Upper Tribunal concludes holiday chalets usable for 11 months a year could be ‘residential property’ under property factor legislation

About this case:

• Citation:
  2025UT17
• Judgment:
  External link
• Court:
  Upper Tribunal for Scotland
• Judge:
  Sheriff Ian Cruickshank

Heather Waugh, Lesley Ross and Duncan and Jane Munro lodged separate applications seeking to determine whether Largiemore Estate Ltd had failed to comply with property factor duties. The respondent, which was not registered as a property factor, argued that it should not be regarded as a factor, and it was concluded by the FTS that it did not have the jurisdiction to determine the application.

The appeal was heard by Sheriff Ian Cruickshank. The appellants represented their own interests while the respondents were represented by Sutherland, solicitor.

Not permanent occupation

The respondents were the owners of land used as a commercial holiday development known as Largiemore Estate, comprising 44 chalets adjacent to Loch Fyne, the solum of each being owned by the owner of the chalet on which it was built. Each chalet was subject to the terms of a Deed of Conditions restricting their use to private holiday dwellings to be used for no longer than eleven months a year, with rights in common to other parts of the Estate and an obligation to pay equal contributions to the costs and overheads of the respondent in respect of their repair and maintenance.

It was concluded by the FTS that the respondents’ ability to recoup their costs from the chalet owners could be distinguished from the position of developers who convey to a third-party land management company the amenity grounds and facilities of a residential development. The tribunal went on to determine that, because the chalets were never meant for permanent occupation, they could not be considered residential property. The FTS stated that any reasonable interpretation of “residence” would imply at least the potential to use a property as a permanent abode.

In their submissions, the appellants pointed to the fact that the respondent did not operate their property as a holiday park in the conventional sense. Each chalet was owned individually, and the Deed of Conditions expressly prohibited using a chalet for business purposes “whether or not said use may be deemed incidental or natural to the ordinary residential use of the chalet”. The 2011 Act did not require a property to be the permanent home of the chalet owner and for other statutory purposes, including Council Tax liability, the chalets were classed as residential.

For the respondent it was submitted that the word “reside” was commonly defined as dwelling permanently. The FTS had not erred when it concluded that the chalets were not meant for permanent occupation and the Deed of Conditions prevented the appellants from residing there as their usual dwelling-place or abode. On that basis the FTS had applied a correct interpretation to the disputed meaning of the wording as used for the purposes of the 2011 Act.

Widest meaning

In his decision, Sheriff Cruickshank said of the definition of residential property: “For the purposes of the 2011 Act, and as part of the definition to be given to property factor, there is nothing to preclude the widest meaning being given to the term ‘residential property’. To my mind that refers to a property which is used for residential purposes without requiring to further consider the nature and extent of the residential occupancy or other current use of the subjects by its owner. In other words, a homeowner is someone who owns a residential property as opposed to a commercial property, the latter not allowing for any element of residential use.”

He continued: “The fact that the title conditions of the chalets limit the occupancy period in each twelve months, and limits occupancy for holiday purposes, does not in my opinion disqualify it from falling within the definition of residential property for the purposes of the 2011 Act. Per the wording of the statute, the only title condition of relevance is whether the owners are required by the terms of the title deeds relating to the properties to pay for the cost of the management or maintenance of the adjacent or neighbouring land.”

Noting that the respondent had raised Sheriff Court proceedings against each appellant for outstanding sums it believed due under their contracts, Sheriff Cruickshank added: “I did not consider any submissions based on the existence of other related proceedings to be relevant for the purposes of this appeal. I am also conscious of the respondent’s position that any services it provides are not those of a property factor. That said, this case highlights a tension between jurisdictions required to resolve disputes between homeowners and property factors from their respective positions in such circumstances.”

He concluded: “Anecdotally I am aware of cases in the Sheriff Court where the homeowners defence to such a claim is that payment has been withheld because of the quality of service provided. Many such actions seem to be paused in the Sheriff Court to allow homeowners an opportunity to have their complaints as to service adjudicated by the FTS. This does not appear to me to be the most expeditious way to resolve the two sides of a disagreement in these circumstances. But to resolve the two aspects of such a dispute in one forum, in relation to which there may be merit, would require a change in jurisdiction for determination of the property factor’s claim for unpaid charges. That would of course require the introduction of statutory provisions to allow for that.”

Sheriff Cruickshank therefore sustained the appellants’ third ground of appeal, and remitted the applications to the FTS to proceed on the basis that the chalets fell within the definition of “residential property” in the 2011 Act.