Fact or Fiction – dispelling the myths!

One of the biggest challenges we have as an industry, and as an organisation, is our customers’ understanding of ‘freehold’ tenure in Scotland. This is specific to how Scotland applies the process of ownership. It is where the property or common land is owned outright by a homeowner or group of homeowners and is not time limited.

In the English system, it is ‘leasehold’ where there is an exclusive right to occupy the property for a set period and homeowners have limited control over maintenance costs. The term of a leasehold interest can vary from the very short (for example, a matter of weeks) to the very long (for example, 999 years).

Income for service equals expenditure to supply service

The factor/managing agent organises the maintenance of the development ensuring that income for services, matches the expenditure to supply the services. All service costs are invoiced to the development bank account, as is the factor’s ‘management fee’ for administrating the work.

Myth

The myth on this occasion, is that many homeowners believe the full costs that are paid monthly, quarterly, annually are all paid to the benefit of the factor.

Fact

This is not the case, the price we pay from the development funds on behalf of the owners is the price the owners’ pay, we simply invoice for our fee, similar to the service supplier, for example ground maintenance. Our best managed developments are where there is no homeowner apathy in existence and owners interact regularly with us, attend factoring meetings and work with us to provide the services and suppliers that the development wishes to have in place, keeping in mind legislation and regulation when deciding. Further information on all issues can be found at our www.jamesgibb.co.uk

Legal obligations to the common land

It continues to be the case that when homeowners find themselves in an estate, development and/or block, some do not realise their legal obligations to the common land within the title of the development. This should be advised by their purchasing solicitor.

Myth A myth then arises that the appointed factor (normally appointed via the initial homebuilder or owners’ association) is the landlord/duty holder and all costs paid for factoring is income for the factor.

Fact

This is not the case, the factor is the managing agent on behalf of the homeowners, with no ownership of any land in freehold factoring in Scotland (this may differ for Housing Associations). It is the factor’s role to upkeep and maintain the said land which is a benefit to the collective duty holders/homeowners who own the common land collectively.

James Gibb doing it the right way