mortgage | Crofting Law Blog

I was live tweeting from @croftinglaw yesterday at The Future of Crofting Conference in Inverness. Here is what I tweeted:-

The Future of Crofting Conference gets underway #croftingfuture

Importance of crofting to the economy and need for practical measures to assist being espoused by @JamieMcGrigor #croftingfuture

We can now see but not hear @AileenMcLeodMSP. Technical issues with video sound hopefully be resolved shortly! #croftingfuture

We now have @AileenMcLeodMSP on screen both vision and sound. #croftingfuture

Hearing about @AileenMcLeodMSP’s visits around Crofting Counties (including Orkney and Shetland) and visits to @CroftingScot #croftingfuture

Meant to tweet a pic of @AileenMcLeodMSP at #croftingfuture conference. Here it is:

Now hearing from @AileenMcLeodMSP about the Vision for Crofting being formulated by various stakeholder groups #croftingfuture

Discussion by @AileenMcLeodMSP about @CroftingLawSump and taking crofting legislation forward in next parliamentary session #croftingfuture

Importance of young crofters being highlighted by @AileenMcLeodMSP #croftingfuture

Reference by @JamieMcGrigor to @AileenMcLeodMSP being an early SPICE girl! #croftingfuture

Next up @MarkShucksmith #croftingfuture

Crofting “a smallholding entirely surrounded by regulations… OR a model for the 21st century?” @MarkShucksmith #croftingfuture

Four main issues emerged from @MarkShucksmith’s report #croftingfuture

Working the land was the message @MarkShucksmith got over and over again #croftingfuture

Key diagram for better governance @MarkShucksmith #croftingfuture

Regulation half the story need development @MarkShucksmith #croftingfuture

Early cross party support but that turned by some into bin @MarkShucksmith #croftingfuture

Bin @MarkShucksmith’s Report image #croftingfuture:

Unfinished business @MarkShucksmith #croftingfuture

Evidence from @MarkShucksmith’s Report still there but does anyone refer to it today? Should still do so when considering #croftingfuture

Report by @MarkShucksmith been translated into Japanese. Norway, Ireland and West Virginia all looking at it. #croftingfuture

Introduction given by @iangeorgemacdo1 in Gaelic. Now speaking (in English) about the ‘new’ Crofting Commission #croftingfuture

Latest @CroftingScot Plan more fully aligned with legislation @iangeorgemacdo1 #croftingfuture perhaps depending on your interpretation 😉

Large amount of cooperation with @coftingscot at roadshows from all stakeholders #croftingfuture

5 main areas to focus on in #croftingfuture….

1. Simplify crofting legislation #croftingfuture

2. Make crofts available to new entrants #croftingfuture

3. Increase affordable housing with meaningful grants and loans #croftingfuture

4. Provide specific ring fenced funding to a lead body to develop crofting #croftingfuture

5. Provide financial incentives through Pillars 1 and 2 #croftingfuture

RT @culcairn Mr Inksters addressing conference #croftingfuture

View from the fank: Young crofters need help with housing and crofters need less forms to fill out. #croftingfuture

Strong sense at #croftingfuture conference that croft mortgages should have been introduced in 2010 Act as originally intended. @scotgov

Get @BillGates to come to crofting counties + use renewable energy on crofts to power @Microsoft servers located in Scotland #croftingfuture

Prof @FrankRennie‘s #croftingfuture presentation ‘The Wider Cultural Context’ is available here:

Now Neil Ross of HIE on Crofting development #croftingfuture

Importance of working together – collaboration #croftingfuture

Now discussing wooly willows in species re-introductions to Scotland #croftingfuture

Panel discussion on crofting development #croftingfuture

More crofts needed #croftingfuture – perhaps reallocating absent and neglected crofts first rather than creating more that may go that way?

How do you actually bring crofting to Moray and Nairnshire? #croftingfuture – no easy answer to that one!

RT @kate4SLB Great quote at #futureofcrofting ‘should do away with the word ‘remote’ – anywhere outside the Highlands is remote for us!’

Only crofters themselves and those that aspire to be crofters can drive the future of crofting @JimHunter22 #croftingfuture

Can buy 200,000 acres of land in Sutherland and no regulation affecting it but not the case with a 5 acre croft @JimHunter22 #croftingfuture

Land Reform the elephant in the room. Crofting not a poor man’s farm. Need to know what we want, clarify that + move forward #croftingfuture

#croftingfuture afternoon session opened and to be facilitated by @JeanUrquhartMSP

Gordon Jackson of @scotgov now looking at the Vision #croftingfuture

Average age of a farmer = 58. Crofter probably a bit higher. #croftingfuture

Hearing about croftingconnections.com -exemplary and of national importance #croftingfuture

Now hearing about @SCFYC #croftingfuture

View from the fank on #croftingfuture is an optimistic one.

Final panel Q&A of the day at #croftingfuture

Landlords who created crofts made them too small to force crofters into other work as well @JimHunter22 #croftingfuture

Very positive to hear young folk positive about the future of crofting @JimHunter22 #croftingfuture

Need to expand @WoodlandCrofts being discussed #croftingfuture

Commitment from @SCFHq to help create new crofts #croftingfuture

Can create new crofts from large ones. One big croft could be divided into several smaller ones. #croftingfuture

Best time to plant a tree was 30 years ago. Second best time is today. @JeanUrquhartMSP recommends we take action asap #croftingfuture

RT @SCFYC “Let’s not stand back & watch while crofting disappears, we are a vital part of agriculture in Scotland” – Jean Urquhart MSP

#croftingfuture conference comes to an end. Interesting day and look forward to @scotgov action on @CroftingLawSump in 2016.

Brian Inkster

The legal requirement for a crofter to live on or near the croft brings with it a requirement for that crofter to have somewhere to live. This has long been recognised by both Westminster and the Scottish Government. Over the past thirty years, support has been available to meet this need but that support now requires rethinking if it is to meet today’s housing needs. To this end, the Scottish Government are currently seeking responses to its consultation on proposed changes to the Croft House Grant Scheme (CHGS). It is a consultation that many would argue is long overdue.

The Scheme aims to attract and retain crofters by enabling them to build (or improve) housing on their croft. That residency requirement has always been enshrined in the Crofting Acts. A crofter must be resident on, or within 32km, of their croft. This is currently a key driver of Crofting Commission policy. The consultation comes at a time when crofting legislation itself is being closely scrutinised by crofting law practitioners and parliamentary committees.

The current levels of support for the construction of a new house from the CHGS is £22,000 for a ‘high geographical priority area’, £17,000 for a standard priority and £11,500 for low priority. This prioritisation is largely based on the view that building on the islands and some of the more remote parts of the mainland is more expensive, therefore grants are increased accordingly.

To be eligible for the grant you must be a tenant crofter, a Kyles crofter or cottar (the meaning of the latter two is for another blog post). Tenants who have purchased and become owner-occupiers in the last seven years were supposed to be eligible, but this is currently uncertain – see my colleague Eilidh Ross Maclellan’s post on that subject.

The proposed changes increase the rates to £28,000 and £23,000 respectively for a High and Standard priority areas, and introduces just two geographical areas – Island and Non-Island. This change in geographical boundaries will mean an increase in support for some areas compared to the previous scheme, which will be good news for some. However, looking back to the CHGS’s predecessor, it is arguable that the proposals put forward in the consultation will still have little impact.

The previous Croft Building Grant and Loan Scheme (CBGLS) was introduced in 1986. Initially, the scheme contained a loan element – paid back to the Government over a period of time (typically 40 years), and a grant element.

It helped many crofters secure a home on their croft. (In fact, the house I grew up in was, largely, paid for by it. In 1986, my parents would have been some of the first people to build their house with assistance from the CBGLS). Back then, if you were frugal, the loan and grant could go a very long way. Nowadays, the amount offered might barely cover the cost of an average house kit.

The Scottish Crofting Federation recently gave their views on the matter, and highlighted some interesting figures. The average cost of building a house in 1986 was £27,860, and the CBGLS, on average, met 82% of building costs. However, over the years the level of support no longer increased with the rising cost of building a home. The loan element was withdrawn in 2004, and was not replaced with the introduction of the CHGS. The Federation calculated in 2008 that support was around 14% of total build costs.

The Shucksmith Report of 2008 stated that the support levels were too low, in an age where typical build costs exceeded £100,000 – a figure that has only increased. The only way that most crofters could raise the finance to build was to decroft, in order to obtain commercial lending. This remains the case. Currently, decrofted house sites are not eligible for grant support. However, the consultation proposes that decrofted houses linked to the croft would be eligible for support, as would ‘adjoining or adjacent’ land.

Another question the consultation poses is the size requirements of a house. It is currently the case that only houses of three beds or more will be eligible for funding – a rule that makes outdated assumptions about the size of a crofter’s family and does not give consideration that houses – like families – can grow and evolve over the years when time and finances allow. The current restriction looks short-sighted.

Any increase if of course welcome, however marginal it may be, but without the ability to obtain the support of a lender, the increase will make little difference, meaning decrofting will continue to be the only route for many. Most crofters are not in the fortunate position of being able to finance the building of a house without a mortgage. If one of the key aims of the Crofting Commission is to retain croft land in crofting tenure, and people working that land, then the Scottish Government may need to consider reintroducing a croft house loan, or, as suggested by the Scottish Crofting Federation, exert some pressure on commercial lenders to consider mortgage products for crofters. The latter may require a change in the law to facilitate mortgages over croft land.

The consultation closes on 31 March 2015 and can be found at http://www.scotland.gov.uk/Publications/2015/01/4893/0

Martin Minton

Image Credit: Urban Realm: Highland Croft House completes

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