Mull is experiencing a housing crisis. Mull and Iona Community Trust (MICT) receives regular pleas from individuals, families and businesses desperately seeking homes on the island across all tenures. The lack of housing is causing significant problems to our communities and threatens to accelerate depopulation of our working age residents.
The demand for homes to facilitate holiday boltholes and lifestyle changes post-pandemic has driven up house prices, far beyond the reach of average households living on the island. An increasing number of self-catering lets to meet the heightened domestic holiday market, while providing valuable income for many, has negatively impacted on the long-term lets options for key workers and business employees.
Various plans for new affordable housing developments will help address this issue, but they take time to come to fruition. Meanwhile, many feel they will never get a foot on the property ladder, and face the prospect of continued renting uncertainty or having to leave the island.
There is, however, an option which ensures that houses being sold must be the primary residence of the owner – FOREVER. A Rural Housing Burden is a mechanism under Scots Law which places a Title Condition on the deeds of a property which will apply in perpetuity. Under the Land Reform Act, a Rural Housing Burden can only be applied by a designated Rural Housing Body: MICT was approved by Scottish Ministers as a Rural Housing Body in 2014.
When a burden is first applied on behalf of the owner, the vendor may wish to offer a discount, usually 20-40% below the market valuation to help make it more affordable.
The new property owner would have full legal title and ownership of their home, but they would be bound by legally enforceable conditions of the Burden which ensures that it must be their main residence and not let as a holiday home.
Once the Burden is in place, MICT has a pre-emptive right to buy it back if the owner ever wishes to sell. If MICT does buy the property back it would be at the discount percentage (if applicable) of the current market valuation and it would then be sold on at the same discount percentage. This ensures that the original discount made will endure in perpetuity. The conditions and MICT’s right of pre-emption remain with the Title forever.
For someone selling a property, the Rural Housing Burden, while possibly reducing the sale price, would give peace of mind that the house would remain as someone’s home in perpetuity, and their generosity would not be taken advantage of. For the new owner, it would be a means of buying more affordably and still being able to benefit from the proportional rise in market prices if they sold on in the future.
If you are considering selling and would like to find out more, contact Helen MacDonald at MICT for a confidential chat: email firstname.lastname@example.org or call 01680 812 912.