Land Reform (Scotland) Bill – Part 1 Large Landholdings

This note is designed to give readers an overview of the content in Part 1 of the Land Reform (Scotland) Bill introduced to Parliament on 13 March 2024.  We will be conducting a more detailed consideration of the specific provisions to assist and inform parties’ responses.

Part 1 Large Landholdings: Management and Transfer of Ownership

Management

Affected Land

The management obligations arise in relation to landholdings which exceed 3000 ha on the mainland or 1000 ha and more than 25% of the land area on inhabited islands.

Where contiguous land is controlled by connected parties and the combined area achieves the thresholds set out above, then the provisions apply, even if the lands owned individually do not reach the area threshold.  This is termed a “composite holding”.

Connected parties are determined by there being common control rather than e.g. relatives. Persons are connected if they are companies in the same group, one has a “controlling interest” in the other or the same person has a “controlling interest” in them both. Controlling interests are determined by reference to the Register of Controlled Interests in Land.

Ministers are to have power by regulation to change the land affected by these provisions.

Community engagement obligations

Ministers are given a general power to make regulations to impose obligations to promote community engagement in relation to affected land.

Management plan and leasing

Ministers are obliged to bring forward regulations to require owners of affected land to:

• provide a publicly available management plan which (a) details ownership structures, the owners’ management vision and objectives, compliance with access legislation, deer legislation and other government-imposed regulations and (b) sets out the management strategy for net zero/climate change/bio-diversity.
• give consideration to reasonable letting requests from a community body.

Land and Communities Commissioner

A new role of Land and Communities Commissioner (LCC) is created, with power to investigate alleged breaches of the regulations mentioned above, on receipt of a report from specified parties such as a registered community body, local authority or NatureScot.

The LCC is given powers to require information to be provided and to issue fines for failure to provide such information.  The LCC is further entitled to determine if a breach has occurred and impose a fine of up to £5000. An opportunity to rectify must be given ahead of a fine being issued in the case of a first failure, with a fine following only if the opportunity to rectify is not taken. For second and subsequent breaches, the LCC will have discretion to immediately fine if the opportunity to rectify is not considered “appropriate” in the circumstances given prior failures

The LCC must have expertise or experience in land management and community empowerment. The LCC can also delegate its function to others.

Transfer of Ownership

Prohibitions on transfer to extend period for community bodies to register interest.

Affected land

In the case of ownership transfers, the threshold to be considered a “large holding of land” (LHL) is 1000 ha, for both island and mainland.  Again, this catches composite holdings i.e. contiguous land holdings which are controlled by connected parties and where the combined area exceeds the 1000 ha threshold.

Owners of land that is, or forms part of, a LHL are prohibited from transferring or taking any action with view to transfer until the prohibition is lifted by Ministers.

Transfers which fall within the existing exempt categories under the Community Right to Buy provisions of the Land Reform (Scotland) Act 2003 (“CRTB Rules”) such as ‘transfers otherwise than for value’ are also exempt from the transfer prohibition, provided the relevant exemption category is stated in the transfer deed. These exemptions therefore cover gifts inter-family or into trust.

Process

The landowner (or security holder with right to sell) has to request that Ministers lift the prohibition.  On receipt of the request, the Ministers must publicise the proposed transfer on a website and notify any party who has asked to be so notified, along with the relevant community council, local authority and national park authority (if applicable). Ministers must also publicise how a community body can register a right to buy interest in some or all of the land.

Ministers may not lift the prohibition for 30 days from the date the proposed transfer is publicised (except in cases where the sale is necessary to alleviate financial hardship which would be worsened by the delay). If, within the 30 day period, the Ministers receive a note of intention to register a community interest in land, then they have power to extend the transfer prohibition for a further 40 days if they are satisfied that it is likely that an application to register a community interest will be made within the 40 day period, and that there is a reasonable prospect of that interest in fact being registered.

If the Ministers extend the prohibition period then they must also invite the person that gave the note of intention to make a late application under the provision of the CRTB Rules. The late registration provisions of the CRTB Rules are amended to accommodate this process.

Ministers again have power by regulation to change the land affected by this provision and also to change the 40 day additional prohibition period (though not the initial 30 day period).

Lotting of LHL and further prohibitions on transfer

Affected land

The land in scope for lotting measures is:

• land that exceeds 1000 ha; or
• land that:
  • exceeds 50 ha,
  • forms part of a LHL,
  • where notice of intention to transfer has been given over other parts of a LHL, and
  • where the total area of the land in question and the area or other parts of the LHL where notice to transfer has been given (and missives are not concluded) exceeds 1000 ha.

Owners of land meeting the criteria cannot transfer that land unless (i) a “lotting decision” is in effect and (ii) the transfer is conducted per the lotting decision and no acquirer (or connected acquirers) acquires more than one lot as specified in the lotting decision.

As with prohibitions on transfer, transfers falling within the existing exempt categories under the CRTB rules are also exempt from requiring a lotting decision, provided the relevant exemption category is stated in the transfer deed.

Process

The process involves the landowner (or security holder with right to sell) of the affected land requesting a lotting decision from Ministers.  Where there is a composite holding with connected owners only the owner of the land being transferred need apply.  Having made a request for a lotting decision the relevant parties can request that no lotting decision is provided and stop the process.

The Ministers’ lotting decision requires them to be satisfied “that ownership of the land being transferred… [in lots]… would be more likely to lead to its being used (in whole or in part) in ways that might make a community more sustainable than would be the case if all of the land were transferred to the same person”.

The Ministers’ lotting decision must state (i) whether they require lotting and, if so, specify the lots or (ii) that no lotting is required.

A lotting decision requires a lotting report from the LCC.  The report is to inform the Ministers’ decision and is based on instructions provided by Ministers. The report is to be provided to the Ministers and also to the landowner requesting the decision.  A lotting decision not to lot can be expedited on request in hardship circumstances per land transfers above.

In making a lotting decision Ministers must have particular regard to:

• the frequency with which land in the community’s vicinity becomes available on the open market, and
• the extent to which the ownership of land in community’s vicinity is concentrated.

Review

There is provision for the party who requested the lotting decision to request a review of the decision, after a year.  On review the Ministers must either (i) confirm the decision or (ii) withdraw the lotting decision and make another one.

As with a request to stop a lotting decision it is also possible for the relevant parties to request a stop to the review process.

In making a review, Ministers must have sought advice from a suitably qualified independent person with knowledge and experience of the transfer of land of a kind to which the lotting decision relates.

Ministers can offer to buy any of the lots specified in the lotting decision, where they consider that the lotting decision has affected the sale of the land by making it less commercially attractive due to its not being transferred with other land.  The price would be determined by a valuer appointed by the Ministers.  The valuer would need to meet the same “suitably qualified” criteria as the adviser mentioned above.  There is provision for appeal to the Lands Tribunal.

The relevant parties can also request that Ministers consider making an offer to buy.  The Ministers must apply the same consideration as to whether the lotting decision has made the land less commercially attractive. If they decide the lotting decision does not have a negative commercial impact then that decision can be appealed to the Lands Tribunal. The Lands Tribunal can determine that there is a negative commercial impact though this does not oblige the Ministers to make an offer.

Ministers have reserved the right to make further regulations concerning buying land in these circumstances, including the valuation process.

Appeal

The owner or security holder of the land in question can appeal against the lotting decision to the Court of Session within 28 days of the decision being made on grounds of (i) an error of fact, (ii) an error of law or (iii) it is unreasonable. Quashing of a lotting decision leads to a requirement to make a new lotting decision.

Compensation

There is provision for compensation to be paid to an owner of land or security holder for loss or expense that is:

• incurred in complying with the procedural requirements of any of the above
• attributable to a potential transfer of the land being prevented by the need for a lotting decision or
• attributable to a lotting decision.

The amount of compensation is to be determined by Ministers or by the Lands Tribunal on appeal.

Further regulations will be required to determine how claims for compensation are to be made and the amount of compensation payable.

View detailed summary of Part 2 – Leasing Land

View Land Reform (Scotland) Bill Overview

If you have any questions or would like to discuss the Land Reform (Scotland) Bill further, please get in touch with a member of our Land & Rural Business team.