Property Factors (Scotland) Bill to ensure standards of practice

The Office of Fair Trading declared in 2009 that the level of customer dissatisfaction in the property factor industry is far higher than any other industry or sector providing services to the public in Scotland.

The Property Factors (Scotland) Bill was drafted by Govan Law Centre and was introduced to the Scottish Parliament on 1 June 2010 with the specific aim of addressing the failings of the property factor industry in Scotland.

The Bill introduces:

  • A mandatory registration scheme
    This will require every person appointed as a property factor to pass a ‘fit and proper person’ test. The register would be funded by an annual registration fee paid by property factors.
  • A statutory code of conduct
    This will set out basic minimum standards of practice for all registered property factors. Homeowners would rely on these in their day-to-day dealings with their property factor. In extreme cases any factor falling below the minimum standards could be de-registered, preventing them from causing ongoing detriment to homeowners.
  • An accessible dispute resolution procedure
    It is expected that a Property Management Committee will be set up to hear disputes between homeowners and factors. This Committee would have the power to ensure compliance with any contracts and minimum standards of practice, and where appropriate, require the factor to make a compensatory award or refund to the homeowner.

Mike Dailly, Principal Solicitor of the Govan Law Centre, said: “Property factors must be the only industry in Scotland who are virtually unlicensed and unregulated. When one-third of your customers are unhappy with the service you provide it’s time for a statutory solution. The Scottish Government are consulting on a voluntary accreditation scheme, but we’ve had self-regulation for centuries and it hasn’t worked. The people of Scotland need a solution with legal teeth, and the bill provides that solution in a fair and measured way.”

It is anticipated that the provisions of the Bill will come into force on 29 September 2011.

Nicola McCafferty
Solicitor

UK renewable energy uptake continues

The Latest Ofgem figures show a boom in small-scale renewable energy systems across the UK.

Since the introduction of the feed in tariff (FIT) by the previous government in April 2010, over 9000 new wind, solar, hydro and micro combined heat and power projects have been installed by both householders and commercial organisations.  Installations in August doubled those in July with nearly 4000 householders going green.

FITs are sometimes better known as ‘Clean Energy Cashbacks’, which describes exactly how they work.

Favourite small-scale renewable energy technologies in the UK remain wind energy and solar power, although hydro-electric power is becoming more popular with almost 40 new projects last month.

The FIT is also attracting European solar companies to the UK. For a fact sheet on the FIT we recommend a visit to the UK energy regulator Ofgem website.

Shaun Mackintosh
Associate

Renewable energy consultation

Yet another consultation exercise has been announced by the Scottish Government. This time it has started consulting on changes to the Renewables Obligation (Scotland) Order 2010.

There are significant proposals for this important and growing sector of the economy, which can benefit many Scottish businesses.

On wave and tidal proposals, the Renewable Energy Association’s chief executive Gaynor Hartnell said: “This is good news for wave and tidal generators. This embryonic industry needs all the support it can get. The UK needs to act swiftly to maintain its leading position. We are at risk of losing out on an industry in which we could be world leaders, just as we did with wind energy in the 1980s, which went to the Danes and Germans. This move must be coupled with a consenting regime which facilitates, rather than frustrates developing projects in UK waters.”

You can contribute by following this link: consultation.

Shaun Mackintosh
Associate

Local Development Plan for Dundee

It has been confirmed to us that Dundee City Council has commenced work towards preparing a Local Development Plan which will in time replace the adopted Dundee Local Plan Review 2005.

The Local Development Plan will set out the strategy which will guide future development of the city for a period of 5 years and provide broad indications of growth for up to 10 years in the future. The plan will also contain policies and proposals covering the principal land use issues in the city and when adopted will be the principal consideration in the determination of planning applications.

The council are undertaking a consultation exercise on the plan and are inviting comments to be submitted to them before 8th October 2010.

Any of our clients who are landowners or have an interest in land in Dundee and who want to promote it for development should consider contacting Shaun Mackintosh who heads Blackadders’ Planning team. Shaun would be happy to advise on the way forward for promotion of any site with the council. Shaun can be contacted on 01382 229222 or shaun.mackintosh@blackadders.co.uk.

Construction Law: Take care when signing Letters of Appointment

It is standard practice that the professional team sign up to Letters of Appointment for any project. But how many employers, architects, engineers or other consultants actually take the time to read through or instruct someone else to look at what the appointment actually says before signing up to it?

The appointment is the contractual arrangement that indicates exactly what services are to be provided and the standard to which those services should be carried out to. It doesn’t take more than a few words to transform a relatively fair appointment into one that would leave any consultant struggling to defend themselves should a dispute arise.

The appointment may in many cases seem like a relatively straightforward contract, but it is as much about what is omitted as what is included. Each appointment should be specifically tailored to suit the requirements of the current project – it could be a costly mistake for an employer to appoint someone using a standard appointment.

If you need help with any construction law issues please contact kyle.moir@blackadders.co.uk or david.milne@blackadders.co.uk.

Rent reviews and break clauses

In the present difficult property market conditions issues such as rent review and the inclusion of tenant break options are matters which regularly require to be considered when negotiating the terms of a new business tenancy.

Traditionally rent review clauses contained in the leases of Scottish commercial property tended to operate on the basis of being upward only with any increase in rent being calculated on an “open market value” basis where the reviewed rent was determined by comparison with the value of comparable commercial premises exposed for let on similar terms and conditions as contained in the lease of the premises where the rent is being reviewed. Given the effect of the recession landlords have found it difficult to obtain rental evidence necessary to achieve an increase in rents and it is therefore becoming more common for landlords to seek to link any increase in rent upon review to the Retail Price Index (“RPI”). The RPI was introduced in 1948 as a measure of inflation and it is calculated by reference to a basket of goods of all descriptions but was never intended for use in the determination of rents of commercial properties and as such its use for this purpose can produce uncertain results. Careful consideration has to be given in every new lease on how any review of rent should be structured and professional legal and valuation advice given to avoid, in so far as possible, failure to achieve any increase in rent upon review.

Turning to the matter of break options, the trend in recent years has been to see the length of business tenancy agreements reduced. Where leases of 20 years were common not so long ago it is now much more likely that commercial leases will be granted for a shorter period of 5 to 10 years. A landlord, having satisfied himself on the covenant of a potential tenant, will seek to ensure that the proposed lease is a long as possible, whilst a tenant might regard a longer period as being necessary to amortise the cost of fit-out, may also seek to negotiate one or more break clauses entitling the lease to be terminated as a defence against changing market conditions. This is of particular importance where a business tenancy agreement is being entered into in respect of a newly established business where longer term profitability cannot be assured. Again professional advice is needed by both landlords and tenants when weighing up the relative advantages and disadvantages of the use of such options.  Recently there have been instances where a landlord has been persuaded to agree forego one or more future rent reviews in exchange for the tenant undertaking not to exercise a forthcoming tenant’s break option.

The terms of a business tenancy agreement are of vital importance to ensure the viability of the lease in changing market conditions and Blackadders can advise on all aspects of commercial leasing whether from the point of view of a landlord or tenant.

Ken Scott, Associate