmented way in the early 20th century when small holiday huts began to be built on land close to the main industrial cities. Hutting sites evolved in different ways, in different parts of the country, influenced in part by the motivation and attitudes of the landowners who provided land for hutting sites. As far as can be determined, no new sites were developed after the 1930's, possibly reflecting the increasing planning control of land use.

37 In the late 1990's, a well-publicised conflict between the owner and occupiers on the hutting site at Carbeth brought the issue of hutting to the attention of Government and the Scottish Executive commissioned a study of hutting in Scotland. ^[15] This identified 37 hutting sites, containing around 630 huts. These sites were located largely in a band from the Angus coast to the Clyde coast, with extensions into East Lothian, the northern Borders and the Solway Coast. While there were 3 large sites which contained upwards of 50 huts, the overwhelming majority of the sites identified (74% of the total) contained less than 20 huts, and in many cases less than 9 huts. The study also found that huts were rented on 27 of the 37 sites identified, and owned on the remaining 10 sites.

38 More recently there has been a renewed interest in hutting, influenced in part by the perceived benefits of similar traditions in Norway, Germany, Sweden and Finland for example. ^[16] Scottish Government Ministers have recently commented positively on hutting in the media, and a couple of motions in support of hutting have also been passed within the Scottish Parliament. ^{[17] [18]}

39 In response to increasing demand for new hutting sites, the Scottish Government recently initiated a pilot project on a Forestry Commission site, and, if successful, this could potentially open the door for other hutting sites to be made available on suitable public sector land. If the hutting movement is to gain any kind of significant momentum however, there is a need for sites to be made available by private, as well as public, landlords. As farmers and rural land owners continue to diversify their businesses, the prospect of a rental income, for corners of land that in many cases will be largely unproductive, could well prove to be attractive. It is not therefore inconceivable that within the right kind of enabling framework, privately owned land for hutting sites could be made available.

40 Such an enabling framework requires the support of planning policy at both a local and national level, and this was recently picked up within the Scottish Planning Policy ( SPP) consultation. Paragraph 69 of the SPP consultation document states that Development Plans should set out a special strategy which " makes provision for housing and other residential accommodation in the countryside, taking account of the development needs of communities and the demand for leisure accommodation, including huts for temporary recreational occupation". The Review Group supports the retention of this statement in the final policy document.

41 Consideration also needs to be given to the impact of building regulations and building standards on the construction of huts. Current building standards are uniform, and because huts have sleeping accommodation, etc, they fall within the category of 'a dwelling'. As such, huts have to conform to all building regulations and standards which apply to new houses and other residential forms of development. While appreciating the need for building regulations and standards to be maintained, there is clearly a need to recognise the unique intention and recreational nature underpinning the form and construction of huts, and the Review Group would urge that this issue is also addressed.

42 The third issue is the nature of the tenure relationship between site owners and hutters. Legal opinion sought to date lays importance on the fact that huts are not occupied as principal homes, and rights of security of tenure within housing legislation are therefore inapplicable. This legal distinction needs to be recognised within the future development of hutting as a recreational activity. This will require a framework which, while better governing the relationship between the hutter and the site owner, does so in a way which does not discourage owners of rural property making new sites available. This could take the form of the kind of framework, defining rights and responsibilities, which has recently been developed by the Scottish Government for mobile home owners.

Final Remarks on Part 5

43 In this part of the report, the Group has sought to address a number of fundamental issues which lie at the heart of achieving a successful and prosperous Scotland. Our review of the evidence suggests a general, underlying lack of understanding among many policy makers and decision makers about how key markets work in practice, in particular the housing market, the land market and the construction market. It is important to stress that markets are socially constructed, and that the ability to restructure or reconstruct markets lies within the gift of Government.

44 The Scottish Government has a clear vision of what it wants to achieve within the spheres of urban renewal, housebuilding and placemaking. However, the evidence suggests that existing mechanisms will not sufficiently address the challenges, nor deliver the Scottish Government's vision and targets. Within this part of the report we have offered an analysis and framework for change. We propose market interventions and the introduction of new rights which will empower the public sector and communities, diversify the construction and development sector and in so doing contribute to a more economically successful and socially just Scotland.