sb 12-45 long leases (scotland) bill-stage 3 (420 kb pdf).pdf

7/31/2019 SB 12-45 Long Leases (Scotland) Bill-Stage 3 (420 KB pdf).pdf

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The Scottish Parliament andScottishParliam entInformation Centrelogos.

SPICe Briefing

Long Leases (Scotland) Bill: Stage 325 June 201212/45

Sarah Harvie-Clark

TheLong Leases (Scotland) Billis based on the recommendations for reform made by the

Scottish Law Commission in 2006 and was introduced in the Scottish Parliament on 12January 2012, having first been the subject of an onlineconsultationby the ScottishGovernment in March 2010. An earlier version of the Bill was introduced in Session 3 of theParliament but fell at the dissolution of Parliament.

Stage 3 proceedings on the Bill are scheduled for 28 June 2012. This briefing summarisesthe key proposals in the Bill and considers some of the issues raised during Stage 1 and 2 ofthe Bill.
http://www.scottish.parliament.uk/parliamentarybusiness/Bills/45695.aspxhttp://www.scottish.parliament.uk/parliamentarybusiness/Bills/45695.aspxhttp://www.scottish.parliament.uk/parliamentarybusiness/Bills/45695.aspxhttp://www.scotland.gov.uk/Publications/2010/03/26131302/0http://www.scotland.gov.uk/Publications/2010/03/26131302/0http://www.scotland.gov.uk/Publications/2010/03/26131302/0http://www.scotland.gov.uk/Publications/2010/03/26131302/0http://www.scottish.parliament.uk/parliamentarybusiness/Bills/45695.aspx


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CONTENTS

INTRODUCTION AND BACKGROUND 3KEY PROPOSALS IN THE BILL 4ISSUES ASSOCIATED WITH THE BILL AT STAGE 1 AND STAGE 2 4SOURCES 10RELATED BRIEFINGS 16


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INTRODUCTION AND BACKGROUND

TheLong Leases (Scotland) Bill(plus accompanying documents)(the Bill) was introduced inthe Scottish Parliament on 12 January 2012 by Richard Lochhead MSP, Cabinet Secretary for

Rural Affairs and Environment. The Bill is based on recommendations of the Scottish LawCommission (SLC) in itsReport on Conversion of Long Leases(SLC 2006). An earlier versionof the Bill was introduced in Session 3 of the Parliament but fell at the dissolution of Parliament.

The ParliamentsRural Affairs, Climate Change and Environment Committeewas designatedthe lead committee for the parliamentary consideration of the Bill. ItsStage 1 Report(ScottishParliament Rural Affairs, Climate Change and Environment Committee 2012e) was publishedon 26 March 2012. The Bill completed Stage 1 (consideration of the general principles) with theStage 1 debate on25 April 2012. The Scottish Government (2012a) published a writtenresponseto the Stage 1 Report on 19 April 2012.

Stage 2 consideration of the Bill took place on16 May 2012; thereafterthe Bill (as amended atStage 2) was published, along withRevised Explanatory Notes.

Stage 3 proceedings on the Bill are scheduled for 28 June 2012. The Scottish Government(2012b) recentlywroteto the Convener of the Rural Affairs, Climate Change and EnvironmentCommittee, responding to various points raised at Stage 2 of the Bill.

Key dates in the Parliaments consideration of the Bill are set out in Table 1 below:

Table 1: Summary of parliamentary consideration

Bill introduced 12 January 2012Stage 1: Rural Affairs, Climate Change andEnvironment Committee evidence sessions

8 February,22 February,29 February,7March2012

Stage 1: Finance Committee 25 January2012Stage 1: Subordinate Legislation Committee 7 February2012Stage 1:Rural Affairs, Climate Change andEnvironment Committees report published

26 March 2012

Stage 1: Plenary Debate 25 April 2012Stage 2: Rural Affairs, Climate Change andEnvironment Committee

16 May 2012

The remainder of this briefing provides a summary of the key proposals in the Bill andconsideration (in table format) of some of the issues arising during both Stage 1 and Stage 2consideration of the Bill. The briefing does not seek to outline all of the issues raised or all of thechanges made at Stage 2.

An earlier SPICe Briefing entitledLong Leases (Scotland) Bill(Harvie-Clark 2012a) providesinformation and analysis associated with the Bill as introduced.
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KEY PROPOSALS IN THE BILL

The main policy rationale for the current Bill is that a tenants right under an ultra-long lease isakin to a right of ownership and so the Bill provides for such a right to be automaticallyconverted to a right of ownership on an appointed day, with compensation for the formerlandlord.

In the Bill as amended at Stage 2, an ultra-long lease (or a qualifying lease as it is referred to inthe Bill) is defined as a registered lease of over 175 years which has a) more than 100 years leftto run, in the case of a lease of residential property; or b) more than 175 years left to run, in anyother case (section 1).

Section 1(4) of the Bill exempts various types of leases from the scope of the conversionscheme, including leases where the annual rent payable under the lease is more than 100.This exemption is designed to exclude leases of property on commercial terms. If it is not clearfrom the lease itself that the annual rent is over 100, section 64 of the Bill allows leases to beexempted by agreement or following an order made by the Lands Tribunal. This provision wasadded following evidence taken on the Session 3 version of the Bill and reflects that annual

rental may be variable.

In another change to the version of the Bill introduced in Session 3 of the Parliament, there isalso an exemption where the leased subjects include a harbour (either wholly or partly) inrelation to which there is a harbour authority. Leases granted for the sole purpose of allowingthe tenant to install pipes and cables and leases relating to the right to extract minerals are alsoexcluded (section 1(4)).

Compensatory payments for a former landlord are based on the annual rent payble under theultra-long lease in question. Additional payments to the former landlords are also payable insome circumstances (Part 4).

ISSUES ASSOCIATED WITH THE BILL AT STAGE 1 AND STAGE 2

Table 2 below outlines the policy issues associated with the Bill which received attention atStages 1 and 2.


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Table 2: Issues at Stage 1 and Stage 2

Issue The Bill as introduced The Rural Affairs, ClimateChange and Environment

Committees recommendations

and the Scottish Governments

response

Stage 2

Common good

(see below regarding WaverleyMarket)

Like the version of the Billintroduced in Session 3, the Billcontains no specific provisionsrelating to common good landand property. However, one ofthe policy issues associated withthe Bill which has attracted themost attention is the extent towhich common good land andproperty will be affected by theconversion scheme for ultra-longleases contained in the Bill and, ifit is affected, whether this isdesirable in policy terms.

The common good is a fund ofmoney and assets owned andadministered by a Scottish localauthority in respect of a formerburgh within the area of that localauthority. The common good issubject to a range of statutorycontrols.

In its Stage 1 Report, theCommittee stated that it did notthink that the case for exemptingultra-long leases of common goodland and property from the scopeof the conversion scheme in theBill had been made; however italso stated neither is the caseagainst this exemption a clearand compelling one.

Following the recommendation ofthe former Justice Committee inrelation to the Session 3 version

of the Bill, the Committeerecommended that anycompensation or additionalpayments received by localcouncils on the conversion ofultra-long leases of common goodshould be directed to the relevantcommon good funds (ScottishParliament Rural Affairs, ClimateChange and Environment

Amendment 9, in the name of JimHume MSP, aimed to excludeultra-long leases of common goodland and property from the scopeof the Bill. This amendment wasdisagreed to (by division).


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All thirty two local authorities inScotland were asked to provideinformation to the ScottishGovernment regarding any ultra-long leases of common good landand property in the areaTheinformation provided suggestedthat there are nine ultra-longleases of common good land andproperty in Scotland (ScottishParliament Rural Affairs, ClimateChange and EnvironmentCommittee 2012e, para 94).1

In the Policy Memorandum to theBill (at para 51) the ScottishGovernment states that if the Billis passed by Parliament theScottish Government will write tolocal councils recommending thatany compensatory or additionalpayments received by localauthorities as a result of ultra-longleases of common good land andproperty converting intoownership should be allocated tolocal authorities common good

funds or accounts.

Committee 2012e, paras 127 and134).

In its response to the Stage 1Report, the Scottish Governmentstated that it did not support anexemption for ultra-long leases ofcommon good land and propertyfor a number of reasons,including a lack of evidence of anadverse impact on the formerlandlords in question (i.e. the

councils) (Scottish Government2012a, para 20).

A lot of the debate associated In relation to a possible The purpose of amendments 1

1Three have been identified in Glasgow, one in Edinburgh, one in Aberdeenshire, three in Dumfries and Galloway and one in South Ayrshire. The City of Edinburgh

Council has never included the ultra-long lease of the Waverley Market site in their total as, during both Sessions 3 and 4 of Parliament, the Council took the view that the

lease was not part of the Councils common good fund. The Councils historical approach to the site was raised during evidenc e sessions on the Bill. See, for example,Scottish Parliament Rural Affairs, Climate Change and Environment Committee 2012c, paras638 639 and 657.


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Waverley Market with the Bill has focused on theformer Waverley Market site inEdinburgh (now the site of thePrinces Mall Shopping Centre).Whether this site was part ofEdinburghs common good fundwas a matter of considerabledebate during the evidencesessions on the Bill. However, inthe version of the Bill asintroduced, the ultra-long lease ofthis site appeared to satisfy thecriteria for a qualifying lease setout in section 1 of the Bill,meaning that (withoutamendment to the Bill) ownershipof the Waverley Market site wouldhave passed from the City ofEdinburgh Council to the currentowner of the tenants interestunder the lease (a privatecompany) on the appointed day.

exemption for the WaverleyMarket site (separate from anygeneral exemption for commongood) the Committee stated thecasehas still to be made(Scottish Parliament Rural Affairs,Climate Change and EnvironmentCommittee 2012e, para 158).

In its response to the Stage 1Report the Scottish Governmentstated it was not for it to reach a

view on whether Waverley Marketwas part of the common good. Italso noted the Committeescomments on an exemption forWaverley Market without addingfurther comment (ScottishGovernment 2012a,paras 22 and23).

and 2 (which were ScottishGovernment amendments) was toalter the definition of qualifyinglease for the purposes of theconversion scheme. The originaldefinition contained in the Bill asintroduced had not made adistinction between residentialleases and other types of leases.Amendments 1 and 2 proposedsuch a distinction, increasing therequired unexpired duration of aqualifying ultra-long lease from100 to 175 years in relation to allleases other than leases ofresidential property.

An important effect ofamendments 1 and 2 was toexclude the ultra-long leaseassociated with the WaverleyMarket from the scope of theconversion scheme contained inthe Bill (Stockwell 2012).

Amendments 1 and 2 wereagreed to without division.

Registration issues The Land Registration etc.(Scotland) Bill was passed by theParliament on 31 May 2012, withone of its main policy objectives

Several witnesses who gaveevidence on the Long Leases Billexpressed concern that a specificupdating project associated with

No relevant amendments atStage 2.


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the completion of the LandRegister of Scotland so thataccurate information about allland and property in Scotlandappears on this public register.

If the Long Leases Bill is passed,then to be consistent with theprinciple of public landregistration, the information aboutland ownership held by theRegisters of Scotland(RoS) (ineither the Land Register or theold Register of Sasines) requiresto be amended at some stageafter the appointed day. This is toreflect the changes of ownershipresulting from the conversion offormer tenants interest inqualifying ultra-long leases tooutright ownership.

The former tenant can either dothis in advance of a transactionaffecting his or her property (e.g.a sale), in which case he or shewill bear the costs of the update.

Alternatively, he or she could waituntil the registration or recordingwhich forms the final step of theconveyancing process associatedwith the aforementionedtransaction, in which case RoSwill bear the costs of the update.

In relation to the Session 3version of the Bill the intention

the Bill would not be carried outby RoS. In its Stage 1 Report theCommittee requested that theScottish Government respond tothe concerns expressed to theCommittee in advance ofconsideration of the Bill at Stage2 (Scottish Parliament RuralAffairs, Climate Change andEnvironment Committee 2012e,para 84).

In its response to the Stage 1Report, the Scottish Governmentmade a number of points inrelation to this issue. Theseincluded that it was not necessaryfor the Land Register of Scotlandto be updated for the Bill to work,due to the provision for automaticconversion on the appointed daycontained in section 4 of the Bill(Scottish Government 2012a,para 10).

The Scottish Government alsosuggested that its proposed

approach to updating helps tosmooth the workload over time(Scottish Government 2012a,para 13).

Finally, the Scottish Governmentstated that both it and RoSrecognise the value of keepingthe Land Register as up to dateas possible and will take every
http://www.ros.gov.uk/http://www.ros.gov.uk/http://www.ros.gov.uk/


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was that RoS would carry out abespoke updating projectassociated with the Bill in respectof ultra-long leases registered inthe Land Register (but not thoserecorded in the old Register ofSasines). However, the FinancialMemorandum to the current Billstates that RoS has decided notto carry out this specific updatingexercise (para 308).

reasonable opportunity toachieve this aim. Officials in theScottish Government are to workclosely with RoS on implementingthe Bill (Scottish Government2012a,para 15).


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RELATED BRIEFINGS

Long Leases (Scotland) Bill

Land Registration etc. (Scotland) Bill

Land Registration etc. (Scotland) Bill: Stage 3

Long Leases (Scotland) Bill(This briefing relates to the version of the Bill introduced in Stage 3of the Parliament which fell at the dissolution of Parliament)

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