Residential property
03 Sep 2018 News

Controlling Interests in Land

The question of who owns Scotland has been a well documented curiosity in recent years because of the way legal title can be held. It is a frustration the Scottish Government hopes to solve with the introduction of a new register known as The Register of Persons Holding a Controlling Interest in Land (RCI) which it hopes will bring about a greater transparency.

Information about the ownership of land in Scotland can be obtained from the General Register of Sasines and the newer electronic Land Register of Scotland, but in a minority of cases due to the way that information is held it can be difficult to ascertain who is the beneficial owner or occupier of land. These ownership arrangements can be entirely legitimate but it is this information which the Scottish Government cites as important to empower the people of Scotland and help improve the sustainable development of the country.

Part 3 of the Land Reform (Scotland) Act 2016 paved the way for a new register to be kept by the Keeper of the Registers of Scotland of the individuals who hold a controlling interest in owners and tenants of land and recently the implementation of the RCI took a major step forward with the publication of draft regulations setting out how the RCI will work in practice.

The draft regulations are under consultation until 8 November 2018 with a view to the regulations coming into force and the RCI being operational on 1 April 2021.

The draft regulations put the onus for providing information about a controlling party on the registered land owner or tenant of land. That person must contact whoever has a controlling interest over them to ascertain the information necessary to populate the RCI and then intimate this information to the Keeper of the Registers of Scotland. Failure on the part of the land owner or tenant to notify the Keeper or the person holding the controlling interest to respond with the necessary information within the prescribed timeframes will result in a criminal penalty, punishable by a fine (currently up to £5,000).

There is no prescribed type of land or property which is affected by the regulations but for the vast majority of situations where land or property is owner-occupied no action will be required.

However there are a number of situations where information will need to be populated in the RCI, such as trust structures, certain partnership and other contractual arrangements, overseas ownership structures and any other arrangements which divest the controlling interest from the registered land owner or tenant.

As the ultimate aim of the regulations is to ascertain the individual(s) with control it follows that if there is a complex ownership structure with multiple layers of non-natural entities, additional information will need to be entered on the RCI until an individual or individuals are identified as having ultimate control.

It is the intention that information publicly available in other registers, such as information on companies, charities and local authorities, will not be duplicated in the RCI therefore such entities will not be required to submit information to the Keeper for inclusion in the RCI. It is also possible for a person who has control or influence over another to be allowed anonymity if it can be proved that the inclusion of their information in the RCI will put them at risk of harm.

It is not uncommon for rural land to be held in the name of an individual but introduced to a partnership, held by a trust or held by an overseas owner by way of an overseas company. In these circumstances full information of the ownership structure will require to be disclosed and each time a change is made to the structure further notification will need to be made to the Keeper to allow the RCI to be updated.

There is no doubt the introduction of the regulations will increase the paperwork required of land owners and tenants affected. To this end there will be a period of grace allowed between the regulations coming into force on 1 April 2021 and 1 October 2021 whereby those finding themselves subject to the regulations will be required to comply. Thereafter, the financial penalties for failure to comply will come into force.  

If you have any questions regarding the regulations and whether or not you may be affected, please contact Murray Soutar.

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