Managing and Maintaining Flatted Buildings: Some Anglo-Scottish Comparisons

Publication Date01 May 2010
AuthorLu Xu
DOI10.3366/elr.2010.0005
Date01 May 2010
Pages236-258
<p>On 1 June 2009 the long-awaited Development Management Scheme (“DMS”) came to life in Scotland.<xref ref-type="fn" rid="fn1"><sup>1</sup></xref><fn id="fn1"><label>1</label><p>See <a href="https://vlex.co.uk/vid/title-conditions-scotland-act-808471677">Title Conditions (Scotland) Act 2003</a> pt 6; the Title Conditions (Scotland) Act 2003 (Development Management Scheme) Order 2009, SI 2009/729; and the <a href="https://vlex.co.uk/vid/title-conditions-scotland-act-808471677">Title Conditions (Scotland) Act 2003</a> (Commencement No 2) Order 2009, <a href="https://vlex.co.uk/vid/the-title-conditions-scotland-812530321">SSI 2009/190</a>. The Development Management Scheme (henceforth DMS) is set out in Sch 1 of <a href="https://vlex.co.uk/vid/the-title-conditions-scotland-812298193">SI 2009/729</a>. An extensive commentary on the DMS can be found in pt 8 of the Scottish Law Commission's Report on <italic>Real Burdens</italic> (Scot Law Com No 181 (2000), available at <ext-link ext-link-type="uri" xlink:href="www.scotlawcom.gov.uk" xlink:type="simple"><italic>www.scotlawcom.gov.uk</italic></ext-link>). See also K G C Reid and G L Gretton, <italic>Conveyancing 2009</italic> (2010) 130–156. The DMS was originally prepared as a scheme for tenements, known as Management Scheme B: see Scottish Law Commission, Report on the <italic>Law of the Tenement</italic> (Scot Law Com No 162 (1998)) pt 6.</p></fn> The DMS is a statutory but optional scheme for the management and maintenance of developments such as housing estates and flatted buildings. In the latter context it creates an alternative to the Tenement Management Scheme (“TMS”) which, since 2004, has provided a set of default rules to supplement whatever provision is made in the title deeds.<xref ref-type="fn" rid="fn2"><sup>2</sup></xref><fn id="fn2"><label>2</label><p><span class="vid_spn">Tenements (Scotland) Act 2004 s 4</span>. The Tenement Management Scheme (henceforth TMS) is set out in Sch 1 of the Act. See further K G C Reid and G L Gretton, <italic>Conveyancing 2004</italic> (2005) 121-150; W M Gordon and S Wortley, <italic>Scottish Land Law</italic>, 3<sup>rd</sup> edn, vol 1 (2009) 469-497.</p></fn> The two schemes are mutually exclusive: where the DMS is selected, the TMS does not apply to any extent.<xref ref-type="fn" rid="fn3"><sup>3</sup></xref><fn id="fn3"><label>3</label><p><span class="vid_spn">Tenements (Scotland) Act 2004 s 4(2)</span>.</p></fn></p> <p>This article compares the DMS to the TMS as well as to the commonhold system in England and Wales which was introduced by the <a href="https://vlex.co.uk/vid/commonhold-and-leasehold-reform-808285645">Commonhold and Leasehold Reform Act 2002</a>. It argues that, if used effectively by conveyancers and developers, the DMS holds advantages over both systems.</p> BACKGROUND The legislation of 2004

Apartment ownership has a long history, dating back well before modern society.4

See C G van der Merwe, “Apartment Ownership” (1994), in International Encyclopaedia of Comparative Law vol VI.

In Scotland, for example, tenement buildings were known in medieval times, especially in Edinburgh. The development of a law suitable for these structures was problematic in many jurisdictions. The concept of apartment ownership was unknown in Roman law, while in the Common Law world the concept of “flying freehold” was no better welcomed. As apartment buildings became more common, providing much-needed accommodation in increasingly crowded cities, so statutory regulation seemed the obvious answer. By the 1980s legislation had been passed in France, Belgium, Germany, New Zealand, Australia, South Africa, and the USA among others. In fact many of these countries had up to three generations of apartment ownership statutes, responding to the deficiencies of the first attempts and to the changing needs of society

This left Great Britain looking increasingly isolated. As late as the end of the last century, neither England nor Scotland had an apartment ownership statute. There were plenty of apartment buildings, of course, and many more were being built, but the law in both jurisdictions was largely static and, arguably, ineffective. In England, due to the problems associated with owning a flying freehold and enforcing positive covenants, flats had usually to be leased rather than owned – a system which, as the government pointed out, was “fundamentally flawed”.5

Commonhold and Leasehold Reform: Draft Bill and Consultation Paper (Cm 4843: 2000, available at http://www.communities.gov.uk/publications/housing/reformdraftbill) 107.

In Scotland, where there had been almost no legal development on the issue for the best part of the twentieth century, conveyancing practice and the widespread use of real burdens effectively side-stepped the lack of formal sources of law. As pointed out by the Scottish Law Commission in 1998, the law itself was “based on a handful of reported cases mixed with disputed extrapolations of professors”.6

Scottish Law Commission, Law of the Tenement (n 1) para 2.1.

To conveyancers schooled in the art of drafting deeds of conditions, the system was both workable and comprehensible, as long as one kept in mind the underlying framework of real burdens and common interest. To those who actually lived in tenements, however – estimated as one quarter of the Scottish population7

Scottish Executive, Tenements (Scotland) Bill Consultation (2003, available at http://www.scotland.gov.uk/consultations/housing/tsbc-00.asp) 7.

– the law was largely inaccessible

For a long time, and in both jurisdictions, there had been calls for statutory reform. In Scotland the initial response was slow. Although the Scottish Law Commission published a discussion paper back in 1990,8

Scottish Law Commission, Discussion Paper on the Law of the Tenement (Scot Law Com DP No 91 (1990)).

a final report (with draft bill) was not issued until 1998,9

Scottish Law Commission, Law of the Tenement (n 1).

and it took a further six years for a bill based on the Commission's work to be introduced to the new Scottish Parliament. Once the bill was in Parliament, however, matters progressed rapidly. The Tenements (Scotland) Act 2004 received Royal Assent on 22 October 2004 and came into force barely a month later, on 28 November. This was also the day on which the feudal system of land tenure was abolished,10

Abolition of Feudal Tenure etc (Scotland) Act 2000 s 1.

as well as being the commencement date for much of the Title Conditions (Scotland) Act 2003

In England the history was longer and the pace slower still. The idea of legislative intervention began with the report of the Wilberforce Committee in 1965,11

Report of the Committee on Positive Covenants Affecting Land (Cmnd 2719: 1965).

and the Law Commission proposed a system of “commonhold” as early as 1987.12

Law Commission, Commonhold: Freehold Flats and Freehold Ownership of other Interdependent Buildings (Cm 179: 1987).

Such was the expectation of its impact that the government decided to postpone indefinitely the reform on freehold covenants recommended by the Law Commission in 1984.13

Law Commission, Easements, Covenants and Profits à Prendre (Law Com CP No 186 (2008)) para 1.15.

Yet a draft government bill had to wait until 2000.14

Commonhold and Leasehold Reform (n 5).

This was finally enacted as the Commonhold and Leasehold Reform Act 2002, and the Act came into force on 27 September 2004, shortly before the corresponding legislation in Scotland. And so it was that, within a period of two months in 2004, both England and Scotland welcomed their first statute on apartment ownership
The late arrival of the DMS

Despite the coincidence of timing, however, the Scottish tenement reform in 2004 was not intended as an equivalent of commonhold in England. In a manner similar to statutes in other jurisdictions, the English Commonhold Act created a new form of apartment ownership, and if an apartment building is to become a commonhold, it has to be registered as such under the statutory regime. The reform does not therefore affect any building, new or existing, unless some positive step is taken.15

For the practical difficulties in respect of existing buildings being converted into commonhold, see P F Smith, “The purity of commonholds” [2004] Conv 194.

As a result, almost all apartment buildings in England have remained in leasehold despite the Commonhold Act. By contrast, the Scottish Tenements Act, or more precisely the Tenement Management Scheme (“TMS”) introduced by that Act, is automatically applied to all apartment buildings in Scotland, whether built before or after 2004. The only exception is where the Development Management Scheme (“DMS”) applies, in which case that scheme replaces the TMS. Although the Title Conditions (Scotland) Act 2003 made provision for the DMS, the scheme could not be enacted in full because one of its central features, the owners’ association, was a “business association” and hence reserved to the Westminster parliament.16

Scotland Act 1998 Sch 5 pt II C1. At C1 “business association” is defined widely as “any person (other than an individual) established for the purpose of carrying on any kind of business, whether or not for profit”. As “business” includes “the provision of benefits to the members of an association”, it will therefore presumably extend to the management of flatted buildings for the benefit of owners.

The Scottish reform therefore remained incomplete until 1 June 2009, when the DMS was finally brought into effect with the help of a statutory instrument from the UK government.17

Title Conditions (Scotland) Act 2003 (Development Management Scheme) Order 2009, SI 2009/729.

With the DMS now in place, the developers or owners of a Scottish tenement building have three choices: they can do nothing and rely entirely on the TMS, or they can carry on the tradition of drafting their own title conditions, leaving the TMS (as a default regime) to fill in any gaps, or they can adopt the new DMS. As at 1 June 2009 the TMS applied to all 830,000 tenement flats in Scotland. The expectation is that some of these existing buildings and many of the newly built developments will start to adopt the DMS. In this sense the DMS faces a similar challenge to that which has confronted English commonhold since 2004, namely to convince developers and owners that it is a specialised, more convenient and effective system for the management and maintenance of flatted buildings. But it is not enough to win the battle of ideas: the DMS is unlikely to be widely used unless it is possible to overcome inertia and a reluctance to venture into the unknown.

So far, English commonhold has failed the test to a rather alarming extent. Developers of new buildings have shied away from innovation and continued to favour the “fundamentally flawed” but thoroughly familiar device...

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