TITLE CONDITIONS (SCOTLAND) BILL
EFFECT OF THE BILL ON SHELTERED HOUSING
1. The Title Conditions Bill, together with the Abolition of Feudal Tenure etc. (Scotland) Act 2000 (the 2000 Act), will have a considerable effect on sheltered housing. The Bill was introduced in the Scottish Parliament on 6 June 2002 and is available on the Parliament's website at http://www.scottish.parliament.uk/parl_bus/legis.html. This document is intended to assist residents and developers of sheltered housing to understand how the various provisions in the legislation will affect them.
2. In sheltered housing complexes (the term "sheltered housing" includes retirement complexes) the developer who builds the complex may impose conditions (often called burdens) on the various flats when they are being sold off in order to control the use of the property. For example, the burdens might prohibit the keeping of pets in individual flats, or might oblige the owners to contribute to common expenditure. Some burdens provide that the developer appoints a manager. Often in the past these have been feudal burdens. The general effect of abolition of the feudal system and of the Title Conditions Bill will be to remove control from the developer and to give it to the owners, who will be able to appoint or dismiss a manager, and to vary the burdens which govern the complex.
3. Section 50 of the Bill provides that in future a sheltered housing complex, or at least one in which all the flats have been sold, will be treated as a "community" with all the burdens applicable to individual flats becoming, if they are not already, mutually enforceable. These burdens are called "community burdens", which are described more fully in Part 2 of the Bill. In practice what this means is that in future the owners of a complex will be able to control what happens to it and they will be able to do so by majority rule (counting one vote for each unit within the complex). This is a change from the arrangements in many complexes at present where the developer has been able to exercise control (usually as feudal superior). The proposals for community burdens provide a number of default rules where the title deeds do not provide for decision-making with regard to issues such as common maintenance, appointment or dismissal of a manager and discharge of burdens. Most sheltered housing schemes are in the future likely to have some sort of provision in the title deeds to supersede these rules.
4. Representations were received during consultation expressing concern that a simple majority would be able to vary the terms of the burdens regulating the operation and management of the complex so as to remove some of the most important aspects of sheltered housing (such as the provision of personal support), perhaps as a means of lowering service charges. Such changes might be instigated by younger, more active owners within the complex and a majority might be assembled against the wishes of a minority of older, more frail owners who want the full range of services maintained.
5. The Executive agrees that the provisions of the Bill should not be used to remove vital elements of sheltered housing from individual complexes. It seems right as a matter of policy that where people have bought into sheltered housing on the basis of the framework of burdens set out in the title deeds they should not find this framework changed by a simple majority with the potential consequences that support services might be removed. The Bill has therefore been amended to specify certain core elements of sheltered housing and to provide that the provisions in the Bill allowing majority discharge of burdens should not apply to burdens that affect these elements.
6. The core elements are as follows:
- Warden service: this service is inextricably linked to the provision of a sheltered housing service within a purpose built complex.
- Maintenance of facilities: the protection of these facilities should ensure that all parts of the complex specifically designed to assist the older residents are in good working order. In many complexes there will not be a particular burden for each individual facility. Instead, there is likely to be a general burden requiring that the facilities of the complex be maintained. It is clearly essential that some facilities should not be removed without a sizeable majority being in favour. A particularly obvious example of this is the emergency alarm system.
7. If the owners wish to vary these elements in some way, they will be able to do so, but given the importance of these core elements within a sheltered housing complex, the Bill has been amended to require a relatively high threshold of 75% agreement among owners for any change.
Minimum Age Requirement
8. There is one other core element in sheltered housing which the Executive believes should be protected from any change. This is a minimum age requirement. The Bill makes it clear that a burden stipulating a minimum age requirement should not be capable of change by any majority of owners. Sheltered and retirement housing should be for a certain type of person and if the minimum age requirement were withdrawn, there would be nothing to stop younger people, perhaps with children, buying into the sector.
Delegation of Powers to a Manager
9. Under section 27, a majority of owners in a community will be able to delegate the power to vary or discharge community burdens in general. The Executive believes that a simple majority would be too low for the operation of this power in sheltered housing. The Bill has therefore been amended so that the delegation of power to a manager to vary or discharge burdens in sheltered housing should be subject to a decision of the higher majority of 75%. It will not, however, be possible to confer on a manager the power to vary a burden affecting one of the core elements specified above.
Manager burdens in sheltered housing
10. The Executive has in the past received many complaints about the management of owner occupied developments, mainly relating to owners not being consulted on proposals for the maintenance of their properties, service charges and the appointment of wardens. Developers of sheltered housing complexes often appoint a manager. Appointing a manager allows developers to retain control of the complexes after they have started to sell off units to private owners. The manager enforces the burdens which have been imposed by the developer to deal with various matters affecting the scheme such as maintenance and restrictions on use. The residents may well benefit from the enforcement of the burdens, but they do not themselves have control over managers - or their appointment - while the burden providing for the appointment of the manager is in force. Developers sometimes give up their right of appointment of the manager when the last unit is sold, at which point power of appointment passes to the owners. But sometimes the developer reserves the power to appoint a manager without time limit. The Bill refers to burdens which regulate the appointment of a manager as 'manager burdens'.
11. The legitimate commercial interests of developers and the ability of owners to regulate their own property have to be carefully balanced. The Executive believes that while the developer is still marketing the properties, he has a strong interest in the condition and maintenance of the property as a whole. At that stage, the manager protects the interests of the developer. Over time, and as units in the complex are sold off, the balance changes and the role of the manager is not then to protect the interests of the developer, but to help the community organise itself. It is proposed therefore that there should be limits on the power of appointment.
12. Sections 58 to 60 of the Bill make it clear that the existing appointment of managers under current manager burdens is valid. Developers will be able to continue to appoint managers in new complexes, but owners will eventually be able to override the developer's choice of manager. The developer will no longer be able to control the appointment of a manager after the last unit has been sold or, even if a unit is retained, after 10 years from the creation of the power of appointment. Retention of the warden's flat does not count for this purpose. This means that the developer is prevented from retaining control artificially by permanently holding on to a flat used by the warden in sheltered housing. If an existing burden provides for the nomination of a manager in perpetuity, or any period longer than 10 years, it will be extinguished if the last unit of the scheme has been sold, or if the manager was appointed more than 10 years ago.
13. In summary, any manager burden affecting sheltered housing would be extinguished after 10 years at the very latest, even if the developer continues to own some of the units within a development. In practice, a developer is likely to have sold all the units in a sheltered housing development (excluding the warden's flat) before 10 years have elapsed.
Dismissal of a manager
14. Owners cannot dismiss a manager while a manager burden is enforceable, but they are free to do so thereafter. If there is no manager burden, they are free to dismiss a manager at any time. In many sheltered housing complexes, the title deeds will not provide for the dismissal of a manager. In that case, the proposals on community burdens provide, in section 27, that the owners of a simple majority of the units (counting by the number of units, not those voting) may dismiss a manager. In other cases, however, the title deeds might specify the size of majority required. Section 59 provides that even if the title deeds specify a larger majority or even unanimity, a manager may be dismissed by a two-thirds majority of owners, regardless of the terms of the title deeds.