HM Insights

Property and Construction Bulletin September - Legislation

Long Leases (Scotland) Act 2012

The Long Leases (Scotland) Act 2012 received Royal Assent on 7th August 2012. The Act brings to an end to ultra-long leases (those for more than 175 years) by converting them into ownership.

An eligible ultra-long lease is one that was let for more than 175 years and, at the "Appointed Day" (a day to be appointed by order by the Scottish Ministers) has more than 175 years left to run (for non-residential leases) or has more than 100 years left to run (for residential leases); and the annual rent does not exceed £100. The current intention is that the Appointed Day will be Martinmas (28th November) 2015. All eligible leases will be converted into ownership on that day unless the tenant opts out.

The Act protects landlords' rights by providing for compensatory and additional payments to be paid to landlords by tenants in some circumstances. Some leasehold conditions will be preserved and become real burdens in the title deeds. Landlords will also be able to preserve sporting rights in relation to game and fishing.

The Scottish Government estimates that there are around 9,000 ultra-long leases in Scotland. Two-thirds of properties let under these leases have annual rents of £5 or less.

The Act can be read here:

Land Registration etc. (Scotland) Act 2012

The Land Registration etc. (Scotland) Act 2012 was passed by the Scottish Parliament on 31st May 2012 and received Royal Assent on 10th July 2012. Some general provisions regarding interpretation etc came into force on 11th July 2012. The remaining provisions will come into force on a day yet to be appointed by Order.

The aim of the Act is to:

  • reform and restate the law on the registration of rights to land in the land register;
  • enable electronic conveyancing and registration of electronic documents in the land register;
  • provide for the closure of the Register of Sasines in due course;
  • make provision about the functions of the Keeper of the Registers of Scotland;
  • allow electronic documents to be used for certain contracts, unilateral obligations and trusts that must be constituted by writing; and
  • provide about the formal validity of electronic documents and for their registration.

Completion of the Land Register

The key policy objective of the Act is the ultimate completion of the Land Register of Scotland. Since the introduction of the Land Register in 1981, registration has been moving from a register of property deeds to a map based system of registration of title to property. It is a slow process as only about 21% of Scotland's land mass is registered in the Land Register.

Under the current system, only transfers of property for value result in a first registration of property in the Land Register. This means that there are many transactions relating to land, e.g. gifts or transfers on inheritance, where a first registration will not arise. Also, many other areas of land will not be the subject of any transfer, such as property held by successive trustees or land held by local authorities or agencies like the Forestry Commission. To speed up the completion of the Land Register, the Act introduces additional "triggers" that will cause first registration. This will happen on a phased basis.

The "triggers" for first registration will be:

  • all transfers of property not yet registered in the Land Register (not just transfers for value);
  • Voluntary registration – At the moment it is the Keeper's discretion whether or not to accept an application for voluntary registration – under the Act all voluntary applications must be accepted, provided that they otherwise comply with the requirements for registration;
  • Registration of security transactions; and
  • Keeper-induced registration – the Act gives the Keeper the ability to register land without application and without the consent of the owner of that land.

Electronic documents, electronic conveyancing and electronic registration

The Act makes provision for electronic conveyancing by amending the Requirements of Writing (Scotland) Act 1995, updating it to allow for electronic documents to have the equivalent status and standards of validity and authenticity as paper documents have now. The Act will enable property documents to be negotiated, signed and registered electronically. Consultation will need to take place to ensure that the system of electronic conveyancing and registration is robust and secure but once electronic conveyancing is available, it should make property transactions cheaper and quicker to complete.

Advance notices

The Act also provides for a system of advance notices which protect the grantee of a deed (the purchaser) during the time between taking delivery of the deed (in exchange for the money) and the registration of that deed. The current position is that once you are registered as the owner of land, you own it. Up until that point you have no rights in respect of that property, regardless of whether you have paid the purchase price, received the keys or begun occupation. The registration process can take several weeks or months in some cases. During this period the purchaser is exposed to the risk of a competing title or the sequestration of the seller. Seller's solicitors provide a letter of obligation, which is a form of guarantee, whereby the firm undertakes to ensure that there is no impediment to the purchaser, or lender where a standard security is granted, being registered as owner or secured creditor within a specified period, usually 14 days. The lodging of an advance notice on the register will ensure that during the next 35 days no disposition or competing advance notice can beat that deed in any race to the register. This new system therefore protects a party from a competing title and will give lenders comfort that their position is preserved as no one else can register a competing title where an advance notice is lodged.

Comment

The Act will be brought fully into force over the coming months - we will keep you advised of developments in our blogs and bulletins. If you have any questions in the meantime, please contact a member of our Real Estate team.

The Act can be read here:

Property Factors (Code of Conduct) (Scotland) Order 2012

This Order brings the "Property Factors (Scotland) Act 2011: property factor code of conduct" into force on 1st October 2011.

The code seeks to encourage transparency by making it clear to homeowners what they are paying for and what they can do to make a complaint. Factors will have to provide homeowners with a "written statement of services". Under the code, they must also have a clear complaints and debt recovery procedure in place.

The Act does not specify the content of the code of conduct, but it requires ministers to lay the final version before Parliament before publishing it and bringing it into force.

The Order can be read here:

The Code of Conduct has been published on the Scottish Government website here:

Consultation: Scotland Better Regulation Bill

The Scottish Government has published a consultation seeking views on potential elements of the proposed Better Regulation Bill. The aim of the Bill is to improve the way regulations are applied in practice across Scotland, by better defining national expectations and standards and the context for local variations.

The main proposals for the Better Regulation Bill include:

  • giving new powers to local authorities and other regulators to implement national regulation systems and policies, except where a local authority makes a compelling case that local circumstances merit a variation;
  • requiring regulators to consider and report on the impact of their regulatory activity on business. This is to ensure regulation is kept up to date, is effective and removes anything which is no longer needed;
  • introducing measures to encourage prompt payment to support business competitiveness. The government has identified that cashflow problems put viable companies at risk – evidence shows while the public sector is improving in the prompt payment of invoices, business to business payments are not;
  • extending statutory review mechanisms to challenges against Scottish Ministers' decisions in infrastructure projects; and
  • introducing proposals to help the planning system reach its potential in supporting economic recovery. New powers are being proposed to link the level of planning fee payable to an assessment of performance.

In relation to planning reform:

The proposed new powers would ultimately enable Ministers to reduce the level of planning fee payable in an authority area where sustained improvements in performance did not materialise. The Scottish Government is seeking evidence and views on the most effective mechanism for introducing the proposed link between fees and performance.

In relation to statutory review mechanisms in infrastructure projects:

Scottish Ministers have an important role to play in deciding whether consent should be granted for major infrastructure proposals. There is currently a confusing and complex picture as the procedure for challenging appeals is different for some types of infrastructure. For example, for windfarms, in most instances the right of appeal is to the Court of Session and the appeal must be made within 6 weeks of the relevant decision. For other types of infrastructure, such as onshore windfarms, power stations, hydroelectric schemes and overhead power lines there is no express right of appeal to the courts. Decisions made by Ministers in these cases can only be challenged by way of judicial review.

The Scottish Government is seeking views on whether there would be merit in extending the express right of appeal to the Court of Session for people or bodies with a sufficient interest in the project to those classes of decision made by Scottish Ministers under legislation governing infrastructure projects.

Responses should be sent by 26th October 2012.

The consultation can be read here.

The Scottish Government Press Release can be read here.