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6th Report, 2011 (Session 3)

Stage 1 Report on the Long Leases (Scotland) Bill

CONTENTS

Remit and membership

Report

Introduction

Procedure
Purpose
Committee consideration

Background

Scottish Law Commission report
Number of long leases in Scotland
General

Part 1 – Conversion of long lease to ownership

Qualifying criteria
Long leases involving common good
Commercial leases
Pipes and cables
Non-exclusive leases over private access roads
Conversion of reserved sporting rights
Submission from Peterhead Port Authority

Part 2 – Conversion of certain leasehold conditions to real burdens

Issues raised by the Subordinate Legislation Committee

Part 3 – Compensation for loss of landlord’s rights

Part 4 – Exemption from conversion and continuing leases

Part 5 – General and miscellaneous

Other issues
Costs
Power to alter primary legislation
ECHR

Committee Recommendation

Annexe A: Subordinate Legislation Committee Report

Annexe B: Finance Committee Scrutiny

Annexe C: Extracts from the Minutes

Annexe D: Index of Oral Evidence

Annexe E: Index of Written Evidence

Remit and membership

Remit:

To consider and report on (a) the administration of criminal and civil justice, community safety, and other matters falling within the responsibility of the Cabinet Secretary for Justice and (b) the functions of the Lord Advocate, other than as head of the systems of criminal prosecution and investigation of deaths in Scotland.

Membership:

Bill Aitken (member and Convener until 22 February 2011)
Robert Brown
Bill Butler (Deputy Convener)
Cathie Craigie
Nigel Don
James Kelly
John Lamont (member from 24 February 2011, Convener from 1 March 2011)
Stewart Maxwell
Dave Thompson

Committee Clerking Team:

Andrew Mylne
Anne Peat
Andrew Proudfoot
Christine Lambourne

Stage 1 Report on the Long Leases (Scotland) Bill

The Committee reports to the Parliament as follows—

Introduction

Procedure

1. The Long Leases (Scotland) Bill (SP Bill 61) (“the Bill”) was introduced on 10 November 2010 by Kenny MacAskill MSP, Cabinet Secretary for Justice. The Bill was accompanied by Explanatory Notes (SP Bill 61-EN), a Financial Memorandum, a Delegated Powers Memorandum (SP Bill 61-DPM) and a Policy Memorandum (SP Bill 61-PM)1 as required by the Scottish Parliament’s Standing Orders.

2. On 16 November 2010, the Parliamentary Bureau agreed to designate the Justice Committee (“the Committee”) as the lead committee in consideration of this Bill. Under Rule 9.6 of the Standing Orders, it is for the lead committee to report to the Parliament on the general principles of the Bill. The Delegated Powers Memorandum has been considered by the Subordinate Legislation Committee. The Financial Memorandum has been considered by the Finance Committee.

Purpose

3. The purpose of the Bill is to convert ultra-long leases into ownership. For the purposes of the Bill, “ultra-long leases” are leases that were let for more than 175 years and that have more than 100 years left to run. All qualifying leases would convert automatically into ownership, unless the tenant opted out. In some cases, compensatory and additional payments would be payable to the landlord by the tenant.

Committee consideration

4. The Committee agreed its approach to evidence-taking at its meeting on 16 November 2010. The Committee’s general call for written evidence was issued on 19 November 2010 and 26 responses were received2.

5. The Committee heard oral evidence over four meetings from the following witnesses—

18 January 2011

Professor George Gretton, Commissioner, and John Dods, Project Manager, Scottish Law Commission;

Andy Wightman, Independent Researcher.

25 January 2011

Lionel Most and Donald Reid, conveyancing committee, the Law Society of Scotland; Kenneth Swinton and Rab Forman, Scottish Law Agents’ Society; Christopher Haddow QC and John Robertson, the Faculty of Advocates,

David Melhuish, Director, and Alan Cook, Chair of the Commercial Committee, Scottish Property Federation; Richard Blake, Legal Adviser, Scottish Rural Property and Business Association.

1 February 2011

Iain Strachan, Principal Solicitor, and Bill Millar, city development department, City of Edinburgh Council; Richard Brown, Managing Director, City Property (Glasgow) LLP, Andy Young, Head of Asset Management, Glasgow City Council; Andrew Ferguson, Solicitor, Fife Council and Vice-President of the Society of Local Authority Lawyers and Administrators in Scotland;

Professor Robert Rennie, Professor of Conveyancing, University of Glasgow.

8 February 2011

Dale Strachan, Partner, and Catherine Reilly, Solicitor, Messrs Brodies, Solicitors;

Fergus Ewing MSP, Minister for Community Safety, and Simon Stockwell, Bill team manager, Scottish Government.

6. The Committee is grateful to all those who submitted written evidence and took part in the oral evidence sessions.

background

Scottish Law Commission report

7. The Scottish Government’s Bill is based on a draft bill produced by the Scottish Law Commission (“the SLC”) in 2006 as part of its Report on Conversion of Long Leases3 (“the 2006 Report”).

8. This Bill represents the conclusion of the SLC’s major review of the structure of land law in Scotland. Previous, related, SLC reports have resulted in the Abolition of Feudal Tenure etc (Scotland) Act 2000 (“the 2000 Act”)4, the Leasehold Casualties (Scotland) Act 2001 (“the 2001 Act”)5, the Title Conditions (Scotland) Act 2003 (“the 2003 Act”)6 and the Tenements (Scotland) Act 2004 (“the 2004 Act”)7.

9. In Scotland, a scheme for the conversion of long leases was introduced by the Long Leases (Scotland) Act 1954 (“the 1954 Act”) and operated between 1954 and 1959. Under the 1954 Act, a lease was eligible for conversion if it was a lease for residential property, had been granted before 10 August 1914 and was for a period of at least 50 years.

10. In England and Wales, it has been possible to convert ultra-long leases since 1881. The current scheme is contained in the Law of Property Act 1925. Subsequently, the Leasehold Reform Act 1967 allowed conversion of leases of houses for more than 21 years on payment of compensation. That right was then extended to flats in 1993 by the Leasehold Reform, Housing Urban Development Act 1993. The Leasehold (Engagement and Extension) Act (Northern Ireland) 1971 provides the comparable scheme for Northern Ireland.

11. One of the few provisions in the 2000 Act to deal specifically with ultra-long leases restricts new leases created on or after 9 June 2000 to a maximum duration of 175 years so, in Scotland, no new leases of more than 175 years have been granted since June 2000.

12. The 2006 report recommended that a conversion scheme, to closely follow the conversion scheme for feus introduced by the 2000 Act, should be introduced for ultra-long leases. The scheme would be compulsory and automatic but with an opt-out for tenants. A lease would qualify if it had been granted for more than 175 years and had more than 100 years left to run. On a specified day, the “appointed day”, all ultra-long leases would convert into ownership, the landlord’s residual ownership would be extinguished but some of the leasehold conditions would continue to remain in force in the form of “real burdens” (see paragraph 121 for a definition of this term). The landlord would be entitled to compensation, calculated as a multiplier of the rent and, in some cases, additional compensation would also be payable.

13. The rationale for the SLC’s proposal was that, as most ultra-long leases were granted for very long periods, for example 999 years, and had many hundreds of years left to run, they were almost indistinguishable from feus and had many of the same disadvantages as feus. The decision taken by the SLC was that a “pseudo-feu should be treated in the same way as the real thing”8. Another argument in favour of a conversion scheme was that ultra-long leases were relatively rare and often concentrated in particular geographical areas and, as such, were not familiar to many practitioners.

14. According to the SLC, when a property subject to an ultra-long lease comes to be sold, there are often resultant increased transaction costs because of the lack of familiarity on the part of legal agents and the additional assurances being sought in order to conclude the transaction. In the view of the SLC, not converting leases now would lead to problems in the future when such leases did come to an end and a tenant faced losing the property without compensation or any account being taken of improvements made.

15. In March 2010, the Scottish Government commenced an online consultation on the SLC’s proposals9. The Scottish Government’s consultation paper set out eleven reasons why it agreed that it was desirable to legislate along the lines suggested by the SLC. Fifteen publicly available responses were received to this consultation, of which thirteen were in favour of the proposed conversion scheme.

16. The Scottish Government’s Bill differs from the SLC’s draft bill in three main ways:

  • leases with a rent of over £100 are excluded, with the aim of excluding leases let on a commercial basis,
  • leases let solely to allow access for pipes and cables are excluded, and
  • any provision in a lease continuing on a year-to-year basis, requiring the landlord to renew the lease, would be regarded as having been complied with.

Number of long leases in Scotland

17. A study of the number of long leases in Scotland was carried out in 1951 for the Scottish Leases Committee chaired by Lord Guthrie. This study examined the Register of Sasines for the period 1905 - 1951. Around 9,000 leases were identified with more than 100 years left to run.10

18. In 2000, the SLC undertook its own study based on entries in the Land Register for the counties of Ayr, Clackmannan, Lanark and Renfrew.11 The key results of the SLC survey were that the most popular length of lease was 999 years, that 999 year leases were more popular from around 1750 until around 1930 and that rent payable, in the vast majority of ultra-long leases, was very low—68% having a rent of £5 or less a year.

19. The SLC took the view that using the results of the 1951 Guthrie Report study together with the results of its own 2000 study had given “a reasonably full picture of the incidence and use of long leases in Scotland today”.12

20. However, the SLC acknowledged that, as only 4 out of 33 registration counties in Scotland were looked at, its study was incomplete. Indeed the SLC study covered only the period in which those four counties had been operational. As at 2000, Renfrew had been operational for 19 years but Ayr for only 3 years. The study only covered leases actually registered and of those, only the leases which had been subject to some activity – that meant that only 25% of the leasehold titles were examined in Lanark and only 50% in Renfrew.

21. The Financial Memorandum (FM) accompanying the Bill advises that the Scottish Government undertook some further work for the partial Regulatory Impact Assessment included in its online consultation in order to estimate the number of long leases that might convert to ownership under this Bill. By a process of extrapolation from the SLC figures, the Scottish Government suggests that there are 9,287 long leases in Scotland with an initial duration of more than 175 years of which 9,064 still have more than 100 years left to run. The Scottish Government has therefore used the figure of 9,000 as the number of leases eligible for conversion under this Bill. This figure was not challenged during the consultation period.

General

22. As detailed, this Bill follows on from the SLC’s work on the abolition of feudal tenure which was given effect to in the 2000 Act. In addition to abolishing feudalism, the 2000 Act prohibited new leases with a duration of more than 175 years but did not address existing ultra-long leases.

23. Professor George Gretton, who gave evidence to the Committee on behalf of the Scottish Law Commission, pointed out that a house on a 999-year lease was to all effects a feudal relationship between the landlord and tenant and that the reasons for getting rid of the system of feudal tenure were equally applicable to ultra-long leases. He commented—

“Ultra-long leases are quasi-feudalism and a sort of toxic waste that is left to future generations.”13

Part 1 – Conversion of long lease to ownership

Qualifying criteria

24. For the purposes of this Bill, a “qualifying lease” is a lease registered in the Register of Sasines or the Land Register, granted for an initial period of more than 175 years and with an unexpired duration of more than 100 years. The annual rent must not exceed £100, it may not be a lease granted for the sole purpose of granting access to pipes and cables nor a lease of minerals. Although only registered leases may be “qualifying leases”, there is provision in Part 4 of the Bill for a separate scheme for unregistered ultra-long leases to be registered and converted into ownership, if a tenant so wished.

25. The Bill’s Policy Memorandum explains that the criteria that leases must be for more than 175 years with more than 100 years left to run were chosen for good reasons.

26. Reference was made to the work of the SLC which concluded that there was a clear dividing line between ordinary long leases and leases which amounted to virtual ownership. A durational limit of 125 years was originally proposed in the Bill to abolish the feudal system but this was increased to 175 during the passage of that Bill, now the 2000 Act.

27. The evidence heard by the Committee was, in the main, in favour of the threshold of 175 years.

28. Kenneth Swinton, for SLAS, said—

“It would be dangerous to go back and revisit that, as everyone, including lawyers, surveyors and other professionals, has been working over the past 10 years on the basis that ultra-long leases are those of 175 years or longer. It seems an unnecessary complication to introduce a new period of 125 years at this late stage. I do not have any evidence to suggest that the move from 125 years to 175 years has changed things”.14

29. David Melhuish, for the Scottish Property Federation, said—

“If the purpose of the bill is to continue the process of property law reform and to tidy up some of the feudal issues that have been around for more than 10 years, keeping a period of 175 years would add to consistency” - David Melhuish, Scottish Property Federation.15

30. Lionel Most, for the Law Society of Scotland, said—

“… consistency is generally helpful. If we have a period of 175 years in one piece of legislation, it is helpful also to have a period of 175 years in another piece of legislation”.16

31. Professor Robert Rennie, said—

“I would stick with 175 years, for reasons of consistency. There is little difference between the approaches. I cannot imagine that a change to 225 years would involve many leases that would not otherwise be involved.”17

32. However Professor Gretton, on behalf of the SLC, advised that the Bill had “flushed out” a small number of leases, possibly up to 50, for around 200 years and said—

“If I could go back in time, I might have gone for slightly more than 225-year leases, more for the peaceful life argument than anything else. Ultra-long leases are a public nuisance and there is a strong case for getting rid of them, even over the 175-year limit. I might have gone to a cut-off point of 225 years, merely for the quieter life argument.”18

33. The Minister said that he had noted the evidence received by the Committee and believed that the cut-off should be leases of 175 years with 100 years of the lease still to run.19

34. The Committee is content with the approach taken that this legislation should apply to leases granted for a period of more than 175 years with more than 100 years left to run.

Long leases involving common good

35. The common good is a fund of money and assets owned and administered by each Scottish local authority in respect of each former burgh within the area of that local authority. In many council areas, it consists of a substantial portfolio of land, buildings, other assets and investments. There is no equivalent to the legal concept of common good in other parts of the UK. The legal framework associated with the common good is a mixture of statute and case law, is very complex and contains a number of areas of uncertainty.

36. Of the 26 submissions received by the Committee in response to its call for evidence, 19 expressed concerns about common good land or assets that might be subject to an ultra-long lease and thus be caught by the provisions of this Bill and automatically converted to ownership. These submissions invited the Committee to agree that common good land should be exempted from the provisions of this Bill.20

37. There is nothing in the SLC’s report about the issue of common good and the Bill itself makes no reference to and provides no exemption for common good. Nevertheless, subsequent to the introduction of this Bill, the Scottish Government wrote to all 32 councils asking them to identify ultra-long leases of common good land or property. Although 8 councils had still to respond, from the responses received, 5 ultra-long leases involving common good land had been identified.21

38. Within the category of common good property, case law suggests that there is a much narrower category of common good which is subject to a type of prohibition or restriction on “alienation”. Alienation is an old-fashioned legal term which features in both statute and case law and means some kind of use by a third party which is alternative to the existing use of the property for the purposes of the common good. Disposal of this type of common good property is subject to statutory control by virtue of section 75 of the Local Government (Scotland) Act 1973 (the 1973 Act).

39. Section 75 of the 1973 Act provides that if a local authority wishes to dispose of common good land or buildings “with respect to which a question arises as to the right of the local authority to alienate it” it requires to go to court to receive authority to do so. “Disposal” under section 75 of the 1973 Act includes an outright sale or a transfer to a third party but also, according to several cases, a lease of a property, at least where the public use of the property is lost. The court may authorise the disposal, subject to any conditions it thinks fit, including the possibility of a requirement on the council to provide substitute land or buildings to be used for the purpose that the common good land or buildings were used.22

40. The identification of common good property in general whether, in a particular case, there are issues around alienability and the circumstances in which a disposal can proceed are all legally complex. During the Committee’s consideration of this Bill and elsewhere, concerns have been raised about local authorities not having accurate records of their common good property. In December 2007 guidance was published requiring local authorities to establish registers of common good assets held by 31 March 200923. In February 2010 Audit Scotland found that councils had generally taken reasonable steps to comply with the guidance but that some of the registers were incomplete.24

41. Consequently, there is still some doubt about how much common good property and assets are held by councils and therefore how many ultra-long leases involving common good there might be.

42. Professor Gretton, for the SLC, agreed that it could be difficult to identify whether a particular property or asset was part of a local authority’s common good but that in any event it was unlikely that there would be many common good properties subject to long leases.25 He explained—

“The number might be more significant, but the probability of that is low; the probability of there being perhaps one or two such properties is considerably higher. I say that because one has not heard of such assertions. Apart from the claim regarding Waverley market, there have been no claims of common good properties that are subject to ultra-long leases, and I would have thought that the publicity surrounding Waverley market would have flushed such things out. It is a question of reasonable probability. There is a vanishingly small possibility that there is a substantial number, so I cannot rule that out, but I think that the number must be pretty small.”26

43. Professor Gretton said that he would have no objection to common good property being excluded from the Bill although he was not pressing for it. He pointed out that an exclusion could cause difficulties for those cases where it was unclear whether the property was part of the common good. However, he concluded—

“Given that we are probably talking about tiny numbers of cases—and possibly not even one case, depending on the position—I do not see that the exclusion of common good property would cause especially big problems. Such a provision would be acceptable.”27

44. Andy Wightman, an independent researcher on land rights in Scotland, who has undertaken research on common good, was the lead voice in the call for a common-good exemption in this Bill. He said—

“In defence of my argument that common good land should be exempted from the provisions of the bill, my simple point is that there were good reasons why town councils decided to go down the route of having leases in general and ultra-long leases in particular. It was to get round what were and what remain valuable protections designed to protect the public good.”28

45. Andy Wightman agreed with others that the number of ultra-long leases of common good property was likely to be low but said that his proposal was a sensible precaution to protect assets that were and had always been intended to be held in trust for the citizens of a burgh. He added—

“I think that it should be 100 per cent exempt. I do not think that the possibility that there may be compensation and that it may be substantial, or even enough, takes away from my fundamental point that such land should be exempt. I do not think that we want to get into arguments about compensation. At the end of the day, if a council wants to dispose of common good land, it is free to do so, even if the land is on a long lease. At that stage, it will come to a view on what is appropriate compensation.”29

46. As already noted, a decision to exempt common good from the provision of this Bill could give rise to questions about what is and what is not common good. Andy Wightman suggested that the solution to this might be to require councils to seek the court’s ruling that property or land being proposed for disposal was not common good. As the estimate of the number of ultra-long leases of common good was low, he suggested that placing such a requirement on councils would not be onerous.30

47. SLAS acknowledged that there would be merit in looking at the common good law with a view to it being put on a modern statutory footing for reasons of better transparency and openness. However, SLAS went on to point out that this was not an argument for excluding common good from this Bill—

“There is no windfall benefit to a developer but to exclude the common good from the Bill would provide a windfall at some future point in time to local authorities and arguably might result in the Bill failing the proportionality test by treating local authorities more favourably than others.”31

48. In its subsequent oral evidence, SLAS said that it did not feel strongly about the issue of common good and would not be opposed to an exemption however Kenneth Swinton did add—

“The only problem might be that we would then have one scheme that applied to local authorities that disposed of property by ultra-long leases on a commercial basis, or which have done so in the past, and another scheme that applied to commercial developers. There would then be a question of proportionality, and that raises the potential of a challenge under article 1 of protocol 1 of the European convention on human rights.”32

49. The Committee heard from City of Edinburgh Council, Glasgow City Council, City Property (Glasgow) LLP (the arms-length body responsible for managing Glasgow City Council’s property) and Fife Council about the extent of ultra-long leases held by councils and whether or not they involved common good property. Specific examples, such as two areas around Pollock park in Glasgow, an area of land off the High Street in Edinburgh and the Waverley market leases were discussed.

50. Clearly, it is not for the Committee to reach a view on what is and what is not common good. What seems to be beyond doubt is that, although the numbers of ultra-long leases are thought to be very low, there is no definitive list of local authority-held ultra-long leases or of local authority-held ultra-long leases involving common good. It is also not clear to what extent any such leases might involve inalienable common good property.

51. The Committee asked Andrew Ferguson of Fife Council and the Society of Local Authority Lawyers and Administrators in Scotland (SOLAR) and also the author of the main textbook on common good law, in what circumstances land might lose common-good status. He responded—

“There is not an awful lot of judicial guidance on the circumstances in which common good status can be lost, but there are other cases concerning the loss of land's common good status through lack of usage. However, in such cases it has been stressed that the common good status of the land in question cannot be lost simply because, through the burgh council's neglect, it has become impossible for people to use it.”33

52. Despite the small number of ultra-long leases involving common good, the City of Edinburgh Council, Glasgow City Council and Andrew Ferguson maintained their view that the Bill should not apply to long leases involving common good property.34 Andrew Ferguson summarised—

“It is clear from the policy memorandum what the bill is meant to attack. You heard from Mr Wightman that there can be many different reasons why common good properties were given out in lease, and I think that we are agreed that a common good exemption makes sense in that context.”35

53. On the other hand, the Minister said clearly that he was not in favour of an exemption for common good leases.

54. The Minister gave a number of reasons for holding that view. His first reason was that the number of common-good leases was low, less than 1% of the 9,000 estimated as being the total number of ultra-long leases across Scotland. His second reason was that there were clear and adequate compensation provisions in the Bill, which would apply regardless of whether the property in question was common good or not. His third reason was that exempting common good could give rise to litigation whenever a council tried to dispose of property and where a question arose as to the status of the property. The Minister summed up the Scottish Government’s view—

“Any litigation in that regard could lead to considerable public expenditure for local authorities at a time when local authorities all over the country are making their views known about the impact of funding pressures. We should not make the suggested exemption lightly, if at all. For the primary reasons that I have given, I believe that we do not need to make such an exemption.”36

55. This Bill is not about common good. It is about ultra-long leases. As stated previously, in scrutinising this Bill, it is not the role of the Committee to consider what might or might not be common good. It is not known how accurate the Scottish Government’s estimated figure of 9,000 ultra-long leases is, how many of these leases are local-authority leases and of them how many involve common-good property. The Committee is disappointed that there is still not an accurate and complete record of the common good property held by local authorities across Scotland.

56. The Committee noted and saw merit in the arguments for exempting leases of common good from the provisions of this legislation. The Bill already provides exemptions for certain categories of lease and, as the number of long leases involving common good property is thought to be small, any exemption might arguably not have a wide reach.

57. The Minister’s argument that exempting leases of common good would give rise to litigation whenever a local authority tried to dispose of property and where a question arose as to the status of it, was not wholly persuasive for the very reason that it is estimated that there will only be a small number of such leases and that, even without an exemption, they could give rise to litigation, for example to obtain a ruling on alienability.

58. The Committee also notes that, when considering the disposal of common good, questions will arise both about what the financial recompense might be; what the nature of the public interest in the land or property being disposed of is, and how that public interest should best be preserved. For example, in the case of ground held in the common good in city or town centres and public parks it could be argued that it would be more desirable to keep them in public ownership and control.

59. On the other hand, the arguments against creating another exemption were, on balance, more persuasive. Firstly, the Bill is the final stage of a programme of reform of land law in Scotland aiming to modernise the law and provide certainty. Creation of another exemption would lead to uncertainty and delays, particularly where a court declarator was required on whether property was common good and the extent to which it could be regarded as alienable. An exemption in this Bill for leases of common good property could also give rise to problems in the case of a late challenge being made against any disposal. The Committee has considered these issues against the backdrop of there being incomplete registers of common good property.

60. The Committee notes that the Bill provides that, where leases are converted into ownership, compensation is payable. In the case of disposal of a common good asset, it is the strong view of the Committee that the compensation received should be paid back in to the local authority’s common good fund.

61. The desirability for certainty from this legislation and the provisions for compensation provided in the Bill have led the Committee to conclude that it is not persuaded, at this time, that there is a compelling case for exempting leases of common good property from this Bill.37

Commercial leases

62. The first of the main differences from the SLC’s draft bill related to commercial leases.

63. As stated in the Policy Memorandum, the Scottish Government departed from the draft bill with a view to excluding commercial leases, explaining that the policy of the Bill was not to convert to ownership leases let on commercial terms38. The mechanism chosen by the Scottish Government to secure this exclusion is set out in section 1(4)(c) and provides that a lease does not comply as a qualifying lease if the annual rent payable is more that £100. The Bill further provides that any rent payable which is variable from year to year is not to be taken in to account.

Should there be an exemption for commercial leases?

64. The SLC had not seen any reason to exclude commercial leases from its original draft bill. The 2006 report noted that non-residential leases in Scotland had been excluded from the 1954 Act but that the English scheme for ultra-long leases made no distinction by type of property.

65. The SLC gave two examples to support its view that there should not be any exemption for commercial leases; the first example was of a tenement built on land held on an ultra-long lease where, in the SLC’s view, it would not be reasonable for the shops or the ground floor to be treated in a different way from the flats above. The second example was of a 999-year lease of a factory or a pub granted in 1891 where, in the SLC’s view, there would be no reason to exclude such a lease if a lease of a house for a similar period would be covered by the Bill.39

66. Professor Gretton for the SLC restated his view that there was not a strong case for such an exemption—

“If the view is that long leases are a bad thing, I see no reason to have the exception. If some people are unhappy that is tough. That said, one could argue that the number of long leases that would be exempted from conversion under the £100 rule would be pretty limited, so it is perhaps not a huge issue.”40

67. Professor Rennie agreed with the SLC position and said he was against any exclusions from the provisions of the Bill.41

68. The Law Society of Scotland was of the view that there should be as few exemptions as possible and observed that the Bill provided for compensation for landlords and also provided an opt-out for tenants where they were unable or unwilling to pay the compensation. The Law Society of Scotland, supported by SLAS, said—

“A tenant who has an ultra-long lease, which may have been formed for reasons of tax planning or funding, has a choice, so we took the view that there was no problem. It is a policy issue more than a legal issue. Commercial tenants are educated and knowledgeable parties; they can take a view and take the steps that the legislation allows them to take.”42

69. However other witnesses were strongly in favour of the exemption for commercial leases. For example, Dale Strachan, a partner in Brodies solicitors, said that the proposed mechanism for compensation in respect of leases that would automatically convert as a consequence of this Bill was “unfortunate” in a number of respects. He said that the Bill provided that the interest of the person who was affected, the landlord, would be unwound at a time not of his choosing—

“It would be odd to choose to realise an investment in a market that has experienced a sustained downturn.”43

70. Alan Cook for the Scottish Property Federation observed that in the case of commercial properties, leases were sometimes a mechanism for arranging a joint venture between parties. Commercial negotiations would have taken place and agreement reached as to how the value generated from the land would be shared. He said that such a transaction was not akin to a sale with no active interest in the value of the land. He concluded—

“It would be wrong for such commercially negotiated arrangements to be swept away by the bill. Although the bill allows the tenant to opt out of the arrangement, it does not allow the landlord to opt out of it. It gives one party but not the other an ability to change the nature of the arrangement that has been negotiated at, no doubt, great length.”44

71. Richard Blake for the SRPBA advised that his members had, at the time of the Scottish Government’s consultation, expressed considerable concerns about commercial leases being caught by the proposed Bill. The SRPBA used the example of a championship golf course in the middle of an estate in Fife that had been let relatively recently on an ultra-long lease with a long-lease turnover rent and a tenant’s right to renew after a certain period. Under the terms of the original draft bill, that lease would automatically convert to ownership with the result that a piece of ground in the middle of an estate in Fife would end up being owned by a company in Los Angeles. The SRPBA said that, after discussion with the Scottish Government, it was comfortable with what was now in the Bill.45

72. Iain Strachan for the City of Edinburgh Council said that, if the policy intention was to exclude commercial leases from this Bill, it should be recognised that, in a number of property transactions, when landlords granted long leases they were, in essence, selling or getting rid of their interests but that they had chosen to do it that way because they had wanted the benefits of the law of landlord and tenant and the protections or rights that it provided, which title conditions might not provide.

73. The Committee agrees with the Scottish Government that commercial leases should be excluded from this Bill.

If there is to be an exemption, is a £100 rent cut-off the right approach?

74. The policy aim is to exclude from the scope of the Bill leases negotiated on commercial terms. Section 1(4)(c) provides that a lease will not qualify for conversion if the annual rent is more than £100.

75. As noted already, at the time of consultation, the SRPBA had concerns about commercial leases being caught. Richard Blake summarised the SRPBA’s position now—

“There was a real issue with that and with other commercial arrangements that were entered into under the earlier, feudal legislation before the restriction of long leases to 175 years or less. However, we believe that our concerns about that have been addressed by the £100 cut-off.”46

76. However Professor Rennie did not think that the £100 annual rental cut-off was the answer. He pointed out—

“One hundred pounds per annum is by no stretch of the imagination a commercial-type rent for a commercial property. I am against any exemptions, but I think that it is crazy to have an exemption level as low as £100.”47

77. Professor Rennie added that he was not sure that setting a figure based on annual rent was the right approach anyway. He was not convinced that there was a general problem across the commercial market but suggested that it might be more appropriate to set a formula with rent set as a percentage of capital value.48

78. The Scottish Property Federation agreed that in relation to whether the £100 flat annual rent was an appropriate measure, “there is a lot to said for taking a more rounded view”49.

79. The Scottish Government explained that, in arriving at the figure of £100, it had had regard to the work undertaken by the SLC which disclosed that, for leases of over 175 years, only 26 had a rent of more than £50 and of those only 7 had a rent of much more than £100.50 The Minister added that alternative approaches had been considered, such as setting a cut-off date, but it was felt that might be seen as arbitrary and could have excluded leases that were not let on commercial terms. Nevertheless, in light of the evidence presented to the Committee, the Minister undertook to consider the matter further.

80. Given the conflicting evidence heard by the Committee on whether the exemption for commercial leases, as currently drafted, met the Scottish Government’s stated policy intention, the Committee welcomes the undertaking given by the Minister to look again at how the exemption has been formulated.

The scope of the exemption

81. As currently drafted, the exemption in the Bill for commercial leases is based solely on annual rent payable. The Committee heard evidence that a number of commercial leases might have a low or “peppercorn” annual rent but, at the time of entering into the lease, a large payment would have been made upfront, known as a grassum.51 Such leases would, because of the way the Bill is drafted, qualify for automatic conversion and would not fall to be exempted as intended by the Scottish Government. Similarly, other commercial leases, although again with a low annual rent, would have an additional variable element of rent.

82. Brodies pointed out that, before the 2000 Act came into force, a large number of long leases had been granted for over 175 years. They gave three general examples: long leases of industrial buildings entered into for a large premium and low peppercorn rent where the owners wished to retain their entitlement to capital allowances; long leases with variable rents entered into as part of stamp-duty planning schemes; and long leases granted and purchased as part of rent sharing investment deals such as ground leases of shopping centres.52

83. Brodies’ view was that, if the wording of section 1 remained unchanged, a number of long leases granted by local authorities and investors would not be excluded and would automatically convert unless the tenant opted out (in contravention of the Scottish Government’s stated policy to exclude commercial leases).

84. Dale Strachan of Brodies solicitors said—

“Through the mechanism as drafted, limits have been chosen for reasons that have been explained. The variable element of the lease can often be the substantive receipt to the landlord. Scots law requires only that there is a fixed payment of rent certain, in addition to any other mechanisms that you choose. That could be £1 a year, and it frequently is. The rental sharing mechanism often has regard to the very substantial receipts that derive from the occupational subtenants.”53

85. Dale Strachan also pointed out that, where the Bill provided for an additional payment by way of compensation for the variable element of the rent, it was to be left to the parties to agree or to remit the matter to the Lands Tribunal. At the same time, the Bill allowed the tenant but not the landlord to opt out of the scheme. Mr Strachan’s view was that this would be “questionable in the interests of encouraging future investment.”54

86. Brodies was concerned that parties who had made commercial arrangements in a free environment could still have them unwound against their will. Dale Strachan, for Brodies, concluded—

““Parliament has made clear its intentions for the future by restricting the length of leases permitted after 9 June 2000. That will be adhered to. Leases were put in place before then for good reasons and often after extensive negotiations with the benefit of commercial advice and knowledge of the law as it then was. Retrospective legislation such as the bill is potentially a disincentive to investment. That is my concern.”55

87. Brodies made the following suggestions for alternative approaches in relation to commercial leases: (1) the total rent including any variable element paid over the past 5 years could be taken into account when calculating rent; (2) a cap could be placed on the exclusion of any variable element worth more than £500 annually, or (3) that the Bill should only apply to leases of at least 225 years duration with at least 175 years to run as at 9 June 2000.

88. Iain Strachan, whose comments were supported by Richard Brown of City Property (Glasgow) LLP, said that in order to give effect to the policy intention—

“we should—just to ensure that the full picture is caught—bear in mind situations in which a grassum has been taken up front, as well as those in which a rent of, for example, £1,000 a year is charged. As far as an exemption for commercial leases in general is concerned, there are, as I say, often good reasons for interests in properties to be disposed of by granting a long lease rather than by disponing the heritable title.”56

89. The City of Edinburgh Council and others suggested that grassum should be taken in to account. In response to that suggestion, Professor Gretton repeated that the SLC’s intention had been to catch all qualifying long leases and that there should not be exemptions. However, he added that, if a policy change was to be made in relation to commercial leases, he would favour a move to a 225-year limit, instead of a £100 limit.57

90. In light of Professor Rennie’s view that it might be better to use a formula to establish the criteria for exemption rather than have a £100 cut-off, the Committee asked Professor Rennie whether the complexities of such an arrangement were not in fact an argument in favour of the £100 cut-off and also why, in the case of a local authority that had received a grassum and had then charged a nominal annual rent, it would not be reasonable to enable the local authority to hold on to the asset in the public interest. Professor Rennie explained—

“I suppose that I am looking at it in more commercial terms. I am saying that the local authority got its money—it got its grassum up front. That sum was equivalent to the price. Therefore, why should it be exempt from a technical piece of legislation that does no more than give the land to the people who paid the value for it at the start? You are asking about the public interest. I am not convinced that such leases were granted for that reason—I think that they were granted because of technical difficulties, with local authorities not being able to sell at the time.”58

91. As noted and welcomed already, the Minister has undertaken to look again at the way in which the exemption for commercial leases is formulated. In looking at this issue again, the Committee draws the Minister’s attention to the issue of variable rent and the arguments made in favour of this being taken account of when setting the criteria for the exemption.

Pipes and cables

92. The Bill’s second main difference from the SLC draft bill relates to pipes and cables and can be found in section 1(4)(b).

93. During the Scottish Government’s consultation, it was argued by some (particularly the SRPBA) that the intention of this legislation should not be to convert into ownership leases only in respect of pipes and cables. The Scottish Government agreed and has now provided that a lease would not be a qualifying lease “if it is one operating for the sole purpose of allowing access (including work) to pipes or cables”. The exemption applies to leases granted for access to pipes or cables but not leases for the installation and use of cables.

94. In its written and oral evidence, the SRPBA said that the insertion of new section 1(4)(b) had dealt satisfactorily with the leases of strips of ground to allow access to be taken for pipes and cables. However, the new section had not gone far enough as strips of ground (leased for valid commercial purposes) would still be caught by this provision and be automatically converted into ownership.

95. Kenneth Swinton of SLAS agreed with the SRPBA that there was still a question about leased strips of land.59

96. On the other hand, Professor Rennie’s view was that the reference to access to pipes was appropriate—

“There is a complicated legal argument about who owns pipes and whether pipes that run through land accede to the land's ownership or remain in the ownership of whoever controls them. I think that that is why there is lease of access to pipes rather than lease of the ground itself, which would suggest that the undertaker did not own the pipes. I am happy with the provision as it is.”60

97. As noted, this was not something suggested by the SLC in its draft bill. Professor Gretton told the Committee—

“I am not entirely happy with the provision as it stands. In my view, the law of Scotland does not allow a lease just for access. A lease is defined as a right of exclusive possession.”61

98. Lionel Most, for the Law Society of Scotland, suggested that it was possible to have a lease “with a small l” but that his understanding of the point made by Professor Gretton was that such a lease might not meet the legal requirements of what constituted a lease in Scots Law.62

99. Professor Rennie said that the argument about the law not allowing a lease just for access was a technical argument—

“Professor Gretton was right to say that we do not recognise lease of access as such; we recognise leases of land. However, in commercial leases, we find leased rights of access, which pertain to the main body of the lease. I think that the point is an academic rather than a practical one.”63

100. Professor Rennie concluded that he had no difficulty with the exemption as currently drafted in section 1(4)(b).

101. In his written evidence, Professor Angus McAllister agreed with Professor Gretton that this provision, as presently drafted, could have the unintended consequence of appearing to give legislative approval to an extension to the categories of contract recognised as leases. Professor McAllister said that the issue was not about whether the exemption should exist but about how it was worded. He suggested that this provision should be re-drafted to make it clear that contracts allowing the passage of pipes or cables through land, together with any rights of access thereto, should not be regarded as being “qualifying” leases for the purposes of the Bill.64

102. The Committee understands that there might be other ways of achieving the Scottish Government’s stated policy, for example by converting existing ultra-long leases of pipes and cables to a “wayleave” (a type of servitude without a piece of land to which the enforcement right attaches). However from the evidence received by the Committee there did not appear to be much support for this.

103. The Minister said that this section of the Bill was an area that he intended giving further consideration to—

“Plainly there is a reason in principle to ensure that the bill does not affect the property rights, whatever they are, that have been granted for leases on pipes and cables. It is not our policy intention to disturb those matters and it is important that we do not do so, for obvious reasons. I believe that there is a common interest in doing more work in this area to ensure that, in the first instance, we get more information on the agreements that have been let in practice.”65

104. Given that this is a legally complex area, the Committee again welcomes the Minister’s undertaking to further consider the evidence received and to seek to reach agreement on the way forward.

Non-exclusive leases over private access roads

105. One further issue raised by the SRPBA was that an unintended consequence of Part 1 of the Bill might be that non-exclusive leases of private roads or tracks for specified access purposes, entered into instead of a servitude being granted, could be caught.

106. The Committee asked Professor Rennie for his view on this issue, but other than repeat that he was not in favour of having too many exclusions and exceptions in the Bill and state that the Bill had been well-thought out over a number of years, he did not give any further view.66

107. The Committee notes again that the Minister has undertaken to explore this issue further with the SRPBA and looks forward to hearing back from the Scottish Government in due course.

Conversion of reserved sporting rights

108. Section 7 follows the scheme set out in the 2000 Act (amended by the 2003 Act) in relation to feudal reform by providing the opportunity for a former landlord to preserve the sporting rights on registration of a notice.

109. The Committee is aware that there had been some criticism of the treatment of sporting rights in these Acts, for example that the legal form in which these rights had been preserved may have deprived the owner of the affected land of a material aspect of the right to develop the land (without compensation or a means of discharge of these rights) and that this may give rise to ECHR concerns.67

110. Professor Gretton said that a landlord’s reserved sporting rights would be very unusual as the type of lease to which this Bill applied was unlikely to have reserved sporting rights. Further—

“The position of the tenant is not going to be worse, because if they are already subject to the landlord's sporting rights, then those rights will continue in the future in a so-called separate tenement. That will, indeed, take away from the tenant some of the benefits of ownership of the land, but it will not make the tenant's position worse.”68

111. The SRPBA was in favour of this section of the Bill. Richard Blake said—

“if sporting rights are reserved from any lease as a matter of contract, the question arises whether it is equitable for the rights to be included in a conversion instead of being excluded. I support the current drafting of the bill on those grounds alone. I reiterate: in practical terms, I suspect that this will not be a terrific issue.”69

112. Professor Robert Rennie said that, during the passage of the Abolition of Feudal Tenure etc (Scotland) Act 2000, he had argued that, because it had been recognised that sporting rights were not a separately owned entity, they could not be a separate tenement. However he conceded that he had lost that argument—

“if we have a separate tenement under the Abolition of Feudal Tenure etc (Scotland) Act 2000 that allows former feudal superiors to reserve sporting rights, we must have a similar right in the Long Leases (Scotland) Bill, which mirrors the 2000 act in a lot of respects. I am, therefore, satisfied with that provision.”70

113. The Law Society of Scotland pointed out that, although the provisions mirrored those in the 2000 Act and no problems had come to light yet, issues could take quite some time to work their way through from the enactment of new legislation to practical application.71

114. The Scottish Government confirmed that the Bill was consistent with the Abolition of Feudal Tenure (Scotland) Act 2000 and that the same approach had been taken in both Bills.

115. The Committee notes that this Bill merely follows the provisions of the 2000 Act and that no difficulties have arisen to date.

Submission from Peterhead Port Authority

116. The Committee received a submission from Peterhead Port Authority (the PPA) regarding a 999-year lease of the South Breakwater at Peterhead to a private company. Both the South and North Breakwaters are substantial long-standing structures used for commercial activity but their principal use is the provision of weather protection necessary for the operation of the Port. The effect of this Bill could be to convert this lease to automatic ownership.

117. The view of the PPA was that a lease of this nature should not be regarded as a feu “in disguise”, it should not be caught by this Bill and was not a lease in relation to which the lease conditions could be converted to real burdens. PPA suggested that this could give rise to a more general policy issue about converting public property into private ownership. It called for an exemption for leases granted by a statutory undertaking and for leases connected with another transaction or series of transactions, the effect of which would be that the overall consideration would result in an effective annual rent of more than £100.72

118. The Minister’s view was that a 999-year lease such as this was clearly akin to ownership, was the type of lease that the Bill was designed to address and that the main issue to consider was whether the leasehold conditions could be converted to real burdens. The Minister stated that the conversion provisions in the Bill were “comprehensive” and as such he was not persuaded of the need for an exemption in this case. Nevertheless, given that the issue had been raised, he undertook to discuss the matter with Peterhead Port Authority.

119. The Committee looks forward to hearing back from the Minister on the issues raised by Peterhead Port Authority once he has had an opportunity to consider this matter further.

Part 2 – Conversion of certain leasehold conditions to real burdens

120. The SLC recommended that specified conditions in qualifying ultra-long leases, comparable to real burdens, should be subject to a conversion scheme of their own in the Bill. The SLC said that the scheme should closely follow the schemes contained in the 2000 Act and the 2003 Act.

121. Part 2 of the Bill provides for the conversion of certain leasehold conditions into real burdens in the title deeds. Real burdens are a category of legal obligations affecting a property which burden the owner of one piece of property and for the benefit of the owner of another piece of property and which survive changes of ownership of the affected properties. They are part of the wider category of “title conditions”. Leasehold conditions must meet certain criteria in order to qualify for conversion and essentially must be capable of being constituted as a real burden under the 2003 Act.

122. The key provisions of the conversion scheme are—

The 100-metre rule: if a former landlord under an ultra-long lease owns a piece of land within 100 metres of the property subject to the former lease, he or she can reallocate a qualifying leasehold condition (by registration of a notice) as a real burden enforceable by the former landlord in his or her capacity as owner of that land (sections 13–15).

Personal real burdens: a range of qualifying leasehold conditions serving a variety of public policy purposes (eg conservation, reducing greenhouse gas emissions, economic development and provision of facilities for health care) can be converted to real burdens enforceable by a public body on registration of a notice (sections 24–27). This type of real burden is “personal” because the public body’s enforcement right is not attached to a piece of property, in contrast to the usual position with a real burden.

Facility and service burdens: qualifying leasehold conditions will be automatically converted to service and facility burdens on the appointed day. A facility burden regulates the maintenance, management, reinstatement or use of a facility, such as a shared part of a tenement. A service burden relates to the provision of services, such as water or electricity to another property. They are enforceable by the owners of the property or properties benefiting from the facility or service (section 29).

Third-party rights: qualifying leasehold conditions expressly conferring rights on neighbouring properties to the property leased are automatically converted to real burdens on the appointed day, enforceable by these neighbouring property owners (section 32). Qualifying leasehold conditions which are imposed under a “common scheme” in respect of a group of “related properties”, will automatically become real burdens enforceable by the owners of these properties against each other from the appointed day (section 31)73.

123. As noted, section 31 is about third-party rights. In cases of outright ownership, real burdens are often imposed under a common scheme, for example the same real burdens will attach to properties within the same block of flats or development. Prior to recent property law reforms, case law had long established that, provided certain criteria were satisfied, mutual enforcement rights in favour of the owners of the properties in the common scheme could be implied by law, despite not being expressly stated in deeds.

124. On bringing forward the Bill that was to become the 2003 Act, the then Scottish Executive departed from the SLC recommendation and relaxed the criteria that had to be satisfied for implied enforceable rights to be created. As a consequence of section 53 of the 2003 Act, more people now have implied enforcement rights in respect of real burdens. This change attracted criticism on various policy grounds. Section 31 of this Bill directly mirrors section 53 in the 2003 Act.

125. Professor Gretton confirmed that, on the whole, conveyancers had not been in favour of section 53 in the 2003 Act but that for reasons of consistency, both pieces of legislation should contain the same provisions. He agreed that there was uncertainty under the common law as to implied rights in connection with leases and that, as a consequence of the 2003 Act, the position was different from the common law for ordinary properties.74

126. Other witnesses also acknowledged the concerns expressed previously about section 53 of the 2000 Act but agreed that in practice it was being coped with. Kenneth Swinton, SLAS confirmed—

“Although I was opposed to section 53 when it came in, there is no evidence from case law that it has adverse consequences, so perhaps the case for repealing it is not that strong. In any event, from a policy perspective, it is rather more important that there is a consistent scheme between the conversion of ultra-long leases and the conversion of titles from the feudal system.”75

127. The Minister confirmed that this Bill follows the regime in the 2003 Act and that to do otherwise could create an approach that the SLC described as “anomalous and potentially confusing”.76

128. The Committee is content that this section should remain unaltered in the Bill.

Issues raised by the Subordinate Legislation Committee

129. In its report, the Subordinate Legislation Committee questioned why, with reference to section 21(3), it was not possible to specify, on the face of the Bill, a period within which a person could oppose or make representations in relation to an application. The Subordinate Legislation Committee considered this to be an important provision and has recommended that the Scottish Government give further consideration to setting out the prescribed period, with a power to amend if required, on the face of the Bill.

130. This Committee concurs with the view of the Subordinate Legislation Committee and invites the Minister to re-visit this issue.

Part 3 – Compensation for loss of landlord’s rights

131. Part 3 of the Bill sets out the scheme under which the landlord of a lease, which would convert to ownership, may claim compensation in respect of loss of rights. In broad terms, basic compensation is provided for loss of rent and additional payments can be claimed on various other grounds as set out in the Bill.

132. John Dods, on behalf of the SLC, said that the provisions in this Bill mirrored those in the 2000 Act and added—

“We also take the view that the compensation provisions, which are for loss of rent and are linked to the provisions in the Abolition of Feudal Tenure etc (Scotland) Act 2000, may in some minds be slightly more generous than should be the case. So, we take the view that the compensation provisions are compensation not just for the loss of the right to rent, but for the loss of other landlord rights, such as leasehold conditions, that might not otherwise be convertible.”77

133. Kenneth Swinton, for SLAS said that, although the compensation arrangements were not significant, in his view they were sufficient and met the ECHR tests—

“the evidence that the commission gathered suggests that surveyors and others who value ultra-long leases value those interests as practically nil when the lease has more than 100 years outstanding. There is provision in the bill for extra compensation over the basic scheme that mirrors the feudal abolition scheme, and we think that that fulfils all the convention's requirements.”78

134. No issues, other than those raised specifically with regard to the conversion of commercial leases, were brought to the Committee’s attention.

Part 4 – Exemption from conversion and continuing leases

135. Section 75 makes provision for certain documents to be registrable despite initial rejection and section 75(5) provides that the Scottish Ministers can by order specify a cut-off date after which notices and agreements cannot be registered.

136. The Committee notes the recommendation of the Subordinate Legislation Committee that the Scottish Government should give further consideration to amending the Bill to prescribe the date or period on the face of the Bill. The Committee draws this to the attention of the Minister.

Part 5 – General and miscellaneous

137. Part 5 of the Bill relates to a number of matters: the appointed day, how the duration of leases is to be determined etc. The third main change made by the Scottish Government to the SLC’s draft Bill can be found in this Part of the Bill.

138. Section 68 provides that renewable leases qualify as ultra-long leases for the purposes of the general conversion scheme presumably on the assumption that such leases were actually intended to be ultra-long leases, despite their notional break points. However, the draft Bill was amended after the Scottish Government’s consultation to make provision where a renewable lease had not been renewed in accordance with the terms of the lease but had instead continued by tacit location.

139. This amendment was made specifically to address the issue of Blairgowrie leases79. Without this amendment, the Blairgowrie leases would not meet the definition of a qualifying ultra-long lease and would not be covered by this Bill. Section 69 now provides that renewal obligations in leases continuing on a year-to-year basis, by virtue of tacit location, should be included for the purposes of calculating the duration of the lease, even if renewal did not happen.

140. The Policy Memorandum explains that in some cases, renewals of leases had not taken place as a result of oversight on behalf of the landlord and tenant. This had been the case in Blairgowrie and Rattray where the leases were for 99 years and perpetually renewable. Particular consideration was given to new section 69 in terms of compatability with the ECRH, particularly Article 1480. The Scottish Government confirmed—

“The aim of the provision is to provide clarity and certainty: to do otherwise could lead to undue problems for the tenant. Given this, the Government considered that Article 14 was complied with.”81

141. The SLC did not make any provision, in its draft bill, for such leases to automatically convert. The view of the SLC was that such leases, on not being renewed, ceased to be long leases and became one year leases. Professor Gretton said—

“You could interpret the situation as being that the tenant had been on a 99-year indefinitely renewable lease and, because they failed to exercise the renewal option, they went back to a pure year-to-year rolling lease, but Section 69 will re-upgrade them. That is one interpretation of the bill.”82

142. But Professor Gretton noted—

“Section 69 is Government policy and I am happy to leave the matter to Government policy. The Government has considered the aspects relating to article 1, protocol 1 of the European convention on human rights. If the Government is satisfied on that point, that is fine by me.”83

143. Both SLAS and the Law Society of Scotland agreed that the inclusion of this provision was a policy decision and a matter of striking a fair balance.

144. Professor Rennie said that he could see the argument that it might be unfair to deprive the landlord of a right to terminate a lease but added that this was not the attitude that landlords had adopted up until now and that in general, therefore, he was in favour of this provision.84

145. The Committee notes that no ECHR concerns were raised in evidence. The Committee is of the view that this provision strikes a fair balance between the rights of landlords and tenants.

Other issues

Residential ground leases

146. In its work on long leases, the SLC considered whether the Bill should include a separate conversion scheme for the remaining residential ground leases (which did not fall into the category of qualifying ultra-long leases for the purposes of the conversion scheme). The SLC ultimately decided against including such a scheme in the Bill and the Scottish Government decided not to take the issue forward in its Bill.

147. In its responses to the Scottish Government’s consultation and the Committee’s call for evidence, the Law Society of Scotland said that without such a conversion scheme, a landlord’s interest in a residential ground lease might become a target for “title raiders” (commercial entities seeking to make money out of largely forgotten property rights, by buying them up).

148. Title raiders could be regarded as objectionable in policy terms because they had no interest – such as maintaining the property or preserving its amenity - other than a financial interest. The Law Society of Scotland argued for a separate conversion scheme for residential ground leases or alternatively for the court to have the power to grant security of tenure (protection from eviction) to such tenants85.

149. Professor Gretton advised that the SLC’s discussion paper that preceded the 2006 Report had suggested the possibility of converting some of the residential ground leases, even though they would not be ultra-long leases within the meaning given in the Bill but that there had not been a lot of support for that suggestion. He concluded—

“If the committee is concerned about residential ground leases that are not eligible for conversion under the bill, there are other ways of approaching that problem. I am not sure how big a danger arises in this regard. What can a title raider do? They can wait until the lease terminates and put the tenant out, but that was going to happen anyway.”86

150. The Committee noted the comments of Donald Reid, on behalf the Law Society of Scotland, that if no amendment were made to this Bill the position would remain as it is at present and the “lingering cases” would be highlighted as not being protected by legislation. The Law Society of Scotland’s view was that this Bill could provide an opportunity to address a problem that exists and will continue to exist.

151. David Melhuish for the Scottish Property Federation suggested that as a draft land registration bill could come forward early in the next session of the Parliament, the issue could be looked at in that context.87

152. The Minister said that he would give further consideration to the issue raised by the Law Society of Scotland but—

“Our view remains that the bill is not the best way of dealing with the matter. In particular, as the SLC's report noted, there is a lack of information in the area. If legislation is needed—we are not convinced that it is—we believe that it should be separate legislation.”88

153. The Committee agrees that the Bill is not the appropriate vehicle to address any question about residential ground leases that are not eligible for conversion under the main conversion scheme applicable to qualifying ultra-long leases. The Committee is content that the matter has been highlighted for future consideration.

Costs

154. The Financial Memorandum (FM) was considered by the Finance Committee. No oral evidence was taken and nor was any formal report made, although the Finance Committee did seek written evidence.

155. One submission, from the Keeper of the Registers of Scotland (RoS), was received. That submission confirmed that the expected administrative costs to RoS of the automatic conversions of registered qualifying ultra-long leases to ownership had been accurately reflected in the FM but that the increase in fees charged by RoS would not offset the administrative costs expected to arise from the new applications for registrations expected to be made to RoS following the enactment of this Bill. These administrative costs would require to be recovered from all applicants for registration rather than just those whose leases are converting to ownership.

156. The submission by the Keeper of the Registers of Scotland is drawn to the Minister’s attention in order that further consideration can be given to the issue raised.

Power to alter primary legislation

157. Section 78 provides that the Scottish Ministers should have the power to alter the legislation by “such supplementary, incidental, consequential, transitional or saving provision as they consider necessary or expedient”. In its submission, the Faculty of Advocates stated—

“Granting this power, particularly in relation to supplementary and saving provisions, is an extreme example of legislation by statutory instrument. It is left up to the Scottish Ministers to determine what is “necessary or expedient for the purposes of or in connection with” the new legislation.”89

158. The Faculty was not in favour of such provisions in statutes, particularly where, as in this case, they are dealing with what is supposed to be a fixed and final position in property law. Its view was that, in the case of the subject matter of this Bill, the result would be that the end user would find it much more difficult to find out the up to date legal position.

159. The Minister undertook to look again at the comments made by the Faculty but noted that the Subordinate Legislation Committee had examined the Bill but had not raised any question about section 78.

ECHR

160. Two aspects of the European Convention on Human Rights (ECHR) are relevant to the Bill, namely Article 1 of Protocol 1 of the Convention (“A1P1”), which protects against confiscation of property or interference with property rights by the state (unless a public interest objective is being pursued and various other conditions are satisfied), and Article 14 of the ECHR which prohibits differing treatment of like situations in relation to the rights protected by the ECHR (including the rights protected by A1P1).

161. Various parts of the Bill engage A1P1 and Article 14, including the qualifying criteria for ultra-long leases (section 1), the possibility of preservation of landlords’ sporting rights (section 7), the conversion scheme for leasehold conditions (Part 2), the compensation scheme for landlords (Part 3), and, as highlighted, the special treatment of ‘Blairgowrie leases’ (section 69). Witnesses were questioned on the compliance of the Bill with the ECHR in oral evidence sessions and no concerns were raised.

COMMITTEE RECOMMENDATION

162. The Committee recommends to the Parliament that the general principles of the Bill be agreed to.

Annexe A: subordinate legislation committee report

Subordinate Legislation Committee 5th Report, 2011 (Session 3)

Long Leases (Scotland) Bill

The Committee reports to the Parliament as follows—

1. At its meetings on 21 December 2010 and 25 January 2011, the Subordinate Legislation Committee considered the delegated powers provisions in the Long Leases (Scotland) Bill at Stage 1. The Committee submits this report to the Justice Committee as the lead committee for the Bill under Rule 9.6.2 of Standing Orders.

overview of the bill

2. The Long Leases (Scotland) Bill (“the Bill”) was introduced in the Parliament on 10 November 2010 by the Cabinet Secretary for Justice, Kenny MacAskill MSP.

3. The Scottish Government provided the Parliament with a memorandum on the delegated powers provisions in the Bill (“the DPM”).90

4. Correspondence between the Committee and the Scottish Government is reproduced in the Annexe. This relates to the delegated powers contained in section 21(3) and section 75(5).

5. The Committee determined that it did not need to draw the attention of the Parliament to the delegated power in sections: 7(2), 13(3)(a), 16(4)(a), 23(3)(a), 24(2)(a), 25(2)(a), 26(2)(a), 27(3)(a), 28(3)(a), 37(2), 37(4)(b), 48(4)(b) and (c), 52(3)(b) and (c), 54(3)(a) and (c), 55(2)(a) and (b), 62(b), 65(1)(b), 66(2)(b), 68(1)(c)(ii), 71(3)(a) and (b), 72(2)(b), 78(1) and 80(2).

Delegated powers provisions

Section 21(3) - Power to prescribe a period during which a person may oppose or make representations in relation to an application to the Lands Tribunal to dispense with the need for a conversion condition to be met when converting a leasehold condition to a real burden

Power conferred on: Scottish Ministers

Power exercisable by: regulations made by statutory instrument

Parliamentary procedure: negative resolution of the Scottish Parliament

6. The Committee considered this provision to be of some importance, setting out as it does a means to oppose or make representations in relation to applications for conversion of leasehold conditions to real burdens. In the event that a short time limit were to be set, by virtue of an exercise of the regulation making power in section 21(3) then this might have significant implications with regard to a person’s ability to oppose or make representations.

7. The Committee noted that the reason for taking the power in section 21(3) is set out only briefly in the DPM, it being stated that the purpose is to ensure the Tribunal can deal with any cases without unnecessary delays. Negative procedure is to apply.

8. The Committee was unclear as to the need for this power, and why it was not possible to specify, upon the face of the Bill, a period within which a person could oppose or make representations in relation to an application

9. The response makes comparison firstly with similar provision made in other primary legislation, in particular the Abolition of Feudal Tenure etc. (Scotland) Act 2000. The Committee considers that it must examine each case on its own merits, and its views are not constrained by an approach taken within 2000 legislation, the particular circumstances of which are not in any event known to the Committee.

10. It is stated that the advantage of not laying down a period on the face of the Bill is that it reduces interference with the Tribunal’s procedure. It is further indicated that it is anticipated that applications to the Lands Tribunal should occur in small and manageable numbers, and that the Bill does not need to be detailed in regard to Lands Tribunal procedures.

11. The response sets out what the Scottish Government considers to be the advantages of the approach taken but does not explore why it would not have been possible for a period to have been specified, on the face of the Bill, within which a person could oppose or make representations in regard to an application. The Committee is unclear why that could not have been done. If need be, the period specified could be accompanied by provision enabling it to be changed, if circumstances require.

12. The Committee does not consider that a compelling case is made for the approach taken. At the same time, in regard to what it considers to be an important provision, the Committee considers that there would be real merit in setting out the period on the face of the Bill, in the interests of accessibility and transparency. Given that, as matters stand, this is to be dealt with by means of secondary legislation, it will be necessary for persons to search for the relevant regulations for confirmation of application timescales, in addition to the primary legislation.

13. The Committee recommends that in relation to the provision contained at section 21(3), in terms of which a tenant can oppose or make representations in relation to an application “within such time as may be prescribed” the Scottish Government gives further consideration to amending the Bill for that period to be set out upon the face of the Bill, if necessary with a power to change the period concerned if circumstances require. The Committee reports this to the lead committee accordingly.

Section 75(5) – power to prescribe a date or period after which notices and agreements determined registrable by the courts or the Lands Tribunal cannot be registered and to provide that applications to the courts or the Tribunal must be made within a specified period for the notices and agreements to be registrable.

Power conferred on: the Scottish Ministers

Power exercisable by: order made by statutory instrument

Parliamentary procedure: negative resolution of the Scottish Parliament

14. Section 75 makes provision for certain documents to be registrable despite initial rejection. Section 75(5) provides that in regard to the registration timetable set out at section 75(2) the Scottish Ministers can by order specify a cut-off date after which notices and agreements cannot be registered. Such notices relate to key elements of the Bill, for example, provisions concerned with the conversion of sporting rights or other conditions, and are therefore of some importance.

15. The DPM explained this as being in the nature of a long-stop provision to increase long-term certainty for parties relying on the register. An indication of circumstances in which it might be used are given although the need for the power is not really justified within the DPM. In particular, while the reason for the cut-off and its aim are commented on, it is not really explained why it needs a delegated power to achieve that.

16. Against that background, the Committee sought further clarification from the Scottish Government as to the need for the use of a delegated power at section 75(5) to achieve the aim indicated.

17. The Committee noted the further information provided within the reply concerning the power being used to provide some greater certainty to other users of the Land Register, as to its accuracy. It notes also that the power would not be used so as to affect any actual case but simply as a means of providing clarity and certainty as to the content of the Register.

18. Again, however, in regard to this power, the Committee does not consider that a compelling case is made for the approach taken, regarding a matter which it considers to be of some importance, being concerned with time limits which impact upon rights. The Committee considers that the response, while commenting on the policy principles underlying the approach taken, does not really explain why subordinate legislation must be used to achieve them. It notes that use of the power is discretionary and it is not apparent on the face of the legislation whether there is a limit date.

19. The Committee recommends that, in relation to the provision made at section 75(5), concerning the power to prescribe a date or period after which notices and agreements determined registrable cannot be registered, and to provide that applications must be made within a specified period for the notices and agreements to be registrable, the Scottish Government gives further consideration to amending the Bill so as to make provision concerning those matters on the face of the Bill itself. The Committee reports this to the lead committee accordingly.

20. The Committee has noted the response from the Faculty of Advocates on the Long Leases (Scotland) Bill, with respect to the observations made there on the delegated powers contained in the Bill, which response covers matters of a general nature and also comments on specific provisions within the Bill. The Committee thanks the Faculty for its response.

ANNEXE

Correspondence with the Scottish Government

Section 21(3) - Power to prescribe a period during which a person may oppose or make representations in relation to an application to the Lands Tribunal to dispense with the need for a conversion condition to be met when converting a leasehold condition to a real burden

Can the Scottish Government explain more fully the need for the use of a delegated power as set out in section 21(3) to achieve the stated aim of ensuring the Tribunal can deal with cases without unnecessary delays, given the absence of any detailed justification within the DPM. Why is it not possible for a period within which a person could oppose or make representations in relation to an application to be set out upon the face of the Bill, if necessary with a power to change that if circumstances require?

Section 75(5) - Power to prescribe a date or period after which notices and agreements determined registrable by the courts or the Lands Tribunal cannot be registered and to provide that applications to the courts or the Tribunal must be made within a specified period for the notices and agreements to be registrable

Can the Scottish Government explain more fully the need for the use of a delegated power at section 75(5) to achieve the aim referred to in the DPM with respect to this provision, given the absence of any detailed justification for such power within the DPM itself.

Response from the Scottish Government

Section 21(3) - Power to prescribe a period during which a person may oppose or make representations in relation to an application to the Lands Tribunal to dispense with the need for a conversion condition to be met when converting a leasehold condition to a real burden

Paragraphs 35 to 37 of the Delegated Powers Memorandum outlines the provision, the reason for taking the power and the choice of procedure.

You asked for a fuller explanation and, in particular, why is it not possible for a period to be set out on the face of the Bill, with a power to change that if required.

The power in section 21(3) of the Bill is along the same lines to previous similar powers in relation to applications to the Lands Tribunal. Section 21 of the Abolition of Feudal Tenure etc. (Scotland) Act 2000 refers to “within such time as may be so prescribed”.

The advantage of not laying down a period on the face of the Bill is that this reduces interference with the Tribunal’s procedures. The power to prescribe a period would only be used if it appeared that regulations were necessary. Generally, the Government expects that the details of the Tribunal’s procedures can be dealt with through the existing Lands Tribunal for Scotland Rules or through the Tribunal’s discretion. Paragraph 4.45 of the Scottish Law Commission report on Conversion of Long Leases91, on which the Bill is based, notes that the “relatively small number of leases eligible for conversion means that applications to the Lands Tribunal should occur in small and manageable numbers”. The Government agrees with the Commission and, therefore, is of the view that the Bill does not need to be detailed in relation to Lands Tribunal procedures.

Section 75(5) - Power to prescribe a date or period after which notices and agreements determined registrable by the courts or the Lands Tribunal cannot be registered and to provide that applications to the courts or the Tribunal must be made within a specified period for the notices and agreements to be registrable.

You asked for a fuller explanation of the need for the use of a delegated power at section 75(5).

Paragraphs 44 and 45 of the Delegated Powers Memorandum provide details on the reasons for the powers.

The key point is that the Land Register needs to be accurate: paragraph 8.10 of the Scottish Law Commission report provides more detail on this.

If the Keeper of the Registers should refuse to register a notice or agreement, it is right that an aggrieved party should be able to challenge this refusal in the ordinary courts or in the Lands Tribunal, as outlined in the first sentence of paragraph 8.12 of the Commission’s report. Ultimately, however, the Register needs to be accurate so that it can be relied upon.

To achieve this end, section 75(5)(b) empowers Ministers to make an order laying down a period during which applications to the court or the Tribunal for a determination that a notice or agreement is registrable may be made. This power means that, if needed, Ministers can stop applications being made long after the Keeper has taken a decision: late applications could raise questions as to whether or not the Register has comprehensive information.

Section 75(5)(a) empowers Ministers to specify a date or period after which notices cannot be registered after the court or Tribunal determines that they are registrable. Again, the aim is to be able to prescribe a long-stop period or date so that parties can have confidence in the accurate and comprehensive nature of the Register.

The purpose of the power is to provide a degree of certainty to other users of the Land Register. Once the power is used to specify a particular date, then anyone who looks at the Register after that date would know (without needing to check for outstanding cases before the courts or the Tribunal or otherwise taking account of the provisions of the Bill) that the Register can be relied upon.

Our expectation is that the power would be used some time after any reasonable application should have been determined, i.e. it would be used on the basis that it wouldn't affect any actual case but would simply provide certainty.

Annexe B: finance committee scrutiny

Letter from the Convener of the Finance Committee on the Financial Memorandum of the Long Leases (Scotland) Bill

As you are aware, the Finance Committee examines the financial implications of all legislation, through the scrutiny of Financial Memoranda (FM). The Committee agreed to adopt level one scrutiny in relation to the Long Leases (Scotland) Bill. Applying this level of scrutiny means that the Committee does not take oral evidence or produce a report, but it does seek written evidence from affected organisations.

The Committee received one submission on the FM (please see the annexe).

Andrew Welsh MSP
Convener
Finance Committee
28 January 2011

Annexe

SUBMISSION FROM THE KEEPER OF THE REGISTERS OF SCOTLAND

By way of background, Registers of Scotland (RoS) is a non-Ministerial Department and is headed by me, as Keeper of the Registers of Scotland. The Keeper is a non-Ministerial office holder in the Scottish Administration and is the Chief Executive of RoS. RoS is a key part of the infrastructure that supports the Scottish economy, underpinning the property market by registering and providing State-backed indemnity protection for property transactions in Scotland, worth up to £50 billion each year. Set up as a Trading Fund in 1996, RoS is self financing from fees levied on its customers.

RoS’s work is dominated by the two main registers that relate to rights in land: the General Register of Sasines (established in 1617) and the Land Register of Scotland (established by the Land Registration (Scotland) Act 1979). I also have responsibility for 14 judicial and Crown registers. Our work is demand-led, fluctuating in response to activity in the property market, particularly the housing component. We typically handle around half a million registration transactions each year.

Sheenagh Adams
Keeper of the Registers of Scotland

Questionnaire

Consultation

1. Did you take part in the consultation exercise for the Bill, if applicable, and if so did you comment on the financial assumptions made?

I submitted a written response to the Scottish Government consultation and was represented at a seminar held by the SG Justice Directorate on 12 May 2010. I was given the opportunity to provide Justice Directorate with information regarding the financial impact of the Bill on the operation of the Scottish property registers.

2. Do you believe your comments on the financial assumptions have been accurately reflected in the Financial Memorandum?

Yes

3. Did you have sufficient time to contribute to the consultation exercise?

Yes

Costs

4. If the Bill has any financial implications for your organisation, do you believe that these have been accurately reflected in the Financial Memorandum? If not, please provide details.

My estimate of the administrative costs to RoS is accurately reflected in paragraphs 280-282.

Paragraphs 283-286 refer to the registration fees that will be charged by RoS for the registration of notices and other documents prescribed in the Bill. Paragraph 284 refers to a consultation on changes to fees, and these changes have now been implemented92. As a result, the fee charged for registration of a notice would be £60 per Land Register title sheet and/or per deed recorded in the Sasine Register, and the total cost to applicants is estimated to be £60,000. Registration fees are intended to cover the cost of processing the applications in question, and the increase in fees will not therefore offset the administrative costs referred to in paragraphs 283-286.

5. Are you content that your organisation can meet the financial costs associated with the Bill? If not, how do you think these costs should be met?

As noted in paragraph 282, the administrative costs to RoS will require to be recovered from registration fees in the Land and Sasine Registers, and so costs will be met by all applicants for registration rather than merely those benefiting from the conversion of ultra-long leases to ownership.

6. Does the Financial Memorandum accurately reflect the margins of uncertainty associated with the estimates and the timescales over which such costs would be expected to arise?

The Financial Memorandum does not define a margin of uncertainty with regard to the administrative costs to RoS of around £200,000. The estimate is not supported by a full case analysis and actual cost may exceed that amount.

Paragraph 286 notes the assumptions made with regard to the estimated total cost to applicants. I consider these assumptions are correctly reflected, subject to the increase in the application fee from £30 to £60 as noted above and the consequential increase in the total cost.

Wider Issues

7. If the Bill is part of a wider policy initiative, do you believe that these associated costs are accurately reflected in the Financial Memorandum?

N/A

8. Do you believe that there may be future costs associated with the Bill, for example through subordinate legislation or more developed guidance? If so, is it possible to quantify these costs?

The administrative costs to RoS may increase if any amendment is made to the Bill in respect of the criteria that define whether a leasehold interest will convert to ownership.

Annexe c: extracts from the minutes

31st Meeting, 2010 (Session 3), Tuesday 16 November 2010

Long Leases (Scotland) Bill (in private): The Committee considered a paper proposing an approach to the scrutiny of the Bill at Stage 1.

36th Meeting, 2010 (Session 3), Tuesday 14 December 2010

Work programme (in private): The Committee considered its work programme and agreed [...] (3) to omit the Lands Tribunal for Scotland from the list of invitees for Stage 1 of the Long Leases (Scotland) Bill [...] .

2nd Meeting, 2011 (Session 3), Tuesday 18 January 2011

Long Leases (Scotland) Bill: The Committee took evidence on the Bill at Stage 1 from—

Professor George Gretton, Commissioner, and John Dods, Project Manager, Scottish Law Commission;

Andy Wightman, independent researcher.

Long Leases (Scotland) Bill (in private): The Committee considered the written evidence received so far and agreed to invite Brodies Solicitors (subject to availability) to give evidence at its meeting on 8 February 2011.

Long Leases (Scotland) Bill (in private): The Committee considered the main themes arising from the oral evidence heard earlier in the meeting. The Committee agreed to write to the Scottish Government inviting it to comment on the evidence given by Professor Gretton on section 1(4)(b).

3rd Meeting, 2011 (Session 3), Tuesday 25 January 2011

Long Leases (Scotland) Bill: The Committee took evidence on the Bill at Stage 1 from—

Donald Reid, and Lionel Most, Members, Conveyancing Committee, Law Society of Scotland;

Kenneth Swinton, Council Member and Convener of Conveyancing Committee, Scottish Law Agents Society;

Christopher Haddow QC, and John Robertson, Faculty of Advocates;

David Melhuish, Director, and Alan Cook, Chair, Commercial Committee, Scottish Property Federation;

Richard Blake, Legal Advisor, Scottish Rural Property and Business Association.

Long Leases (Scotland) Bill (in private): The Committee considered the main themes arising from the oral evidence heard earlier in the meeting. The Committee agreed to invite written evidence from organisations in the oil and gas industry and in the telecommunications sector on the implications of section 1(4)(b) (access to pipes and cables).

4th Meeting, 2011 (Session 3), Tuesday 1 February 2011

Long Leases (Scotland) Bill: The Committee took evidence on the Bill at Stage 1 from—

Iain Strachan, Principal Solicitor, Legal and Administrative Services, and Bill Miller, City Development Department, City of Edinburgh Council;

Richard Brown, Managing Director, City Property (Glasgow) LLP;

Andy Young, Head of Asset Management, City of Glasgow Council;

Andrew Ferguson, Solicitor, Fife Council, and Vice President of the Society of Local Authority Lawyers and Administrators in Scotland (SOLAR);

Professor Robert Rennie, Professor of Conveyancing, University of Glasgow.

Long Leases (Scotland) Bill (in private): The Committee considered the main themes arising from the oral evidence heard earlier in the meeting.

5th Meeting, 2011 (Session 3), Tuesday 8 February 2011

Long Leases (Scotland) Bill: The Committee took evidence on the Bill at Stage 1 from—

Dale Strachan, Partner, and Catherine Reilly, Solicitor, Brodies LLP;

Fergus Ewing MSP, Minister for Community Safety and Simon Stockwell, Bill Team Manager, Scottish Government.

6th Meeting, 2011 (Session 3), Tuesday 22 February 2011

Long Leases (Scotland) Bill: The Committee considered a draft Stage 1 report. Various changes were agreed to and the Committee agreed to consider a revised draft at its next meeting.

7th Meeting, 2011 (Session 3), Tuesday 1 March 2011

Long Leases (Scotland) Bill: The Committee deferred consideration of a revised draft Stage 1 report to its next meeting.

8th Meeting, 2011 (Session 3), Tuesday 8 March 2011

Long Leases (Scotland) Bill: The Committee considered a revised draft Stage 1 report. Various changes were agreed to and the report was approved for publication.

Annexe d: index of oral evidence

2nd Meeting, 2011 (Session 3), Tuesday 18 January 2011

Professor George Gretton, Commissioner, and John Dods, Project Manager, Scottish Law Commission

Andy Wightman, independent researcher

3rd Meeting, 2011 (Session 3), Tuesday 25 January 2011

Donald Reid, and Lionel Most, Members, Conveyancing Committee, Law Society of Scotland

Kenneth Swinton, Council Member and Convener of Conveyancing Committee, Scottish Law Agents Society

Christopher Haddow QC, and John Robertson, Faculty of Advocates

David Melhuish, Director, and Alan Cook, Chair, Commercial Committee, Scottish Property Federation

Richard Blake, Legal Advisor, Scottish Rural Property and Business Association

4th Meeting, 2011 (Session 3), Tuesday 1 February 2011

Iain Strachan, Principal Solicitor, Legal and Administrative Services, and Bill Miller, City Development Department, City of Edinburgh Council

Richard Brown, Managing Director, City Property (Glasgow) LLP

Andy Young, Head of Asset Management, City of Glasgow Council

Andrew Ferguson, Solicitor, Fife Council, and Vice President of the Society of Local Authority Lawyers and Administrators in Scotland (SOLAR)

Professor Robert Rennie, Professor of Conveyancing, University of Glasgow

5th Meeting, 2011 (Session 3), Tuesday 8 February 2011

Dale Strachan, Partner, and Catherine Reilly, Solicitor, Brodies LLP

Fergus Ewing MSP, Minister for Community Safety and Simon Stockwell, Bill Team Manager, Scottish Government

Annexe e: index of written evidence

Bailie Dr Nina Baker
Brodies Solicitors
City of Edinburgh Council
Dave Cuthbert
Bill Fraser
Catriona Grant
Robert Hamilton
Carol Henry
Hillhead Community Council
Kelvinside Community Council, Glasgow
Law Society of Scotland
Mary Mackenzie
Sally Macpherson
Thomas Minogue
Peebles Community Council
Peterhead Port Authority
Jon Pullman
Sally Richardson
St Andrews Preservation Trust Ltd
Scottish Law Agents Society
Scottish Rural Property and Business Association
John Swanson
Andy Wightman
Andy Wightman (supplementary submission)
Professor Angus McAllister

Written evidence is published separately (in the order received) on the Committee’s webpage at:

http://www.scottish.parliament.uk/s3/committees/justice/inquiries/LongLeases/longleasessubmissions.htm


1 Long Leases (Scotland) Bill and accompanying documents. Available at:
http://www.scottish.parliament.uk/s3/bills/61-LongLeases/index.htm

2 Long Leases (Scotland) Bill, responses to Justice Committee call for evidence. Available at: http://www.scottish.parliament.uk/s3/committees/justice/inquiries/LongLeases/longleasessubmissions.htm

3 See guidance - (Scot Law Com No 204) The Scottish Law Commission’s report and draft Bill can be found here: http://www.scotlawcom.gov.uk/publications/reports/2000-2009/

4Abolition of Feudal Tenure etc (Scotland) Act 2000. Available at: http://www.legislation.gov.uk/asp/2000/5/contents

5 Leasehold Casualties (Scotland) Act 2001. Available at: http://www.legislation.gov.uk/asp/2001/5/contents

6 Title Conditions (Scotland) Act 2003. Available at: http://www.legislation.gov.uk/asp/2003/9/contents

7 Tenements (Scotland) Act 2004. Available at: http://www.legislation.gov.uk/asp/2004/11/contents

8 The Scottish Law Commission Report on Conversion of Long Leases, paragraph 2.4.

9 Scottish Government. Consultation on SLC Report on Conversion of Long Leases. Available at: http://www.scotland.gov.uk/Publications/2010/03/26131302/0

10 Report of the Scottish Leases Committee, paragraphs 37 and 38 and appendix II (the Guthrie Report).

11 The Scottish Law Commission Report on Conversion of Long Leases, appendix C.

12 The Scottish Law Commission Report on Conversion of Long Leases, paragraph 1.4.

13 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4016.

14 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4060.

15 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4073.

16 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4061.

17 Scottish Parliament Justice Committee. Official Report, 1 February 2011, Col 4104.

18 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4026.

19 Scottish Parliament Justice Committee. Official Report, 8 February 2011, Col 4162.

20 The principal submission is from Andy Wightman (LL1). All submissions available at:
http://www.scottish.parliament.uk/s3/committees/justice/inquiries/LongLeases/longleasessubmissions.htm

21 Scottish Government. Letter from the Minister for Community Safety to the Justice Committee dated 23 February 2011.

22 SPICe Briefing Long Leases (Scotland) Bill: Available at: http://www.scottish.parliament.uk/business/research/briefings-11/SB11-01.pdf

23 Local Authority (Scotland) Accounts Advisory Committee (LASAAC). Accounting for the Common Good Fund: A Guidance Note for Practitioners (2007)

24 Audit Scotland. An overview of Local Government in Scotland 2009. Available at:
http://www.audit-scotland.gov.uk/docs/local/2010/nr_100218_local_authority_overview.pdf

25 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4018.

26 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4019.

27 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4020.

28 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4036.

29 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4038.

30 Andy Wightman. Written submission to the Justice Committee and Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4043.

31 Scottish Law Agents’ Society. Written submission to the Justice Committee.

32 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4059.

33 Scottish Parliament Justice Committee. Official Report, 1 February 2011, Col 4092.

34 Scottish Parliament Justice Committee. Official Report, 1 February 2011, Col 4097.

35 Scottish Parliament Justice Committee. Official Report, 1 February 2011, Col 4097.

36 Scottish Parliament Justice Committee. Official Report, 8 February 2011, Col 4153.

37 Robert Brown MSP dissented on the basis that he was persuaded that there is a compelling case for exempting leases of common good property from this Bill.

38 Scottish Law Commission Report on Conversion of Long Leases, paragraph 2.4.

39 Scottish Law Commission Report on Conversion of Long Leases, paragraph 2.33.

40 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4027.

41 Scottish Parliament Justice Committee. Official Report, 1 February 2011, Col 4108.

42 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4066.

43 Scottish Parliament Justice Committee. Official Report, 8 February 2011, Col 4146.

44 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4076.

45 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4076.

46 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4076.

47 Scottish Parliament Justice Committee. Official Report, 1 February 2011, Col 4107.

48 Scottish Parliament Justice Committee. Official Report, 1 February 2011, Col 4108.

49 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4077.

50 Scottish Parliament Justice Committee. Official Report, 8 February 2011, Col 4159.

51 A grassum is a single up-front payment often made in addition to a periodic payment such as rent. A grassum can also mean any payment made to a landlord by a person wanting to obtain a tenancy

52 Messrs Brodies Solicitors. Written submission to the Justice Committee.

53 Scottish Parliament Justice Committee. Official Report, 8 February 2011, Col 4145.

54 Scottish Parliament Justice Committee. Official Report, 8 February 2011, Col 4146.

55 Scottish Parliament Justice Committee. Official Report, 8 February 2011, Col 4147.

56 Scottish Parliament Justice Committee. Official Report, 1 February 2011, Col 4099.

57 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4028.

58 Scottish Parliament Justice Committee. Official Report, 1 February 2011, Col 4109.

59 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4064.

60 Scottish Parliament Justice Committee. Official Report, 1 February 2011, Col 4105.

61 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4034.

62 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4063.

63 Scottish Parliament Justice Committee. Official Report, 1 February 2011, Col 4105.

64 Professor Angus McAllister. Written submission to the Justice Committee.

65 Scottish Parliament Justice Committee. Official Report, 8 February 2011, Col 4165.

66 Scottish Parliament Justice Committee. Official Report, 1 February 2011, Col 4107.

67 Paisley, R. Servitudes – the New Scottish Regime. In: Rennie, R. ed The promised Land: Property Law Reform. (2008) Edinburgh: W Green & Son Ltd.

68 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4032.

69 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4078.

70 Scottish Parliament Justice Committee. Official Report, 1 February 2011, Col 4110.

71 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4070.

72 Peterhead Port Authority. Written submission to the Justice Committee.

73 Scottish Parliament Information Centre (2011). Long Leases (Scotland) Bill. SPICe Briefing 11/01. Available at: http://www.scottish.parliament.uk/business/research/briefings-11/SB11-01.pdf

74 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4030.

75 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4060.

76 Scottish Parliament Justice Committee. Official Report, 8 February 2011, Col 4168.

77 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4031.

78 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4062.

79In Blairgowrie and Rattray, it was common for leases of residential property to have an initial duration of 99 years with leases being perpetually renewable for further periods of 99 years at a time. Such leases are often referred to as “Blairgowrie leases”.

80 Article 14 of the ECHR provides “The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”

81 Long Leases (Scotland) Bill. Policy memorandum, paragraph 62.

82 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4024.

83 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4024.

84 Scottish Parliament Justice Committee. Official Report, 1 February 2011, Col 4110.

85 The Law Society of Scotland. Written submission to the Justice Committee.

86 Scottish Parliament Justice Committee. Official Report, 18 January 2011, Col 4033.

87 Scottish Parliament Justice Committee. Official Report, 25 January 2011, Col 4078.

88 Scottish Parliament Justice Committee. Official Report, 8 February 2011, Col 4169.

89 The Faculty of Advocates. Written submission to the Justice Committee.

91 The Scottish Law Commission report is at http://www.scotlawcom.gov.uk/download_file/view/251/

92 Fees in the Registers of Scotland Amendment Order (SSI 2010/404)