Multi-owned Housing

Law, Power and Practice

Ann Dupuis, Sarah Blandy

• Publisher: Routledge
• Year: 2016
• Print ISBN: 9780754675662
• eBook ISBN: 9781317093275
• Topic: Politics & International Relations
• Subtopic: Local & Regional Planning Public Policy
• Index: Politics & International Relations

This internationally edited collection addresses the issues raised by multi-owned residential developments, now established as a major type of housing throughout the world in the form of apartment blocks, row housing, gated developments, and master planned communities. The chapters draw on the empirical research of leading academics in the fields of planning, sociology, law and urban, property, tourism and environmental studies, and consider the practical problems of owning and managing this type of housing. The roles and relationships of power between developers, managing agents and residents are examined, as well as challenges such as environmental sustainability and state regulation of multi-owned residential developments. The book provides the first comparative study of such issues, offering lessons from experiences in the UK, the US, Australia, New Zealand, Israel, Hong Kong, Singapore and China.

Chapter 1
Introduction

Ann Dupuis, Sarah Blandy and Jennifer Dixon

Origins and Rationale

This book is an international, interdisciplinary, edited collection that explores the issues of private governance and management of multi-owned housing developments. In particular, it addresses the relationship between law and power and how this is expressed in practice. In bringing together contributions from a range of countries and contributors, new and critical insights are raised for housing researchers and practitioners engaged in the fields of sociology, planning, law, urban and housing policy, property and environment management.

In recent years multi-owned housing developments (which include high-and low-rise apartment blocks, mixed commercial and housing sites, as well as collectively-managed individual dwellings in planned communities), have become increasingly common in many areas of the world. The topic is timely, given that multi-owned developments are largely an urban trend and that in 2007, for the first time, the global urban population exceeded the population living in the countryside (United Nations Population Fund 2007). Although continuing urban growth is forecast to be particularly rapid in less developed regions, nonetheless in Europe and Northern America the percentage of the population living in urban areas is estimated to reach 80 per cent and 87 per cent respectively by 2030. This rate of growth almost certainly means increasing political pressures to promote more intensive and sustainable forms of urban development, leading to higher density housing and to a greater proportion of residential development in the form of flats and apartments. This type of housing is attractive to government at national and local levels because it is seen to reduce urban sprawl and to enable inner city regeneration. Owners and residents are also becoming educated to appreciate the advantages of multi-occupied housing which, in many cases, promise them access to a better location and more extensive facilities than would be available in more traditional urban forms. Hence, demand is also growing.

Multi-owned residential housing is, however, more (and more complicated) than a collection of individually owned homes. In this type of development the individual dwelling, often referred to as a ‘unit’ or ‘lot’, might consist of an apartment, flat, or house. As well as purchasing a dwelling, each owner also acquires certain rights over the common property and facilities, which can include grounds, internal roads and parking, leisure and retail facilities, even schools and places of worship. Individual rights over the common property can amount to full ownership of an undivided share, or merely a right of access. The advantages of sharing the cost and responsibility for maintenance, security and the common property are offset by the inherent difficulties in this collective arrangement. In practical terms, who will manage the common property? In legal terms, who will own it and what rights will others have to it? In terms of urban development, does the local state have the power and capacity to regulate this type of housing at the outset and/or to intervene if subsequent problems arise from the breakdown of collective responsibility? From a sociological perspective, critical questions are raised concerning the impact of legal entities on the quality of the day-to-day lived experiences of owners and residents.

This book addresses these and other issues from an international and interdisciplinary approach. An international perspective is needed to draw out the essential themes and emerging issues in the relationship between law, power and practice in the context of multi-owned developments. The challenges of balancing the competing demands of development, management and regulation of this kind of housing are common to all countries, although the contexts (legal, social or cultural, political and institutional) vary widely. An interdisciplinary approach is needed as the multi-faceted issues raised by these sites are addressed in practice by urban and housing policy-makers, legislators and the courts, planning officers, and property lawyers, as well as by those more closely involved: the developers, professional managing agents, and owners. The book reflects the fact that multi-occupied housing has provoked academic discussion from a variety of disciplines, notably law, planning, sociology, economics and the environmental and political sciences.

The rationale for this collected volume, therefore, is to provide a sound conceptual basis through which the complex issues of governance and management of multi-owned housing can be examined across different jurisdictions. Drawing on notions of power, law and practice, it reveals the complexities of developing, living in, and governing this form of housing. The inspiration for this book was the 2005 Gated Communities Conference in Pretoria, South Africa, Territory, Control and Enclosure, where the editors presented a conference paper which drew on our respective analyses of multi-owned residential developments in England and New Zealand (Blandy, Dixon and Dupuis 2005). The conference paper was developed into a journal article for Urban Studies, ‘Theorising power relationships in multi-owned residential developments: Unpacking the bundle of rights’ (Blandy, Dixon and Dupuis 2006).

Our research at that point identified the key actors involved in multi-owned housing as the developer, the professional managing agent (also known as corporate manager, management company, etc.) and the owners – as both purchasers of individual dwellings and as owners of rights in the development’s collective property. We also developed a theoretical framework to explain the similar empirical findings in both England and New Zealand: that residents in multi-owned developments were experiencing frustration and dissatisfaction. It was initially surprising when residents told us in interviews that they felt powerless, and that the developer or managing agent exercised significant control over the site, over financial concerns such as levies and even over behaviours and activities residents could and could not engage in. Our respective academic backgrounds in law, planning and sociology led us to develop an interdisciplinary approach to understanding how apparently neutral legal frameworks can disguise a real imbalance of power, usually at the expense of the residents, in different jurisdictions.

Conceptual Analysis

We drew on the idea, widely accepted in common law jurisprudence, that property rights may be seen as ‘a bundle of powers, capable of being mentally contemplated apart from one another and capable of being separately enjoyed’ (Maine 1881: 158). This analysis is helpful in understanding how rights ‘work’ in the context of multi-owned housing, as it allows for more than one owner of rights in the same property and for differentiated rights to be the subject of separate contracts between two or more of the interested parties. Our theoretical approach is to analyse which rights are transferred between key actors through the life-course of a multi-owned development, and at what points. This makes transparent the exercise of power and helps to explain why certain actors benefit from these transfers and why others are left disadvantaged.

Making use of sociological insights into the nature of power and how it may be used by different parties in the life cycle of a multi-owned development, we developed the concept of ‘critical legal events’. These are the points at which particular rights – of ownership, development, occupation and management, for example – are transferred or allocated to one or more of the parties involved in the site. These critical legal events typically include initial purchase of the site; the establishment by the developer and their advisors of the legal entity established to govern and manage the common property; the transfer of individual dwellings to new purchasers; and the on-going management and operation of the site, usually (but not always) by managing agents on contract to the residents as a collective legal entity. These legal entities, known as bodies corporate, home owners associations, common interest developments, residents associations, and so on in their particular jurisdictions, are crucial in framing the day-to-day management and maintenance of commonly-owned property.

The analytical framework that has been the driver for this book is underpinned by a particular understanding of the law (for further details, see Blandy, Dixon and Dupuis 2006). Rather than accepting the law as a neutral framework, we adopted Bourdieu’s (1987) concept of the juridical field. The actors who are able to control this field, through access to lawyers and to influential politicians, can make sure the law is used to their advantage. This approach has much in common with Foucauldian discourse analysis, which holds that knowledge is power, and that knowledge is discursively produced through language (Foucault 1980). Power can be exercised by actors with access to ‘legal practice and legal language [which] are structured in such a way as to prevent the acquisition of such knowledge by any other than a highly trained elite of specialists’ (Goodrich 1987: 7), and this is particularly relevant to multi-owned housing, as most purchasers are unable to understand the highly complex legal frameworks which are often couched in extremely technical language.

International and Interdisciplinary Approach in Context

The contributors to this book are each recognized scholars in their own disciplines, which include environmental science, law, management and tourism studies, planning, political science, sociology, housing and urban studies. Their chapters provide analysis drawn from research in Australia, China, England, Hong Kong, Israel, New Zealand, Scotland, Singapore and the US. Each of the chapter authors has responded in a different way to the challenges posed by multi-owned residential developments, partly due to the range of disciplinary backgrounds represented here. However, the main reason is that each chapter reflects the authors’ research into the most pressing real-life issues which arise from this type of housing in their respective jurisdictions. Starting with a common analytical framework designed to tease out relationships of power between the key actors has therefore produced a rich and varied collection of material reflecting the best of current research and analysis on this topic.

Each chapter author provides contextual information about multi-owned housing developments in their particular jurisdiction, before addressing more specific issues. A wide range of dwelling types is presented in the chapters, including: single family houses; low-rise/walk up apartments; high-rise towers; and large planned and gated communities. A similarly wide range of uses is discussed; from the purely residential, to mixed uses with commercial and retail premises and tourist accommodation. In the same vein, the extent of the typical ‘common property’ also varies widely, from merely a shared external shell of the building to something far more extensive; as do the types of facility or services provided for owners, from basic ground maintenance to very luxurious leisure and other facilities. We also asked contributors to consider, where relevant, the attitude of the planning authorities to multi-owned developments. In some areas, notably in the US, collective management of residential areas is welcomed by municipalities because it increases local taxes while reducing demand for publicly funded services (McKenzie 1998). Our own research initially focused on owners (Blandy, Dixon and Dupuis 2006) but we also recognize that planners have a potentially important role to play as key actors in the development phase of these sites (Blandy, Dixon, Dupuis and Parsons 2006).

Legal Considerations

Each of the countries considered in these chapters has a different history in terms of its law relating to multi-owned housing developments, but all are common law jurisdictions. The problems raised by multi-owned housing are, of course, by no means confined to common law countries and solutions based in common law have now been adopted by countries with a different legal tradition (for example, homeowner associations are now established in many post-Soviet countries: Tsenkova and Lowe 2003). However, we sought contributions from scholars researching these issues in common law countries to avoid language difficulties and to ensure a shared starting point in the property law regime of England and Wales. The exception here is the chapter dealing with Scotland; in fact the recently reformed Scots property law framework was unique, being based on feudal relationships rather than on a civil law regime (in which ownership is absolute rather than a ‘bundle of rights’).

As Clarke has observed, the ‘problem of finding an acceptable device to regulate relationships in communal-living situations is one that has had to be faced by all common law jurisdictions … In most cases the devices are found wanting and inadequate, leading to reform and statutory solutions being introduced or proposed’ (1998: 385). These common law devices include leasehold, still very much in use in England and Wales; tenancies in common, the basis on which high-rise buildings in Hong Kong are owned; and co-ownership in common, historically used in New Zealand from when large plots were first sub-divided. Although statutory solutions have a shorter history, the first Australian strata title legislation was passed in New South Wales as long ago as 1961 and condominium legislation had been adopted by all the US states by 1967. The selected jurisdictions here illustrate differing approaches to legal frameworks for multi-occupied sites. In England and the US, their development has been enabled by using diverse property law models, while Australia has taken a legislative approach in establishing a statutory framework for strata titles, and this has been followed in other jurisdictions including Singapore.

In contrast, each chapter in this volume also addresses the country-specific contexts in which the law is operating and looks specifically at practice ‘on the ground’. These contextual details make it possible to combine analysis at the state level, at the ‘intermediary level of legal implementation and enforcement, and at the micro-level of citizenry’ (Banakar 2009: 81), so that richer comparisons can be made between the various legal approaches adopted to address these issues. This volume therefore goes beyond a comparative legal text as it combines critical perspectives from sociology, urban planning and other disciplines with research into current practice at every level.

Unravelling the Complexities of Private Urban Governance

Each chapter provides fresh insights and sheds light on issues which are also addressed elsewhere in the collection, to build up a full picture of law, power and practice relating to multi-owned housing developments in common law countries across the world. Sarah Blandy’s chapter is concerned with multi-owned residential developments, a rapidly growing housing sector in England and Wales. Here, leasehold remains the predominant and remarkably versatile legal framework, although statutory alternatives are now available. Blandy shows how developers retain their powerful position as initial freeholder of the site, setting up the legal framework which best suits their interests, and discusses the impact which this has on the experience of residents. Douglas Robertson’s chapter on Scotland examines the recent major reforms to what was Europe’s last feudal property system, which affect the owners of multi-owned private flatted property representing some 30 per cent of all Scottish home occupiers. However, developers still retain the choice of which legal framework to adopt. Robertson argues that throughout the reform process the interests of developers and managers have been allowed to take precedence over those of the residents.

Evan McKenzie’s chapter explores the crucial issue of whether private contract law is adequate for resolving disputes between owners and powerful residents’ associations which undertake quasi-judicial, public functions. McKenzie lays out the US legal framework for common interest housing, examines emerging regulatory trends in three states: Arizona, California and Florida and offers an assessment of the political power dynamics that drive the competing law reform agendas. Given that common interest housing is such a large share of the new housing stock in the US, the stakes riding on these reforms are enormous. Based on her own research into condominium towers (high-rise residential buildings), Rachelle Alterman’s chapter compares two types of condominium law: ‘simple’, as represented by the law in Israel; and ‘enhanced’, as in the US state of Florida. This increasingly popular type of building involves particularly high costs, increasing over time, and higher probabilities for free-riding by some residents. Alterman considers whether either type of law can be effective in ensuring adequate long-term financing for maintenance, in different economic and social contexts. This chapter highlights the role of local planning authorities in Israel, which are attempting to compensate for lack of regulation by requiring that developers should contract with a property management company.

Alice Christudason, Ngai Ming Yip and Feng Wang discuss multi-owned residential developments in Asia: Singapore, Hong Kong and China respectively. In Singapore and Hong Kong there is a similar shortage of land and consequent state encouragement of high density housing. Christudason’s chapter focuses on conflicts between minority residential owners and majority commercial owners over decisions to sell mixed-use buildings, in the context of urban regeneration. Her case study indicates that the current legal framework offers little legal protection for minority owners, and the chapter assesses recent reforms in light of this imbalance of power. Ngai Ming Yip suggests that problems with the management and governance of multi-unit residential developments are especially severe in Hong Kong, where there is an inadequate legal infrastructure for multiple ownership. Yip argues that in areas like Hong Kong, where civic society is still relatively underdeveloped, it is more difficult for communal governance to take root. A highly concentrated power structure, and the bias of the state towards economic development (and hence towards developers), can marginalize small owners in multi-ownership properties. Feng Wang’s chapter discusses the very topical issues arising from the development of new residential neighbourhoods in China, a phenomenon occurring over the last decade. This chapter sets out the regulatory environment for the management of newly developed neighbourhoods and analyses the imbalance of power relationships among developers, property management firms, residents’ committees and homeowner associations. Wang’s research sheds light on the operation of law in a fast-changing environment in which owners find themselves outmanouevred by developers and the newly established property management firms.

The next three chapters discuss a variety of issues in multi-owned housing in Australia. Michael Bounds discusses legal arrangements associated with property ownership in multi-owned developments in Sydney, New South Wales. In assessing the implications of these arrangements for residential satisfaction, Bounds argues that satisfaction can be high for residents in multi-owned housing. This position is contrary to the views of many critics of medium-density development still evident in Australia, which Bounds suggests derive from a variety of continuing anti-urbanist sentiments. His research indicates that home type and the characteristics of a neighbourhood’s residents are much more important factors in residential satisfaction than housing density. However, the key issue is one of control, which distinguishes multi-owned housing from individual home ownership; the case studies illustrate how owners are disadvantaged in dealing with developers. The implications of recent reforms are also considered.

Cathy Sherry’s chapter highlights the ability of developers in New South Wales to cause bodies corporate (the collective legal entity to which owners must belong) to enter into long-term contracts in the early stages of the development, when the developer as owner of all or most of the units controls the body corporate. The chapter outlines a recent Australian case on the sale of long-term management rights by a developer, to illustrate the successes and failings of both specific legislation dealing with multi-owned housing and the use of more general principles of common law to achieve a just result for the owners. The chapter ...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• List of Figures
• List of Tables
• List of Contributors
• List of Cases by Jurisdiction
• List of Statutes by Jurisdiction
• Acknowledgements
• 1 Introduction
• 2 Legal Frameworks for Multi-owned Housing in England and Wales: Owners’ Experiences
• 3 Disinterested Developers, Empowered Managers and Vulnerable Owners: Power Relations in Multi-occupied Private Housing in Scotland
• 4 Emerging Regulatory Trends, Power and Competing Interests in US Common Interest Housing Developments
• 5 The Maintenance of Residential Towers in Condominium Tenure: A Comparative Analysis of Two Extremes – Israel and Florida
• 6 Share Value as Determinant of Strata Owners’ Bundle of Rights in Collective Sales in Singapore
• 7 Management Rights in Multi-owned Properties in Hong Kong
• 8 Regulations and the Imbalance of Power Relationships in Newly Developed Residential Neighbourhoods in Urban China
• 9 Governance and Residential Satisfaction in Multi-owned Developments in Sydney
• 10 Long-term Management Contracts and Developer Abuse in New South Wales
• 11 Multi-titled Tourism Accommodation Operations in Australia: The Queensland Context
• 12 Governing Multi-owned Residential Developments in New Zealand: New Forms of Private Governance
• 13 Private Governance and Sustainability: Balancing Public and Private Rights and Responsibilities in New Zealand
• 14 Conclusions
• Index