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5. OCCUPANCY REQUIREMENT

5.1 Background

5.1.1 In some desirable locations, it is considered that the ease of decrofting can result in an over-inflation of the market value of croft land, resulting in prices for crofts that potential crofters cannot afford. Speculation on the development value of croft land is considered to be inflated by the potential use of housing for second homes (either land for development or existing housing). This has resulted in an incentive to crofters to take land out of crofting tenure, thereby reducing the link between a croft house and croft, and steadily eroding the amount of land in crofting tenure. As crofting is considered to make a valuable contribution to the community and society, the CoIoC considered that this speculation, reduction in croft land and absenteeism where properties are being used as second homes, was damaging to the crofting community.

5.1.2 Accordingly, the CoIoC recommended that all croft houses be tied to residency through a real burden, which would be deemed to be included in the conveyancing when next assigned or purchased. This would run with the land in perpetuity. Decrofting the house site or purchasing the landlord's interest would not extinguish this burden. Any new houses, whether or not decrofted, would have a similar burden imposed, which would be reflected in the planning consent enforced by the Local Authority.

5.1.3 In its response, the Government recognised the problems faced by crofting communities as a result of absenteeism, neglect and speculation of croft land resulting from an external demand for second homes. However, it did not agree that the proposed burden was the best approach to addressing these problems. It believed that it is only necessary to consider an occupancy requirement where land has been taken out of crofting tenure. For land remaining in crofting tenure, the Government considered that better enforcement of existing legislation relating to croft land, which requires crofters to live on or near their croft as well as put the land to some form of productive use, would achieve the aims of the Committee's recommendations in relation to croft land.

5.1.4 The occupancy requirement would require any house on land that has been taken out of crofting tenure to be used as a main place of residence. The enforcement of this requirement would not be a matter for the crofting regulator, but for the relevant Local Authority. The Government considered that, if such an occupancy requirement were introduced, the Local Authority would be able to apply the sort of enforcement action it takes to secure compliance with the conditions of planning consent if the occupancy requirement were not being met.

5.1.5 The Committee also invited the Government to consider back-dating the introduction of the proposed burden to all assignations and purchases made after 12 May 2008, so as to forestall any rush to avoid the provisions of the legislation. The Government indicated in its response that the draft legislation would be framed so as to make retrospective provision to place any proposed occupancy requirement on houses built on land taken out of crofting tenure after 12 May 2008 in accordance with the Government's statement to Parliament on that date in response to Parliamentary Question S3W-12829.

5.1.6 The Government also undertook to consult with Local Authorities about the utility of this type of occupancy requirement and its enforcement prior to bringing forward detailed proposals in this consultation. Discussions with Local Authorities covering the Crofting Counties on the merits of an occupancy requirement as well as issues relating to the implementation, administration and enforcement of the occupancy requirement are ongoing.

5.2 Issues for consideration

5.2.1 Purpose of the occupancy requirement

5.2.1.1 The purpose of the occupancy requirement is to:

• Discourage decrofting for the purpose of building houses that will not be used as main residences
• Discourage the separation of croft houses from the croft
• Ensure that croft land remains affordable to those wishing to take up crofting.

5.2.1.2 The occupancy requirement will not prevent decrofting for the purpose of housing where there is demand for housing that will be used as a main residence. It is recognised that it is important to ensure land is available for housing development. Where croft land is used for housing that will be used as a main residence, this may offer greater benefits to the community than retaining the land in crofting tenure.

5.2.1.3 Failing to take any action will not address the tensions within crofting communities over the use of croft land for housing developments that they do not consider to be of greater value than the croft that has been lost. It will also continue the erosion of land in crofting tenure. On the other hand, repealing provisions that allow for decrofting will severely limit housing developments that are vital for sustaining crofting communities. A flexible approach is therefore required to address local circumstances.

5.2.2 Attachment of the occupancy requirement

5.2.2.1 The owner of any residential accommodation built on land taken out of crofting tenure would be under a duty to ensure that any such accommodation is used as a main residence. It would be for the owner to ensure that the same individual, being the owner or a tenant, resides in the accommodation concerned for a minimum of 183 days in any calendar year, ie just over half a calendar year, resulting in the property being used wholly or mainly as a dwelling and not just as a second or holiday home. Views are sought below as to whether or not 183 days in any calendar year is an appropriate requirement in order to deliver the policy objective or whether it should be longer.

5.2.2.2 The occupancy requirement would only relate to housing and not commercial property. It would attach conditionally to the whole of the decrofted property, and apply to any housing built on the land, or when commercial or other property is used as a dwelling (ie there is a change of use).

5.2.2.3 As indicated in the Government's response, the draft Bill includes provision to attach the occupancy requirement to land taken out of crofting tenure after 12 May 2008. To ensure the legislation works fairly and reasonably to those subject to the occupancy requirement, the draft Bill proposes that any enforcement action would only consider occupancy from the date the provisions are brought into force - no account would be taken of any absenteeism before that date, but all land decrofted on or after 13 May 2008 would be subject to the requirement.

5.2.3 Administering and regulating the occupancy requirement

5.2.3.1 The draft Bill provides for the Local Authority for the area in which the property is situated to administer the occupancy requirement. On introduction of the occupancy requirement, the Local Authority would be able to take the sort of enforcement action taken to secure compliance with the conditions of planning consent if the occupancy requirement were not being met. The occupancy requirement is a tool that Local Authorities will be able to use to protect croft land. They would have the discretion to remove the requirement where it is considered to be unnecessary and to suspend it where it is not appropriate at any given time. Where croft land is under pressure, the occupancy requirement would be useful in ensuring that the land is only used for housing that will be used as a main residence, which crofting communities in their area may find more acceptable.

5.2.4 Automatic exceptions to time considered as being absent from residence

5.2.4.1 The draft Bill provides for situations where it would be unreasonable to regard a person as being absent from his or her residence for the purposes of fulfilling the occupancy requirement, whether that person is the owner or the tenant. It is proposed that the following periods of absence would be disregarded and not taken into account when determining the length of absence which results in the breach of an occupancy requirement:

• Working away from home for a set period, eg off-shore, Merchant Navy, full-time education, etc
• Stays in hospital accommodation, the State Hospital and nursing homes
• Stays in care homes
• Stays in Local Authority care accommodation
• Individuals in the armed forces, or detained under military court system
• Prison, detention and non-custodial community orders
• Action during calling-up of a standard security, intestacy action (contested will), etc.

5.2.4.2 The draft Bill also provides the Scottish Ministers with the power to modify the list of exceptions by statutory instrument.

5.2.5 Discretionary extinction or suspension of the occupancy requirement

5.2.5.1 The Local Authority would have discretion, on application in writing by the owner, to extinguish or suspend the occupancy requirement. The Government would issue guidance to Local Authorities as to the matters they should take into account in deciding whether or not to grant an application for extinction or suspension.

5.2.5.2 The Local Authority would be required to issue its decision on whether to extinguish or suspend the occupancy requirement (as the case may be) in writing, and to give reasons for the decision, within two months of receipt of the application. If the decision is to take longer, it would be required to inform the applicant, and explain why it is due to take longer. Failure to comply with the timescale would not affect the validity of the decision.

5.2.5.3 An alternative approach would be to empower the Local Authority to apply the occupancy requirement either when granting planning consent or at the point of decrofting. However, it seems more appropriate for crofting law to apply the requirement as an effective condition of decrofting and for the Local Authority to be permitted to lift the occupancy requirement as a matter of housing and planning policy. This approach will not prevent the Local Authority from zoning areas in which the occupancy requirement would generally be lifted.

5.2.6 Reinstatement

5.2.6.1 Local Authorities would have power to reinstate the occupancy requirement if it is suspended. However, the decision to extinguish the requirement would be final. The sorts of things that a Local Authority would take into account in deciding to reinstate would be where the use has changed or the owner intends to change the use. The Government would issue guidance to Local Authorities as to the matters they should take into account in deciding whether or not to reinstate the requirement. For example, where a house was being used as a workshop and now is to be used as a home.

5.2.6.2 The draft Bill provides for a process where the Local Authority intends to reinstate an occupancy requirement and includes provisions for sending the notice to the owner, including informing him that the authority intends to reinstate the occupancy requirement setting out the Local Authority's reasons and giving the owner 14 days to respond in writing. The Local Authority must then take account of the response and issue its determination whether to continue to suspend or reinstate the occupancy requirement within 28 days of giving the notice (ie a further 14 days after the period for making representations).

5.2.7 Enforcement of the occupancy requirement

5.2.7.1 The draft Bill provides Local Authorities with powers of enforcement, and related duties, as failure to comply with an occupancy requirement would result in the imposition by the Local Authority of a civil penalty (fine). The burden of proof would be on the balance of probabilities and the burden should be on the Local Authority to prove that the occupancy requirement has not been met.

5.2.7.2 The draft Bill provides for a power to make enquiries as to whether the owner of property subject to an occupancy requirement is complying with it. In carrying out its enquiries, and in enforcing the occupancy requirement, Local Authorities will have power to appoint officers to enforce the new requirement. Local Authority officers' proposed powers for carrying out enforcement functions are stipulated in the draft Bill.

5.2.7.3 A sheriff may, by warrant, authorise an appointed Local Authority officer to enter premises, using reasonable force, if necessary, to search the premises. A warrant would be required where the premises are unoccupied or the Local Authority officer has been refused entry to premises. A Local Authority officer who entered any unoccupied dwelling would be required to leave those premises as effectively secured against unauthorised entry as the Local Authority officer found it. It is proposed that it should be an offence to fail to comply (without reasonable excuse) with a request for documents or to obstruct the Local Authority officer (or anyone assisting him, such as a police constable) in carrying out his visit, punishable on summary conviction in the Sheriff Court to a fine not exceeding level 3 on the standard scale (£1,000).

5.2.7.4 Ministers would have the power to issue guidance to Local Authorities about the performance of their enforcement functions.

5.2.8 Determining whether there has been a breach

5.2.8.1 The draft Bill provides a procedure to be followed by a Local Authority which is satisfied that there is enough evidence to impose a fine.

5.2.8.2 Evidence will vary from case to case and could be wide-ranging. Evidence that would support a fine might include a number of witness statements, employment details of the owner/tenant which might confirm that they are not resident at the address for more than 183 days and any observations made by the Local Authority officer at the address. A person claiming a council tax rebate or any other property related discount for the address as it is a second home, would also constitute evidence.

5.2.9 Sanctions

5.2.9.1 The draft Bill provides for failure to comply with an occupancy requirement to result in a fine, the level of which would be at the discretion of the Local Authority, but set at a maximum of £5,000. Discretion would provide the Local Authority with the necessary flexibility to impose a lower value fine, for example, for a first offence, or a higher fine for repeat offences. Failure to pay a fine should be subject to civil recovery rules and, if a court orders payment of the fine on appeal, failure to pay it should be a contempt of court.

5.2.9.2 The Local Authority would have discretion not to impose a fine where it thinks there is a good reason for not being resident. For example, a person has been ill and is being cared for at a relative's house.

5.2.10 Appeals

5.2.10.1 The draft Bill allows for the owner to appeal by summary application to the sheriff court against the following decisions of the Local Authority:

• The refusal to suspend or extinguish the occupancy requirement
• The reinstatement of the occupancy requirement
• That the occupancy requirement has been breached
• The imposition of a fine and the level of fine imposed.

The Local Authority should be able to be a party to the appeal, if it wishes.

5.2.10.2 The draft Bill also sets out the powers of the sheriff in upholding an appeal and options for further action by the sheriff and by the Local Authority if the sheriff remits the decision back to the Local Authority for reconsideration.

5.2.11 Conclusion

5.2.11.1 The draft Bill provides for an occupancy requirement to be placed on land taken out of crofting tenure after 12 May 2008. This requires houses built on decrofted land to be used as a main residence. The purpose of the occupancy requirement is to discourage house building that will not be used as a main residence, discourage the separation of croft houses from the croft and ensure croft land remains affordable to those wishing to take up crofting. The draft Bill provides Local Authorities with discretionary powers to extinguish, suspend and reinstate the occupancy requirement, thereby provide a flexible approach for addressing local circumstances. Local Authorities will also be able to take action in the event of a breach of the requirement. The occupancy requirement will not prevent decrofting where there is demand for housing and will be a useful tool for Local Authorities to use to protect croft land.

5.3 Regulatory and Equality Impact Assessment

5.3.1 Issue

5.3.1.1 In some desirable locations, the speculative development value of croft land has resulted in land being removed from crofting tenure and put to use in a way that is considered to be of less benefit to the community than the retention of the croft. The Government wishes to retain land in crofting tenure, make it affordable to those who wish to take up crofting but also to make land available for housing where it is considered to be a better use of land than retaining it in crofting tenure.

5.3.2 Objective

5.3.2.1 The objective of the occupancy requirement is to discourage decrofting for the purpose of building houses that will not be used as main residences; to discourage the separation of croft houses from the croft; and to make croft land more affordable for those wishing to take up crofting.

5.3.3 Potential Risks

5.3.3.1 Potential risks associated with introducing the occupancy requirement include:

• Occupancy requirement is too cumbersome to administer
• Occupancy requirement is too difficult to enforce
• Local Authorities choose to use their discretionary powers to circumvent the legislative intention leading to policy delivery failure.

5.3.4 Options

5.3.4.1 In broad terms, three options are available:

(i) Do nothing;

(ii) End decrofting or restrict further the ability to remove land from crofting tenure; or

(iii) Provide for an occupancy requirement for housing built on land removed from crofting tenure after 12 May 2008.

5.3.5 Benefits

5.3.5.1 Option 1 involves no change. Failing to take action will not address the tensions within crofting communities over the use of croft land for housing developments that they do not consider to be greater value than the value of the croft that has been lost. This will allow the current trend of decreasing croft land to continue, resulting in fewer crofts available for new entrants to crofting.

5.3.5.2 Option 2 would go some way to decreasing the amount of land removed from crofting tenure and would end speculation on croft land. However, it would also severely restrict the potential for developing crofting communities as it would limit the use of land for other purposes. In principle, it might be possible to amend the law to allow the Crofting Commission to impose conditions on decrofting which required the decrofted land to be used as a principal residence. However, it is not considered appropriate that the crofting regulator rather than the relevant Local Authority should be in a position to regulate the occupancy of housing which is no longer associated with a croft.

5.3.5.3 Option 3 does not prevent land being removed from crofting tenure for development purposes. However, it requires housing built on land that has been decrofted to be used as a main residence. The effect of the occupancy requirement will make croft land less attractive for building second homes, thereby keeping crofts affordable for those who wish to take up crofting. Furthermore, it is also likely to make any housing built on decrofted land more affordable to those who wish to live in the local community permanently. The occupancy requirement is considered to be a useful tool that Local Authorities will be able to use to protect croft land. Ensuring a property is a person's main residence should contribute positively to population retention and growth in our more fragile rural communities.

5.3.5.4 The Government decided to proceed with Option 3 and its proposals are set out in section 5.2 of this document.

5.3.6 Impact on stakeholders

Crofters

5.3.6.1 It is considered that crofters will benefit from the retention of land in crofting tenure and the expected reduction in land subject to decrofting will provide croft land for new entrants to crofting and make crofts more affordable in the longer term. Furthermore, it is considered that it will strengthen crofting communities by increasing the number of permanent residents within the community. However, the occupancy requirement will limit the development potential of the land as it will not be attractive for building housing that might appeal to a broader market and which might not be used as a main residence.

Landowners

5.3.6.2 Where croft land is decrofted, the owner of the land subject to the occupancy requirement will be required to ensure the requirement is complied with. It will be the responsibility of the owner to ensure that whoever is resident in the property, be it the owner or a tenant, complies with the requirement to reside in the property for a minimum of 183 days a year. Failure to comply will result in the Local Authority taking action to ensure the occupancy requirement is complied with or, where appropriate, imposing a fine for failure to comply. Landowners may apply to the Local Authority to extinguish or suspend the requirement, or appeal the Local Authority's decision to the local sheriff.

Crofters Commission and other NDPBs

5.3.6.3 As a result of the occupancy requirement, it is expected that the Crofting Commission will receive fewer applications for decrofting. The impact, if any, on the Commission is therefore expected to be minimal, through a slight reduction in decrofting applications. However, this will be offset by the requirement of the Commission to give notice to the Local Authority, where land has been removed from crofting tenure and is now subject to the occupancy requirement.

Local Authorities

5.3.6.4 Following the Crofting Commission's approval of a decrofting application or the Land Court approving the resumption of croft land, the land is no longer subject to crofting regulation and would therefore, would be a matter for the Local Authority. The occupancy requirement will apply automatically to land following decrofting and Local Authorities will be required to keep records of land subject to the occupancy requirement. They will be provided with administration and enforcement powers in order to deliver their functions. The impact on Local Authorities will depend on a number of factors, including:

• How the Local Authority applies its discretion, ie whether it takes a blanket or case-by-case approach to reflect local circumstances
• The number of areas of croft land decrofted and the number of houses built thereon
• The number of applications from landowners to extinguish or suspend the requirement
• The number of cases where the authority decides to re-instate the requirement
• The number of breaches of the requirement resulting in enforcement action and evidence gathering
• The number of appeals lodged against Local Authority decisions.

5.3.6.5 It is expected that the policing of the occupancy requirement will be limited, as suspected breaches are likely to be detected through information passed to Local Authorities by neighbours or other individuals within the local community. Area Committees may also report suspected breaches of the occupancy requirement to the Local Authority.

5.3.6.6 The Crofters Commission Annual Report for 2007/08 indicates that it approved a total of 479 decrofting applications within the whole of the Crofting Counties for that period. It is therefore not expected that the occupancy requirement will result in significant work for Local Authorities as the effect of the requirement is to deter speculation on croft land for second homes and to retain land in crofting tenure. As planning authorities currently enforce conditions relating to planning consents, it is expected that planning authorities or housing departments would be the most likely area to administer and enforce the requirement in the event that a complaint was made.

5.3.6.7 Scottish Government officials have liaised with the Convention of Scottish Local Authorities ( CoSLA) and, in more detail, with Local Authorities in Crofting Counties about the proposed occupancy requirement.

Sheriff Courts and Legal Aid

5.3.6.8 Appeals against Local Authority decisions in respect of an occupancy requirement or the imposition of a fine will be directed to the Sheriff Courts. Impact on the judicial system will depend on the number of appeals lodged. This is expected to be minimal as there will be a number of steps in the process and every step should be exhausted to resolve disputes before reaching the appeals stage. It is therefore expected that few cases will result in appeals to the sheriff and therefore the demand on legal aid advice is expected to be low.

5.3.7 Costs

5.3.7.1 Local Authorities will incur costs administering the occupancy requirement and enforcing it in the few cases that are likely to emerge. Local Authorities have been invited to provide information on anticipated costs. The Government recognises that a small amount of set-up costs will be incurred by Local Authorities in preparation for undertaking their occupancy requirement functions. It is proposed that Local Authorities should be able to use any receipts from fines to fund the administration and enforcement of the occupancy requirement, with any surplus receipts to be used at Local Authorities' discretion.

5.3.7.2 Owners of land subject to the occupancy requirement will not incur costs where they are meeting the conditions of the requirement. Where they have tenants residing within houses they own that are subject to the occupancy requirement, they may wish to stipulate permanent residence as part of the lease arrangements. Where the landowner breaches the requirement, they may face legal costs associated with any action taken against them.

5.3.7.3 The impact on the judicial system will depend on the number of appeals lodged and this is expected to be minimal. The actual number cannot be predicted but this is expected to be very low. It is therefore considered that administrative costs to the Sheriff Courts and demand on the legal aid system in relation to appeals against an occupancy requirement are expected to be low.

5.3.7.4 The Crofting Commission and the Land Court will face costs associated with reporting the attachment of the occupancy requirement to land although these are expected to be minimal.

5.3.8 Small Firms Impact Test

5.3.8.1 It is not considered that the occupancy requirement proposals will impact negatively on small businesses as it is proposed that commercial properties be exempt from the occupancy requirement. Only residential properties will be affected by the requirement.

5.3.9 Competition Assessment

5.3.9.1 It is not considered that the proposals relating to the occupancy requirement will create any significant comparative advantage or disadvantage. Any person taking land out of crofting tenure would be fully aware of the fact that an occupancy requirement would be attached to the land. However, it will impact on the housing market as, over time, more houses are likely be subject to an occupancy requirement. The effect of the occupancy requirement will be to limit the marketability of a house subject to the requirement as only those who wish to use the house as a permanent residence will be attracted to it.

5.3.10 Enforcement and Sanctions

5.3.10.1 Local Authorities will have powers of enforcement and related duties, as it is proposed that failure to comply with an occupancy requirement will result in the Local Authority imposing a civil penalty (fine). Local Authority powers include a power to make enquiries as to whether the owner of property subject to a requirement is complying with it and powers of enforcement. In carrying out its enquiries and in enforcing the occupancy requirement, Local Authorities will have power to appoint officers to enforce the new requirement. Local Authority officers should have power to:

• enter any place for the purpose of enabling or assisting the officer to decide whether he thinks the owner is complying with the requirement
• interview any person
• require any person holding records relating to the occupancy requirement to give the records, or copies of them, to the officer
• take someone else with him
• do anything else reasonably required in order to fulfil the object of the visit.

5.3.10.2 A sheriff may, by warrant, authorise an appointed Local Authority officer to enter premises, using reasonable force, if necessary, to search the premises. A warrant would be required where the premises are unoccupied or the Local Authority officer has been refused entry to premises. A Local Authority officer who entered any unoccupied dwelling would be required to leave those premises as effectively secured against unauthorised entry as the Local Authority officer found it. It is proposed that it should be an offence (without reasonable excuse) to fail to comply with a request for documents or to obstruct the Local Authority officer (or anyone assisting him, such as a police constable) in carrying out his visit, punishable on summary conviction in the sheriff court to a fine not exceeding level 3 on the standard scale (£1,000).

5.3.10.3 If there is enough evidence to support imposing a fine, the Local Authority will have the power to serve a notice on the owner of the property informing him that the authority thinks he has not complied with the occupancy requirement, setting out reasons and giving 14 days to respond. The Local Authority must then take account of the response and issue its determination whether the occupancy requirement has been breached within 28 days of giving the notice (i.e. a further 14 days after the period for making representations). If the Local Authority determines that the owner is in breach, it must decide whether to impose a fine, and determine the level of fine (set at a maximum of £5,000), and must do so unless it thinks there is a good reason for not doing so. Failure to pay a fine will be subject to civil recovery rules, and if the court orders payment of the fine on appeal, failure to pay the fine will be a contempt of court.

5.3.11 Equity and Fairness

5.3.11.1 An occupancy requirement will automatically apply to all land following decrofting after
12 May 2008. There are no barriers of race, age, sex, income, religion, sexual orientation or disability, the occupancy requirement applies to all houses on decrofted land whether they are owned by members of the local community or owners living further afield. The inclusion of an appeals process following Local Authority decisions should encourage Local Authorities to apply fairness and consistency in their decision-making process within their area.

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