CHAPTER 4 - DRAFT SSI - POLICY POINTS ARTICLE BY ARTICLE
This chapter deals with the individual implied terms in the written agreement, relating article-by-article to the draft Scottish Statutory Instrument ( SSI), which is attached at Annex A, and should be read in conjunction with this chapter.
Views are sought on the specific consultation questions within the sections below.
Implied Terms 1 and 2 - Duration of Agreement
These set out the length of time the agreement between resident and site owner is for - that is, the resident's right to station his or her mobile home on the land. Essentially, the agreement has no end date, subject to a number of conditions. These conditions include the site owner only having a limited interest in the land, planning permission expiry, or termination of agreement by owner or resident of which each have their own related conditions attached.
This implied term has not been updated in England and Wales, and we propose to implement no change in Scotland.
Question 1: Do you see any need to amend the provisions relating to the Duration of Agreement? If "Yes" please explain your response.
Implied Term 3 - Termination by Occupier
Currently, the resident is entitled to terminate their agreement at any time so long as they give the site owner at least 28 days notice in writing.
This term has not been updated in England and Wales, and we propose to implement no change in Scotland.
Question 2: Do you see any need to amend the provisions relating to the Termination by Occupier? If "Yes" please explain your response.
Implied Terms 4 and 5 - Termination by Owner - Draft SSI article 2(2) and (3)
Clarification that the court determines timescales
In the existing legislation, under implied terms 4 and 5, the site owner is entitled to terminate the agreement with a resident "forthwith" under certain circumstances following an application to court. In the draft SSI we are proposing that the word " forthwith" be deleted from these two implied terms and replaced with " at a date to be determined by the court" because:
- in fact, the court will determine the date for the agreement to be terminated, so the term "forthwith" is redundant and therefore replacing it with "at a date to be determined by the courts" removes ambiguity, and;
- it has been argued that a site owner could use the existence of the term "forthwith" to pressurise a resident into an immediate termination regardless of the court's timescale.
Question 3: Do you agree that the term "forthwith" should be replaced in implied terms 4 and 5, with the phrase "at a date to be determined by the court?" If not, what in your view is the benefit of retaining the status quo?
Only or Main Residence Provision
There is a requirement within the Mobile Homes Act 1983 [Section 1(1)(b)] that to be covered by the legislation, the home must be the resident's only or main residence. This provision differentiates these arrangements from those that apply to holiday parks. There would appear to be broad consensus on this overarching principle, and we have not received any views that the "only or main residence" requirement should be altered.
However, many park home residents are elderly. In addition, with changing demographics, this form of living appears to be on the increase.
As such, residents' groups are of the opinion that implied term 5 which allows the site owner (with court approval) to terminate the agreement if it is not being used as the resident's main home should be qualified by a reasonableness test. That would allow a court to exercise discretion to accommodate the occasions when, for example, residents have temporary care home stays or long term hospital stays. In these circumstances, providing the home owner continues to pay the pitch fee and ensures the plot and exterior of the home is maintained, residents' groups argue that the site owner should not have the ability to terminate the agreement.
This is one of the areas where there exists an apparent difference of opinion between residents and from site owner representatives. The draft SSI does not include any qualifying exceptions as the opposing argument is that it is better if each case can be decided on its own merit and it should be up to the court to consider what is reasonable for each individual circumstance. It could be that if, for example we apply ill health related exclusions we could risk excluding other equally relevant cases. We are seeking views as to the appropriateness of any potential change.
Implied term 6 also enables the owner to terminate the agreement "at the end of a relevant period" on the basis of the condition of the home. The relevant period is every 5 years from the start date of the agreement. This implied term requires an application to the court where it is to be used. Although there is overarching consensus that this provision remains, there is a query on the necessity of the 5 year relevant period. The draft SSI amends the provision as it currently stands to replace that with reference to a date to be determined by the court (unlike the position in England and Wales, where "forthwith" has been inserted instead of the reference to the end of the relevant period). We are again seeking views on the appropriateness of any change.
The stakeholder working group considered that the remaining provision in implied term 6 should not be amended,
Question 4: Do you consider that there should be any legislative exemptions giving specific circumstances which would prevent a site owner from terminating the agreement on application to the court, despite the requirement for a residential mobile home to be the only or main residence?
Question 5: If your response to Q4 is "Yes" what would the appropriate exemptions be and why?
Question 6: If your response to Q4 is "No" do you consider that the current provision should be amended or left to stand? Please explain your response.
Question 7: Do you agree the "relevant period" as it stands should be retained? Please answer Yes or No and explain your response.
Implied Term 7 - Recovery of Overpayments by Occupier
Currently, if the agreement is ended the resident is entitled to reclaim any pitch fees or other charges which have been paid in advance for the period after the agreement has ended. There has been some discussion as to whether or not it would be appropriate to impose a duty on the site owner to repay any relevant overpayments rather than the resident possibly having to resort to court action. However, it is questionable if such a change would achieve anything, as a resident would still have to resort to court action to enforce any new duty.
Question 8: Do you consider that any change to this provision would be desirable? If your response is Yes, please explain why.
Implied Term 8 - Sale of the Mobile Home - Draft SSI Article 2(5)
This is a key implied term covering the provision in relation to the sale of a mobile home. The draft SSI would alter the position as it currently exists in the legislation applying to Scotland, to achieve the same changes as have been effected in England and Wales, though the wording is different because there are already differences in the wording of the Scottish provision from that in England and Wales. It is therefore especially important that the draft SSI is read in conjunction with the commentary in relation to this implied term.
The Scottish Government is open minded on change in this area. As such, we will not reach a concluded view as regards any changes to this implied term until this consultation process completes and we have considered all views expressed.
The current terms in force in implied term 8 include in particular:
- Park owner approval of prospective buyers, including that this can be given conditionally, and;
- The requirement that site owners receive a commission of 10% on the re-sale of each mobile home.
The amendments to implied term 8 in England and Wales follow Department of Communities and Local Government ( DCLG) and Welsh Government consultations, focusing on the park home commission rate. The decision in each case was to retain the provision relating to the 10% commission on re-sale. However, residents groups have been pressing for reform in Scotland that goes considerably further than the changes implemented in England and Wales. As such a complete re-write of implied term 8 has been suggested by resident groups to change the legislative provisions in Scotland which relate to the sale of a park home.
On the other hand, site owners representatives have been pressing for retention of the current implied term as it stands in Scotland. In particular, they have pressed for retention of the provision relating to commission on sale where there has been some concern expressed that removal or reduction of the commission could have a negative impact on the viability of park businesses.
The Scottish Government appreciate that it is likely to be very challenging to achieve consensus in this area. We therefore wish to seek as wide a range of consultation responses as possible to inform our approach to this section of the current legislation.
Article 2(5) relates to assigning the agreement on the sale of the mobile home to a person approved by the site owner. At present the site owner's consent cannot be unreasonably withheld. However, the consent can be given conditionally, in terms of sub-paragraph (1C). Sub-paragraph (1D) requires that any conditions be reasonable. In line with the amendment made in England and in Wales the draft SSI contains amendments to prevent any conditions being attached to consent. However, the requirement for consent would be retained.
Question 9: Are you content with the amendment to the current provision as outlined in article 2(5) of the draft SSI? Please answer either Yes or if No explain why.
Implied term 8, at sub-paragraph (1A), relates to the occupier serving on the owner a request for the owner to approve the person for the purposes of sub-paragraph 8(1).
Question 10: Are you content with the current provision as outlined in sub-paragraph 8(1A)? Please answer either Yes or if No explain why.
Implied term 8, at sub-paragraph(1B), provides the timescale that the owner has to deal with the request under sub-paragraph(1A). It has been suggested that the period of 28 days as it currently stands is too long and that a period of 14 days is more appropriate timescale for a park owner to respond to a request to approve an incoming purchaser.
Question 11: Do you agree that the approval period offered to the owner should be retained at 28 days and if so why?
Question 12: Do you consider that 14 days, or some other period, is a more appropriate timescale and if so why?
Implied term 8, at sub-paragraphs (1E)(1F)(1G)(1H)(1I) apply to the owner's approval and the related conditions and implications. The draft SSI makes a series of amendments at article 2(5)(c) to (f) to reflect the proposal that it should no longer be possible to grant consent subject to conditions. It does not make any further changes to these sub-paragraphs, We would invite views on each of the provisions, but would anticipate, based on stakeholder working group input, that any other amendments would be minor.
Question 13: Are you content with the provisions as drafted for each of the sub-paragraphs? If you consider further changes should be applied to any of them please outline your suggestions and explain why against each one.
Implied term 8, at sub-paragraph(2), sets out one of the key areas of contention. It provides that where the occupier sells the mobile home, and assigns the agreement, the owner is entitled to receive a commission on the sale, provided it does not exceed a rate specified by an Order made by the Scottish Ministers. The current Order in Scotland specifies that a site owner is entitled to receive a commission on the sale price when a mobile home is sold on. The maximum level is set in the secondary legislation and is currently 10%. This level was set at that level in 1983 across Great Britain and has not been altered since.
Site owners have argued that the commission should be retained because:
- The commission forms an important part of their business income, and could not be removed without significantly increasing pitch fees, otherwise it may have a detrimental impact on the viability of businesses.
- To a great extent a mobile home draws its value from the quality of the site and the value of the land, both in terms of location and site upkeep.
- Some residents with low incomes may prefer to pay the commission on sale, when they are in funds, rather than pay an ongoing higher pitch fee out of their limited income.
However, residents' groups have argued that it is an unfair payment because:
- It is not directly related to services provided - it is not attributable to a service received, and
- It provides an incentive for unscrupulous site owners to harass residents into selling, to maximise profits.
The DCLG consultation highlighted a number of alternative options for consideration-
- No change to the current maximum rate of 10%.
- A reduction in the maximum commission rate payable for new and existing agreements from 10% to 7.5% with a prohibition on a compensatory increase in pitch fees.
- Reducing the maximum rate of commission on the sale of a park home for new agreements only, to 0%, without a limitation on a compensatory increase in pitch fees.
Other options which may also be considered could include-
- The introduction of a sliding scale of commission related to the length of stay.
- Base the commission in some way on the value of the land.
- Reduce or eliminate the commission.
- Offer buyers the option of either commission on sale or increased pitch fees at the point of sale.
These options as offered are to stimulate thinking in giving consideration to reforming the commission payable on the sale of a park home. This list is not exhaustive and there may be other options worth considering. We would very much welcome your thoughts in order to progress appropriate reform in Scotland.
Question 14: Should commission on re-sale continue to be payable in Scotland? If so, at what level?
Question 15: Why is your response at Q.14 the correct way forward for Scotland
Question 16: Are there any other options we should consider and if so why would this be the best way forward?
Implied term 8, at sub-paragraph(3) enables secondary legislation to be made with regard to the commission rate. It enables different provision to be made for different areas or for sales at different prices. However, it would not enable different provisions on another basis, and would require to be removed or amended if commission were to be prohibited altogether.
Question 17: Should this provision be retained as presently drafted?
Implied Term 9 - Gift of Mobile Home - Draft SSI Article 2(6) .
Amendments in relation to the gifting of a mobile home have been progressed in England and Wales by the addition of a provision which clarifies that the park owner cannot claim commission on the gift of a home. This reflects the decision in England and Wales to prevent any conditions being attached to the grant of consent to assignation. It is considered that, if conditional consent is prohibited in Scotland then the Scottish version of implied term 9 should also include this change and as such the draft SSI reflects this at article 2(6).
However it should be noted that this provision relates only to the gifting of a mobile home, therefore when the person who was gifted the mobile home decides to sell it and assign the agreement it is a new transaction. Any prohibition of a payment in relation to a gift does not impact on how implied term 8 operates in relation to future sales.
It has been suggested that clarification might be useful in relation to how any amendment to the current provision relates to inherited homes (to which section 3 of the Act applies). Whether and how that should be progressed will depend in part on decisions that result from matters discussed above.
Question 18: Do you see a need for any change(s) to the provision currently made in implied term 9? If the answer is "Yes" please explain what change(s) you would suggest, and why.
Implied Term 10 - Re-siting of mobile home - Draft SSI Article 2(7).
Currently the site owner is entitled to move the mobile home to a comparable position on the site. The changes in England and Wales which have been reflected in the attached draft SSI, significantly strengthen the provision of the occupier. Except for essential repair or emergency works, if the park owner wishes to move the home they would have to apply to a court and satisfy the court that moving the mobile home was reasonable. Strengthening this provision in this way is aiming to deter park owners moving mobile homes purely for the purposes of facilitating the redevelopment of the site. The amended version of implied term 10, at sub-paragraph (1) of the draft new paragraph 10, makes this change.
The new provision at sub-paragraph (2) of the draft new paragraph 10 relates to repairs to the base on which the mobile home is stationed. That is a situation where emergency works might be required. The stakeholder working group has discussed the addition of a provision in Scotland which would ensure that where this provision is applicable and the mobile home is moved, the work is carried out by appropriate contractors.
As stakeholders did not reach complete consensus in this area, the provision suggested in the attached draft SSI reflects the English and Welsh amendments only. We are seeking views in this area to ensure workable provision is drafted that will enable a balance of rights to be established for both residents and businesses. Residents would prefer the terminology to reflect the fact that the work must be carried out by registered specialist contractors and the remaining portion of the 10 year guarantee is renewed. However site owners have highlighted that this is not always possible or practical as not all contractors trained in siting and movement are registered. Similarly, not all park homes are manufactured by companies in National Park Home Council membership and not all park homes are registered under the structural warranty scheme. It might therefore not be reasonable for the legislation to be too specific which may result in the provision being too restrictive. However in order to build in some security it might be appropriate to ensure a duty of reasonable care to the assets of the occupier and that the site owner has appropriate insurance in case of damage being caused.
There was consensus that sub-paragraphs (3) and (4) be added to the proposed new version of implied term 10, as in England and Wales, to strengthen the provision, and the draft SSI reflects these additions. Sub-paragraph (3) essentially just repeats what is already provided by sub-paragraph (a) of the current implied term, but in a way which may provide greater clarity. Sub-paragraph (4) explains what is meant by "essential repair or emergency works".
Question 19: Do you agree that the strengthened provision as drafted in proposed new implied terms 10 should stand? If No please explain why.
Question 20: Do you think there should be additional provision drafted in Scotland to strengthen the position in relation to the contractors responsible for moving the home?
Question 21: If your response to Q 20 is "Yes", what would be an appropriate addition?
The overarching headings which detail implied terms 1 to 10 above are the implied terms that currently apply in Scotland, as detailed in Part 1 of Schedule 1 to the Mobile Homes Act 1983. The content as drafted in the attached SSI has been based on both the benefits that have been recognised in the revised English and Welsh legislation and the support and help of the Residential Mobile Homes Stakeholder Group. Our approach to possible wider reform will be informed by the analysis of this consultation and further engagement with the stakeholder working group.