5 Paying for repairs
5.1 Maintenance accounts
If you and your fellow owners take a scheme decision to carry out maintenance, contractors may only be willing to start work once the money has been collected. Therefore, you can agree that each owner who is liable for a share of the cost should deposit their share of the estimated cost with someone nominated for this purpose. This could be an owner, property manager or agent. If the deposit for the work is more than £100 or, if taken together with other deposits made in the past 12 months, more than £200, then the money must be paid into a maintenance account.
Key points to note about a maintenance account, as set out by the Tenements (Scotland) Act 2004, are as follows:
- The account must be one that pays interest with a bank or building society and a property manager or at least two other people (who do not have to be owners) must be authorised to operate the account on behalf of the owners.
- Money must be paid into it on an agreed date at least 28 days after the decision to do the work was taken.
- The Scottish Parliament may change the sums mentioned above from time to time to reflect the value of money. Check current limits with your council.
5.2 Operating the maintenance account to pay for scheme repairs
When a maintenance account is required, you and your fellow owners must be told about it in writing by whoever is nominated to hold deposits. You must also be given a note that summarises the work and details of:
- the estimated cost;
- why it is considered necessary;
- how the shares of the cost have been worked out;
- the other owners’ shares;
- the date the decision was made and the names of those who
- agreed to it;
- the timetable for the work, including the start and finish dates;
- the number and location of the maintenance account and the
- names and addresses of those authorised to operate it;
- the last date for owners to pay their shares into the maintenance
- account; and
- a refund date on which you can reclaim your deposit if the work
- is not started by the start date.
If you are not given a refund date, you can reclaim your deposit if the work has not started 28 days after the start date. Any money left in the account after the work has been paid for must be shared among the depositors in proportion to the shares they deposited.
5.3 Help from your local council
The Housing (Scotland) Act 2006 changed the way councils can help homeowners to do repairs and improvements. The previous system of support meant that owners got either grant assistance or no assistance at all the scheme of assistance introduced by the 2006 Act will give councils greater flexibility to provide support to more people. Your council has a scheme of assistance that says how it will help owners maintain their homes. From 1 April 2009 councils have had a duty to prepare and publish a statement of assistance, and have a transitional year to decide when to introduce their schemes. Each local scheme of assistance will be different but they will all have certain features in common:
- You as owners are responsible for the costs of maintaining your properties. The main source of finance for repairs must be your own savings and loans rather than grant subsidy.
- Your council will offer more advice and assistance to owners in future. This may include a wider range of helpful information leaflets; websites; practical help to get work done; perhaps even training courses and special advisers who will be able to help you steer your way through repairs and finding finance.
- Councils will decide their priorities. They may give you more help as a flat owner than as the owner of a house, as many recognise that flat owners have particular problems in getting repairs organised and that repairs to high buildings can be very expensive. However, you are unlikely to get a grant automatically.
- As a last resort, the council may use enforcement powers to carry out work and apply a repayment charge to recover funds (see section 6).
- The council’s statement of assistance will set out what work the council considers to be a priority. This statement should be publicly available. Priority works will get most help.
5.4 Financial support and advice
If you cannot raise enough money through your income, savings or a commercial loan to carry out repairs, the council may be able to help you get a loan. This may be subsidised, depending on your circumstances.
Grants may still be available as a very last resort. Any help will be means-tested. This will generally include looking at your income, savings, ability to access affordable high-street lending, and wealth (for example, what equity (capital value) you have in your home). This may mean that, for a given repair, an applicant with no free income, equity or savings may receive more financial help than someone in the same situation who has paid off their mortgage. This is because the person with no mortgage might instead get a loan secured on the value of their home to fund repairs.
If you need a loan to fund a large repair, you need to get good financial advice. Generally, the cheapest loan is one secured on your home, and a mortgage adviser will be able to help you.
If you are an older person or have a disability, your local Care and Repair agency or Ownership Options may be able to offer you further help (see section 7 for contact details).
5.5 Help for owners of listed buildings or those in conservation areas
If you live in a listed building, you may have to use traditional materials and techniques to maintain the building. However, if your home is listed or your building is in a conservation area or an area where a town scheme is in place, you may be eligible for special grants. You should contact your local planning office for more information and advice on what you need to do and any assistance you may get.
You can also contact Historic Scotland for information on town schemes in your area. If you plan to apply for grant aid, you must employ a conservation-accredited architect or surveyor to carry out a survey and prepare a report (see section 7 for contact details).
5.6 What happens when an owner sells and works are agreed or under way?
An owner is liable for the costs of work under way, carried out or to be carried out as a result of a scheme decision. If an owner sells their flat during this process, they remain liable for any unpaid costs of the work. However, it may be difficult to trace the previous owner, once they have moved, to recover what they owe. Therefore, fellow owners should register a ‘notice of potential liability for costs’ with the title deeds or land certificate. As long as this notice is registered 14 days before the sale takes place, it will make the selling owner and new purchaser jointly liable for the costs. The remaining owners can then ask either the seller or buyer to pay. If the new owner has to pay, they can recover the costs from the previous owner.
If you and your fellow owners wish to register a notice against a flat whose owner is selling and is potentially liable for unpaid costs, you should consult a solicitor.
The most satisfactory solution is to adjust the purchase price to take account of the unpaid costs. The Home Report includes a questionnaire in which sellers should disclose any responsibilities they have for common repair work.
If, while you owned a flat, you made a deposit that remained unspent after work was paid for, you can still recover your deposit after you sell your flat.
The Home Report
Homes put on the market for sale from 1 December 2008 must have a Home Report. The purpose of the report is to give buyers information about the condition and value of a property before they decide to buy.
The Home Report has three parts:
1. a house condition survey and valuation;
2. an energy report;
3. a property questionnaire.
The property questionnaire includes, for example:
− property management arrangements;
− responsibilities for shared and common areas and the shares that need to be paid towards the common repairs;
− details of any compulsory repairs notices, work notices and maintenance orders served on the property;
− any structural problems or storm damage that may have occurred in the past;
− alterations made to the home;
− whether it is listed or in a conservation area;
− details of any notices served on the property; and
− planning applications from neighbours.