6 OWNERSHIP AND MANAGEMENT OF MIXED USE COMMUNITIES
6.1 This chapter presents the evidence on real and perceived barriers to delivering mixed use development that arise from the ownership and the management of mixed communities. In this context there are likely to be not just multiple owners but a mix of ownership types from commercial and retail to residential and community.
6.2 The responses from the online survey provided some evidence on the barriers resulting from multiple ownerships with the "difficulty of agreeing improvements between a variety of ownerships" ranked 7th out of 30 in terms of barriers for both planning authorities and developers.
6.3 Where there is a residential component in a mixed use development, this can be a particular issue. While a developer may retain ownership of a commercial development and let on long leases, this is not possible in Scotland as the system of land tenure, does not allow residential leases for a period longer than 20 years 24. Therefore where residential uses above a commercial property are to be provided, the flats are generally sold and ownership of the scheme becomes fragmented.
6.4 This chapter focuses on the following specific issues:
- Whether a vision for a successful mixed use development can be established and then maintained where there are multiple ownerships;
- How potentially conflicting activity patterns can be successfully planned for and then managed once the mixed use development is occupied;
- Whether mixed use can be sustained in the long term; and
- How multiple owners can achieve a consensus to deal with property management, maintenance and improvement and deal with other changes.
Long Term Vision
6.5 Dealing with a fragmented ownership can be an issue from the very start of the mixed use development process. Land assembly and ownership is fundamental as a basis for large scale master planning and can be a significant barrier to development of any kind. Control of land through ownership can have a greater influence than planning control. In this context, the vision of a single landowner or structured promoter/development partnership or company can be instrumental in delivering a mixed use development. In the workshops, it was pointed out that it is also likely that less capital investment will be required if the land is already owned and, with a reduced borrowing requirement, there is also likely to be less pressure from banks and investors who may perceive mixed use development as inherently more risky. One example of this that was highlighted at the workshops was the development proposed at Tornagrain near Inverness.
6.6 How the initial vision of a single landowner or structured promoter/development partnership or company can be sustained and refreshed post occupation, when there are many owners, needs to be considered. In this context, the recent introduction of new legislation to permit the establishment of Development Management Schemes and the consequent establishment of Owners' Associations as corporate bodies provides a potential solution 25. This is discussed further below.
Dealing With Conflicting Activity Patterns
6.7 There was a majority view at the workshops that mixed uses had many advantages, particularly that an emphasis on housing as well as employment uses could reduce car use and therefore provide a more sustainable development pattern. The minority view was that an emphasis on housing could lead to a reduction in the economic and employment potential of the mixed use development. Other advantages of mixed use were also cited e.g., the use of facilities such as car parks at different times of day by different types of user or the potential for the use of combined heat and power schemes. 26
6.8 The interviews, literature review and workshops all highlighted the potential barrier of the difficulty of reconciling different environmental health requirements within a mixed use development. Environmental Health 'rules' for example often require solutions which segregate activities and require the definition of clear "zones of responsibility" which can reduce the net 'lettable' floor area and, consequently, the profitability of the development. Building regulations may also impose additional fire safety requirements. These kinds of regulation can, on occasion, work against good place-making principles and act as a barrier to achieving a high quality development. Workshop attendees agreed however that this perceived barrier can be overcome with good early concept development and thoughtful urban design/place- making as part of the master planning and early discussions with regulators.
6.9 Attendees at both workshops highlighted the need to develop a better understanding amongst partner agencies ( i.e. Historic Scotland, SEPA, SNH and Scottish Water) and local authority colleagues of the wider issues and priorities in mixed use development. The view of workshop attendees in Edinburgh was that these partner agencies were in some cases a barrier and, where appropriate, needed to be involved early in the mixed use development process.
The research identified examples within North Lanarkshire Council, Highland Council and Edinburgh City Council of assembling 'cross department' teams to negotiate mixed use developments. This has proved to be a very effective method of dealing with the spectrum of issues and variety of disciplines/professions that mixed use development involves and helps to build trust between the local planning authority and the developer/promoter.
Sustaining Mixed Use
6.10 Having established a mixed use development, there may be issues of how the mix of uses can be sustained, especially where one high value use becomes dominant. One specific example of this was cited in Edinburgh where, as in many town centres, vacant or underused property above shops is difficult to bring back into use, because in some cases, stairs and access to upper floors have been removed to create more valuable ground floor retail space. Owners of town and city centre retail property are also reluctant to encourage residential use of the upper floors because this reduces their options to refurbish or redevelop the building together with adjoining buildings in the medium and longer term. This illustrates the need for continued advocacy and robust input from planners in managing proposed changes of use in mixed use schemes in order to prevent a watering down of the original design concept.
Achieving Consensus: Management, Improvement & Redevelopment Among Multiple Owners
6.11 Workshop attendees in both Aberdeen and Edinburgh agreed that regular and high quality maintenance of mixed use development is crucial. It is likely that mixed use schemes will require more maintenance partly because of the more intensive and extended use patterns and partly because a lack of maintenance will affect capital resale values. A lack of maintenance may also lead to a perception that businesses in the scheme are of a poorer quality. Ensuring high quality maintenance and management can be a barrier to delivering mixed use development that is successful in the long term.
6.12 Some workshop attendees pointed to the perceived benefits of leasehold tenure as it applies in England. It was implied that a freeholder (who owns the land and has granted the leases) is able, through the terms of the lease, to maintain greater control over the development under the leasehold system, provide a long term vision and control or promote change appropriately to ensure that a development retains a market profile that might not be easily achieved with multiple ownerships. The lack of such a landholding system in Scotland was seen as a barrier to mixed use development.
6.13 However, property law in Scotland has undergone huge change since 2003 and relationships between multiple owners are now governed by the Title Conditions Act 2003 and, where properties are divided horizontally, by the Tenements Act 2004. The Housing (Scotland) Act 2006 is also relevant in many contexts. These changes have aimed to tackle some of the issues around multiple ownerships that have been seen as barriers to delivering mixed use development.
6.14 The Title Conditions Act 2003 created the concept of a series of "burdens" or obligations that the owners of properties had towards other owners in related properties e.g. flats in the same development. Such burdens can cover maintenance of shared facilities such as the structure or common recreation areas; payment of service charges; employment of a development manager; establishment of building maintenance funds or restrictions on the use of property. These burdens are set out in the title deeds and are heritable, so are passed from owner to owner.
6.15 Recent legislation has now completed the reforms brought by the Title Conditions Act by making it possible to set up a Development Management Scheme ( DMS) which can be enforced by a manager employed under the aegis of an Owners' Association which can now be established as a corporate body. The Development Management Scheme is a model set of rules intended as a best practice tool for use by developers when creating new communities. The provisions of the DMS are heritable burdens so changes agreed by one set of owners cannot be set aside on change of ownership. The majority of DMS rules can be varied to suit the individual characteristics of the development. This therefore gives a means of providing a strong controlling body for a development that can employ professional management to provide proper maintenance and enforce the Owners' Association's wishes. However, a broad consensus will still be required to achieve change.
6.16 At both workshops it was agreed that an effective management company or owners' association can play a lead role. It was also pointed out that a strong maintenance and improvement culture with an implicit understanding of the realistic maintenance costs amongst occupiers/residents needs to be established in a transparent way from the first day of occupation of the development.
6.17 Title deeds for newly developed properties should be drawn up in such a way as to set out how costs of management and maintenance will be shared between different types of owner so that neither residential or commercial owners are overly burdened with repair or service charge costs. For example, a retail unit in a mixed use development is likely to generate more footfall than residential units, imposing greater maintenance and security requirements and so should be required to pay a higher share of service costs. Research on modern title deeds and deeds of conditions showed that such deeds have, in recent years, become much better at clearly establishing the various rights and responsibilities of owners. 27
6.18 The Tenements Act 2004 set out owners' responsibilities for maintenance and management of properties in multiple ownership. Combined with the provisions of the Housing (Scotland) Act 2006, there are now clear and enforceable means of ensuring that all owners contribute towards maintenance so ensuring that buildings can be properly maintained and managed. While this legislation was drawn up with residential tenements in mind, it will apply also to commercial or mixed use areas.
6.19 Redevelopment of larger mixed use sites will require site assembly and, if existing residential and other units in the development site cannot be acquired by negotiation, redevelopment is likely to require use of Compulsory Purchase Orders. There is concern among local planning authorities and the development profession that the existing compulsory purchase order ( CPO) system is not meeting current needs. However, it may equally be the issue that practitioners lack the necessary skills to employ CPO procedures to best effect, possibly because they are now relatively little used by local authorities. Although, the Stenhousemuir case study (See Chapter 7) is a good example of where a CPO was used successfully. In addition, there may be concern over issues of competition where a developer indemnifies a local authority against the costs of implementing a CPO on their behalf. These, and other issues, are noted in previous research published by the then Scottish Executive in 2001 and 2002. 28
Conclusions & Summary of Issues
6.20 Land assembly and dealing with a fragmented ownership is fundamental for large scale master planning, at the very start of the mixed use development process and can be a significant barrier to development of any kind. At planning application stage, mixed use developments can be subject to considerable and perhaps competing demands from a wide range of partner agencies. These can impact on profitability and reduce the quality of place making that designers seek to achieve. However, there are good examples of cross departmental teams building up expertise to deal with such issues. Workshop attendees agreed that this perceived barrier of reconciling different environmental health requirements within a mixed use development can be overcome with thoughtful urban design/place-making as part of the master planning and early discussions with regulators.
Issue 6.1: Fragmented Ownership
6.21 Fragmented ownership is a particular issue where residential uses have been introduced into a mixed use development, as the flats and houses provided are generally sold off whilst commercial units may be retained and leased out by the developer. Recent legislation has made effective management and maintenance easier to establish but there is still a lack of real experience and good practice in implementing the legislation.
6.22 It is not considered necessary to make any further amendments to legislation governing land tenure; however, better promotion of the use and benefits of the legislation is needed and this should be undertaken by a range of professional bodies and be part of CPD training programmes.