Title Conditions (Scotland) Act 2003 (Rural Housing Bodies) Amendment Order 2024: business and regulatory impact assessment

Final Business and Regulatory Impact Assessment

Title of Proposal: The Title Conditions (Scotland) Act 2003 (Rural Housing Bodies) Amendment Order 2024

Purpose and intended effect

Background

Section 43(5) of the Title Conditions (Scotland) Act 2003 ("the 2003 Act") makes provision for the Scottish Ministers to prescribe a body to become a Rural Housing Body (RHB) if it meets the criteria under section 43(6) of the Act.

Objective

To provide affordable housing for local residents. Section 43(1) of the 2003 Act permits the creation of rights of pre-emption in favour of prescribed RHBs. Such rights of pre-emption are known as "rural housing burdens." A rural housing burden gives the body in whose favour it has been created the first opportunity to buy the property back in the event of a sale. The objective is to maintain a stock of affordable homes.

Rationale for Government intervention

The applications by Shapinsay Development Trust and Tayvallich Initiative Ltd both identify the need to provide housing that is affordable for permanent residence, and to keep the housing in affordable tenure.

A body can only become an RHB if it is prescribed by SSI. Prescribing an RHB may help to achieve one of the Scottish Government's national outcomes which is that "we value and enjoy our built and natural environment and protect it and enhance it for future generations." It could also help to meet the national indicators to "improve access to suitable housing options for those in housing need" and "increase the number of new homes."

Shapinsay Development Trust

The proposal would support Shapinsay Development Trust who have identified, after extensive community engagement along with their most recent housing needs assessment, that all types and tenures of housing are required on the island to meet the very changing community needs. The plans are to offer for sale a small number of serviced plots for self-build which will have a rural housing burden applied to the title deeds in order to keep the properties within the community.

Tayvallich Initiative Ltd

The proposal would allow Tayvallich Initiative Ltd to secure a sustainable future for the community. Provision of housing is at the heart of their plans and they are scoping out how to build housing and provide plots for house building. Any plots for self-build or homes built by themselves when made available for sale will have a rural housing burden applied to the title deeds.

Consultation

Within Government

More Homes / Rural and Islands Housing Fund

We have considered the application with the More/Rural Islands Housing Fund Team. They were content for the applications by Shapinsay Development Trust and Tayvallich Initiative Ltd to proceed.

Public Consultation

We did not carry out a written public consultation across Scotland, given the limited

impact of the SSI to each specific area.

Business

Shapinsay Development Trust

We have interviewed two businesses in the area which have been willing to participate in the BRIA process. The local authority Orkney Council has also been interviewed.

Joiner

Small business

Interviews were held by telephone calls due to the location. The Council's interview was held by Teams video call.

Options

There are 2 options regarding Shapinsay Development Trust's ("the Trust") application to become designated as an RHB.

Option 1 is to do nothing.

Sectors and groups affected

There would be no initial direct impact on the local community and businesses on the Island if we decided not to approve the application for the Trust to be designated as an RHB. However, the Trust have assessed that all types of tenures of housing is required on the island to meet the very changing community needs which includes plots for self-build.

Benefits - Option 1

By doing nothing, no positive benefits would arise. Current issues would remain and could result in an impact on businesses.

Costs – Option 1

There would be no costs involved as no SSI would be required. Doing nothing may not initially have an impact on the local economy in the short term but may do so longer term.

Option 2 is to designate Shapinsay Development Trust as an RHB.

Sectors and groups affected

This proposed SSI would designate the Trust as an RHB. The related impact would, therefore, be felt on the Island. Businesses may benefit with more individuals making use of them. Construction businesses through to local trades people may be involved in the building of properties. In addition, any housing built could house people from within the community (such as the younger generation) or people who wish to move permanently to the Island. The local school may also benefit. This may also have an impact on Orkney as many individuals from Shapinsay commute to Orkney for work.

Benefits – option 2

The aim of the Trust is to meet the very changing community needs of the island which has assessed that all types of tenures of housing is required. In providing serviced plots, this can attract the younger population to own a home on the Island.

Costs – option 2

No costs apart from the minimal cost of the SSI.

Non-regulatory options

This is not applicable as the process to become an RHB to place rural housing burdens in title deeds can only be achieved through an order. Any non-regulatory route to try to achieve the same outcome of placing burdens in title deeds would need legal advice to explore the options to see if this achievable.

Tayvallich Initiative Ltd

We have interviewed four businesses from the village and surrounding area which have been willing to participate in the BRIA process. The local authority Argyll and Bute Council has also been interviewed.

Tayvallich Inn

Tayvallich Bay Association and Sandisland Workshop Limited

The Crawfords Group

Meikle Electrical

Interviews were held by telephone calls due to the location. The Council's interview was held by Teams video call.

Options

There are two options regarding Tayvallich Initiative Ltd's ("TI") application to become designated as an RHB.

Option 1 is to do nothing.

Sectors and groups affected

There would be no initial direct impact on the local community and businesses in the area if we decided not to approve the application for TI to be designated as an RHB. However, not increasing the housing market with affordable housing may impact on the recruitment of staff and attempts to create a long term vision for the community.

Benefits - Option 1

By doing nothing, no positive benefits would arise. Current issues would remain and could result in an impact on businesses.

Costs – Option 1

There would be no costs involved as no SSI would be required. However, doing nothing could have a negative impact on the local economy if businesses continue to struggle with recruiting staff.

Option 2 is to designate Tayvallich Initiative Ltd as an RHB.

Sectors and groups affected

This proposed SSI would designate TI as an RHB. Businesses may benefit with more individuals available for employment. Providing plots for self-build or to build and sell the properties, may create work for construction businesses through to local trades people. In addition, providing more housing for sale would affect the local community or people who wish to move permanently to the area.

Benefits – option 2

The aim of the TI is to provide affordable housing to the local community, where such housing is in demand, as there is not at present a sufficient supply. It will enable homeownership at an affordable price.

Costs – option 2

No costs apart from the minimal cost of the SSI.

Non-regulatory options

This is not applicable as the process to become an RHB to place rural housing burdens in title deeds can only be achieved through an order. Any non-regulatory route to try to achieve the same outcome of placing burdens in title deeds would need legal advice to explore the options to see if this achievable.

The following questions and answers cover Shapinsay Development Trust and Tayvallich Initiative Ltd

Regulatory and EU Alignment Impacts

N/A

Intra-UK Trade

No

International Trade

No

EU Alignment

No

Scottish Firms Impact Test

Shapinsay Development Trust

All businesses interviewed were supportive of the Trust's plan to provide affordable housing – plots for self-build. If there was to be any impact on businesses on the Island it would be positive. No negative views were expressed. There is a demand for affordable housing. The island has an ageing population so to provide more housing for the younger generation is positive. It would be good for the school and the community.

The Trust's control on the housing is a good way forward to sustain the Island in the long term.

The Council is supportive of the aims of the Trust. They felt that the Trust is best placed to identify the needs of the community. Whether this is to retain islanders or to attract individuals to the island by the provision of affordable housing . The Council highlighted that the Trust remains operational within their geographic location. No negative factors were identified.

Tayvallich Initiative Ltd

All businesses interviewed were supportive of TI's plans to provide affordable housing by making plots available for sale. They could only see positives for businesses in the area as well as the community as a whole.

Second homes are very popular in Tayvallich. Local people find it very difficult to buy property which comes up for sale due to the demand for them. Businesses can face difficulties in recruiting staff locally and need to look outwith the area. However, finding housing for new employees not local to the area provides its own challenges.

The village has an ageing population so there is a need to attract and retain younger people and families to revitalise it. Access to affordable housing may attract new businesses to the village. It will be positive for existing businesses. More people provide more business across all sectors. It would also benefit the school. It is felt that the work of TI is providing a long term vision for the village.

The Council is also supportive of TI being designated as an RHB. A large proportion of properties in the area are second homes or holidays homes. This creates difficulty in attracting workers to move to the area as principal occupation. If TI is designated then this will help with working towards forward planning for sustainability for the area. TI is committed to providing a range of property tenures for the community.

Competition Assessment

Shapinsay Development Trust and Tayvallich Initiative Ltd

The Scottish Government has considered the impact of the proposal on competition and does not consider that there would be an adverse impact on the construction or small trades people as the work carried out by the RHBs is relatively small-scale.

Competition assessment filter questions

Will the proposal directly or indirectly limit the number or range of suppliers?

No. The policy will not restrict the number or range of suppliers either directly or

indirectly and will not impact on their ability to compete. It will be for Shapinsay Development Trust and Tayvallich Initiative Ltd to decide which suppliers to use following any due processes, where applicable, if they decide to build the houses. Current proposals are to sell plots for self-build.

Will the proposal limit the ability of suppliers to compete?

No. Again, it will depend on what processes Shapinsay Development Trust and Tayvallich Initiative Ltd have in place to appoint suppliers, where applicable. The current proposals by both applicants do not state that there will be any restrictions on suppliers to compete as the plans are to sell plots of land for self-build.

Will the proposal reduce suppliers' incentive to compete vigorously?

No. The policy itself does not place any restrictions on who may tender for the work or the range of suppliers. The location/design of the houses may rule out some firms/businesses, but this is not a consequence of the policy.

Will the proposal limit the choices and information available to consumers?

No.

Consumer Assessment

Shapinsay Development Trust and Tayvallich Initiative Ltd

Does the policy affect the quality, availability or price of any goods or services in a market?

Properties or plots will be marketed at an affordable rate in the backdrop of a highly competitive market which makes home ownership not affordable. The rural housing burden in perpetuity allows the control of keeping the market price at an affordable rate. This option will not be attractive to all consumers.

Prior to purchasing a house all potential purchasers should be made aware of the conditions attached to the sale. Conditions may vary from one property to another, however, one condition which will be a constant, is the rural housing burden placed in the deeds in perpetuity.

Does the policy affect the essential services market, such as energy or water?

No, the policy is not relevant to these services.

Does the policy involve storage or increased use of consumerdata?

No. Designating a body to be an RHB will not create an increase of consumer data.

Does the policy increase opportunities for unscrupulous suppliers to target consumers?

No. This is a very small market impacting on small communities who will be aware of the named RHB that will market the properties or land for sale through their own website.

Does the policy impact the information available to consumers on either goods or services, or their rights in relation to these?

No. As above information on any sales of land or properties will be made available by the RHB directly.

Does the policy affect routes for consumers to seek advice or raise complaints on consumer issues?

No. Any issues will be raised through the usual channels.

Designating these two applicants as RHBs will allow them to place a rural housing burden in perpetuity within the title conditions of the deeds of a property to ensure that they get first call and control over the affordability of the property.

Any potential buyers must be told of a rural housing burden before purchase so that they are fully aware of the conditions attached to the property. This will be treated like any other title condition that a property may have and should be explained to them by their solicitor.

Test run of business forms

Shapinsay Development Trust and Tayvallich Initiative Ltd

There are no new forms associated with this proposal.

Digital Impact Test

Shapinsay Development Trust and Tayvallich Initiative Ltd

This Order prescribes two bodies as RHBs who will then have the ability to place a burden in the title deeds of a property in perpetuity. There is no direct digital impact. Any impact will be if the home buying process becomes a digital platform then this would include an impact on Registers of Scotland and solicitors. Some of the home-buying transactions are already digitalised.

Legal Aid Impact Test

Shapinsay Development Trust and Tayvallich Initiative Ltd

The proposal has no impact on the legal aid budget.

This policy does not increase the risk of a home purchaser or seller raising a court action and therefore seeking legal assistance. Property transactions through RHBs are a very small percentage of the overall market.

Enforcement, sanctions and monitoring

Shapinsay Development Trust and Tayvallich Initiative Ltd

The policy does not need enforcement or sanctions.

The Carnegie UK Trust carried out research on rural housing burdens in 2011 which can be accessed at http://www.carnegieuktrust.org.uk/publications/the-effectiveness-of-rural-housing-burdens-a-policy-summary/

Implementation and Delivery plan

Shapinsay Development Trust and Tayvallich Initiative Ltd

An SSI has been prepared to add Shapinsay Development Trust and Tayvallich Initiative Ltd to the list of prescribed RHBs. Each applicant will have their own individual plans and timeframes that they are working to.

Post-implementation review

There are no plans at present to undertake a review.

Summary and recommendation

Shapinsay Development Trust and Tayvallich Initiative Ltd

Summary costs and benefits table – no table required as this is not a new policy. We are reviewing applications and assessing whether a body should be designated as an RHB.

The Scottish Government has noted the feedback through the interviews of the local businesses in the BRIA process. Following consideration of these comments and the information presented in the applications, the Scottish Government considers that Shapinsay Development Trust and Tayvallich Initiative Ltd should each be designated as an RHB and the SSI made.

The reason for this decision is that the proposed use of rural housing burdens by Shapinsay Development Trust and Tayvallich Initiative Ltd will benefit the communities and the surrounding areas. It will allow homes or plots of land for self-build to be sold at affordable prices giving the local communities an option to purchase affordable housing as well as retaining the younger generation and /or attracting new people to the areas to help boost the community and economy.

Declaration and Publication

I have read the Business and Regulatory Impact Assessment and I am satisfied that (a) it represents a fair and reasonable view of the expected costs, benefits and impact of the policy, and (b) that the benefits justify the costs. I am satisfied that business impact has been assessed with the support of businesses in Scotland.

Signed:

Date 19 September 2024

Minister's name Siobhian Brown

Minister's title Victims and Community Safety

Scottish Government Contact point: Sandra Jack sandra.jack@gov.scot