The Scottish Law Commission recently published a discussion paper containing provisional proposals for the introduction of owners’ associations.
The paper runs to over 200 pages and follows a recommendation in 2018 that establishing owners associations could help improve the condition of tenements throughout Scotland.
Landlords should note that a ‘tenement’ includes any building made up of at least two flats divided from each other horizontally and intended to be in separate ownership. As such, if introduced the proposals would not be restricted to traditional sandstone tenements common to both Glasgow and Edinburgh but would also cover modern apartment buildings and high-rise flats.
The purpose of an owners association (‘OA’) would be to manage maintenance and repair of the building fabric, with key features including the OA having a separate legal personality, the requirement to hold an annual meeting and to prepare an annual budget and repair plan.
It is suggested that OAs would be created for each tenement through mandatory statutory provision with a new Owners’ Association Scheme replacing the current Tenement Management Scheme set out in the Tenements (Scotland) Act 2004.
Other powers – opening bank accounts and investing or borrowing money
The paper explores in detail what powers an OA would have and suggests a general power to do anything necessary to manage the tenement. This general power could be supplemented with other key powers such as carrying out maintenance and improvements, entering into insurance contracts, opening bank accounts and investing or borrowing money.
The paper consults on various other factors including a potential register of OAs, appointment of an AO manager, decision making by members and considers potential Human Rights implications.
The Scottish Law Commission’s consultation is open for comment until 1st August 2024 and a final report will be prepared thereafter. Landlords should consider how these proposals may impact their rental properties and if they wish to respond to the consultation with their views.
