Tenement dwellings - provision of Building Reserve Funds: report

4. Background

Definitions

Tenements are legally defined as buildings ‘comprising two or more related flats that are divided from one another horizontally’. These make a large proportion of Scotland’s total housing stock. Recent research estimates 40% of housing stock comes within the definition of tenements.^[2] The Scottish House Condition sample survey 2019 found 24% of occupied dwellings are tenements and 13% are ‘other flats’ which consist of houses converted into flats and ‘4-in-a-block’ flats.^[3]

The topic of the condition of overall housing stock in Scotland, including tenements has been of concern to Scottish Government for some years. According to data published by the Scottish House Condition Survey, half of all housing is in ‘critical disrepair’ and almost half demands ‘urgent attention’.^[4] Research by Douglas Robertson revealed a failure of property maintenance for properties of all construction periods. This is attributed to ‘deep-seated socio-cultural and legal failings, in relation to how our current model of property ownership is structured’.^[5]

Maintenance is legally defined within the Tenements Act 2014 as: ‘repairs and replacement; cleaning; painting and other routine works; gardening; the day-to-day running of the tenement; the reinstatement of part (but not most) of the tenement building.’^[6]

Policy Context

The Scottish Parliamentary Working Group has been meeting since March 2018 with the purpose of establishing solutions to aid, assist and compel owners of tenement properties to maintain their buildings.^[7] The Working Group comprised sector experts and MSPs from all parliamentary parties. In January 2019, the group published its interim recommendations report and then formally discussed stakeholder and public responses to the report, which were received via consultation.^[8] In May 2019 the group produced recommendations for mandatory Owners Associations, Building Reserve Funds and Building Surveys.^[9] Scottish Parliament acknowledged the work of the Working Group.^[10] Scottish Government responded and made a commitment to implement their recommendations.^[11] Included in these recommendations was the introduction of mandatory Building Reserve Funds (sometimes referred to as Sinking Funds) for tenements:

“Statutory guidelines should set out the minimum payment each building needs put into a BRF every year. The guidelines should be based on the assessed repair risk for that type of building and extent of common responsibility. There should be a transparent points system.”

It has not been established in which cases owners are legally required to provide/ pay into a BRF. Title deeds are the only sources of specific obligations applying to a property someone owns. In addition to the legal position of owners, Scottish Government is interested in the legal position of tenants in relation to BRF. These details will be examined in detail through collaboration between Scottish Government and the Law Commission of Scotland as indicated in the Tenement Condition Workplan for 2021.^[12]

To note, for this research commission there are a raft of existing legislation relevant for tenement maintenance and repair. Examples include:

• Tenements (Scotland) Act 2004.^[13] Created a default scheme for tenement maintenance and management known as the Tenement Management Scheme (TMS). This is a common scheme of management for tenement properties and includes the following:
  • The identification of certain parts of the tenement as 'scheme property' for the purposes of maintenance, repair and replacement. Specific examples of scheme property are the roof, foundations, external walls and solum (i.e. the ground upon which the tenement is built) but also includes any tenement part which is the common property of two or more owners.
  • Procedures for making scheme decisions. For example, how proprietors' meetings are called and conducted; voting requirements for making binding decisions; and providing appropriate notification of decisions.
  • Matters on which decisions may be made. For example, appointing a manager; arranging for an inspection of scheme property; carrying out scheme maintenance; and arranging for a common policy of insurance for the tenement.
  • A mechanism for having emergency work carried out.^[14]

For tenements not factored or regulated by a Deed of Conditions) recourse should be made to the 2004 Act regulating the rights and responsibilities of tenement property owners in the absence of title provision.

• Housing (Scotland) Act 2006^[15], Housing (Scotland) Act 2010^[16] and Housing (Scotland) Act 2014.^[17] Local authorities have powers to enforce improvements and repairs on privately owned property. There are different legal procedures that a local authority can use, depending on the nature of the repair required. Local authorities can issue work notices, defective building notices, dangerous building notices and abatement notices. In addition, local by-laws can be utilised to serve notices for dangerous buildings and essential repairs.
  • Local Authorities can issue works notices to private owners to carry out work for a property to meet the Tolerable Standard.^[18] This is a "condemnatory" standard which means that it is not reasonable to expect people to continue to live in a house that falls below it. Local Authorities are required to provide information, advice or practical help for works notices.
  • There is no statutory entitlement to financial help for any of these notices.
  • Local by-laws can include setting out the responsibilities of occupiers to keep common areas clean, enforce painting or cleaning of common stairways and passageways in tenements.
  • Owners may apply for help under the individual Local Authority’s Scheme of Assistance for House Repairs and Adaptations.
  • Local Authorities have the power to pay a missing share when the majority of owners in a tenement block have agreed to carry out work to repair or maintain their property, and one or more of the owners has not paid their share of the cost of the work (where the owner is unable or unwilling to do so, or where the owners cannot be identified or found).
  • Local Authorities can also designate Housing Renewal Areas where it considers ‘that a significant number of the houses in the locality are sub-standard,’ or ‘that the appearance or state of repair of any houses in the locality is adversely affecting the amenity of that locality.’
  The Planning (Listed Buildings and Conservation Areas) (Scotland) Act 1997^[19] Local Planning Authorities can undertake urgent works necessary for the preservation of an unoccupied listed building (or unused parts of an occupied listed building), provided that the owner is given notice of the intention. The cost of these urgent works can be reclaimed from the owner.

Stakeholders fed back on recent developments:

‘as things have evolved with all the legislation that Scottish Government has brought in over the years, trying to strengthen tenant’s rights and have a firmer control on property condition… it’s a growing sector and there’s even more changes coming’ (Property Factor)’

‘there are a range of enforcement powers in the legislation, but in reality local government can’t step in, unless something is dangerous we don’t have the resources to do anything about it… a compulsory purchase is very rare and the council would never get that money back’ (Local Authority staff member)’

Tenements in Scotland

In addition to the legal definition of tenement, we suggest some main categories of tenements as segmented within National Statistics and wider literature (see table 4.1).

Table 4.1: Tenement Typologies

Owner

• Individual
• Business
• Registered Social Landlord (RSL)- private
• Registered Social Landlord (RSL)-Housing Association
• Mixed within tenement block

Use

• Residential only
• Mixed use for example retail units

Tenure

• Owned
• Mortgaged
• Privately Rented
• Social Rented

Resident

• Owner occupier
• Tenant

Factoring

• Professional factor appointed
• Self-factored
• Not in place

Communal arrangements

• Owners Association
• Development management scheme
• Neither in place

Age

• Pre-1919 (classified as ‘old’ within SHCS)
• 1919-1982
• Post-1982

History

• Custom built as tenement
• Later subdivided

Repair status

• Critical elements
• Non-critical elements
• Not established

Repair severity

• Urgent disrepair
• Extensive disrepair
• Basic
• Not Applicable

At the time of this review, the most recent published figures from the Scottish House Condition Survey were from 2019. We include figures for aspects of tenements including age of building (figure 4.1), type of tenure (figure 4.2) and location (figure 4.3).

Source: Scottish house condition survey: 2019 key findings, Table 2, p16 (www.gov.scot)

Source: Scottish house condition survey: 2019 key findings, Figure 7, p26 (www.gov.scot)

Source: Scottish house condition survey: 2019 key findings, Figure 3, p19 (www.gov.scot)

According to the Scottish Household Survey:

• About a third of occupied tenements were built prior to 1919, a third between 1919-1982, and the remaining third built after 1982.
• 19% of owned properties are flats and 25% of mortgaged properties are flats.
• Of private rentals in Scotland, two thirds are flats (67%).
• Privately rented flats are most likely to be built before 1919.
• The majority of Local Authority flats were built between 1919-1982.
• Housing Associations have higher proportions of flats post 1982 than other tenure types.
• The vast majority of tenement households are located in urban areas.

Maintenance and Repair

All stakeholders included in our secondary and primary research saw disrepair as an issue for buildings in Scotland, including tenements. Different Local Authorities have different configurations of staff teams, but the remit and statutory function for addressing ‘below tolerable standards’^[25] in private accommodation is usually included within environmental health teams. Not only do local authorities see the worst cases, but they receive many enquiries from members of the public unsure about how to address disrepair.

In the past, our stakeholders highlighted that more grants were available, say through Local Authorities to cover repairs. Although one local authority stakeholder did share:

‘it was good on one hand to have those grants available. But then I understand that the people applying for the grants weren’t always the ones that needed it. The grants weren’t necessarily reaching the people with most need and least money to pay for repairs.’

Stakeholders consulted confirmed disrepair can affect:^[26]

• Public safety from falling material.
• Resilience to climate change (increased rainfall and severe weather events).
• Energy efficiency which is reduced if the external building fabric is not in good repair.
• Fuel poverty which is directly related to reduced energy efficiency.
• Wellbeing of building occupants (in damp, cold buildings).
• Our traditional built environment, physically, socially and economically less attractive.

Discussing repair with tenement owners and tenants they raised the last two of these affects in particular- wellbeing of occupants and the appearance of the surrounding built environment.

All participants expressed that as time passes properties deteriorate, albeit at different rates. One key stakeholder discussion group member summed this up: ‘you can’t just let it sit, it’s just going to get worse’.

Consequently, our stakeholder participants raised three related areas to consider:

1. Addressing Current Repair Needs

• Condition of building stock could be improved.
• Common for buildings to have elements in need of repair, 88% of traditional building inspected in Stirling had repairs requiring work within 12 months.^[27]
• Outstanding repairs not being organised.
• disrepair is not solely the result of natural deterioration of the original building fabric, or a lack of timely repair and maintenance. It also found significant levels of accelerated and hidden disrepair from poor quality or inappropriate interventions.^[28]
• Local Authorities stepping in when cases extreme.
• Grant initiatives over the years to encourage repairs of historic buildings, for example through Conservation Area Regeneration Schemes (CARS),^[29] and Heritage Trusts.^[30]

2. Planning for Future Repair Needs

• Newer properties, to high build standard may not currently need any repairs,
• Costs can be significant for repairs such as roof repairs.
• Surveyors best place to predict future repair needs but can never be completely accurate.

3. Enabling Ongoing maintenance

• Ongoing maintenance seen as the best tactic to mitigate repairs.
• Maintenance should, but does not often focus on less visible aspects such as cleaning gutters.
• Improvements such as painting the close could be regarded outwith maintenance, but are acknowledged as beneficial for aesthetic reasons and to create a feeling of safety in common areas.
• Small regular maintenance costs should be preferable to larger, irregular repair costs for owners.
• Calls for proactive maintenance schemes are widespread.

All research participants, including tenement owners and occupiers, touched upon the need for maintenance to prevent bigger, more costly repairs.

One Local Authority stakeholder explained: ‘maintenance is about prevention, and you need to spend regular, small amounts on maintenance to prevent repairs.’

One owner occupier commented:

‘If you have a rule that you check something once a year, and that it will likely save you money in the long run, you can get people used to that. It's better to do regular maintenance than wait until you need a repair.’

A factoring representative explained:

‘The more sensible first step is solving the problem of maintenance of buildings. The working group was not about reserve funds it was about how to ensure tenements are maintained and brought up to a standard. Talking about building reserve funds seems very premature.’

Within the next sections we detail research findings in relation to the original research questions. These sections are grouped into- findings to understand better the context of common repair and maintenance; experiences of existing arrangements; and findings relating to how a BRF could be applied in Scotland.