Land Reform in a Net Zero Nation consultation paper

The Scottish Government has recently published a consultation paper on a new Land Reform Bill, which contains three key proposals that apply to "large-scale" landholdings. In this article, Harry Oliff and Catherine Donald highlight the influence that this will have on subsidies, land use tenancy and transparency.

26th July 2022

Last month the Scottish Government published “Land Reform in a Net Zero Nation”, a consultation paper on a new Land Reform Bill. The paper sets out the proposals for the bill and seeks views on various related issues, including measures aimed at “large-scale holdings”, changes to subsidies, the introduction of a new type of agricultural tenancy, and transparency of land ownership. 

Large-scale holdings

Three proposals have been put forward which are intended to apply to “large-scale” landholdings. What is meant by “large-scale” has not yet been formulated by the Scottish Government, which is seeking views on this. The measures are not expected to capture family farms, and it is suggested that a landholding will be large-scale if it is over 3,000 hectares in extent; accounts for more than a fixed percentage of a local area; or accounts for more than a specified minimum proportion of a permanently inhabited island.

The three proposals are as follows:

1.    Strengthening the Land Rights and Responsibilities Statement (LRRS)

The LRRS was introduced by the Land Reform (Scotland) Act 2016 and required Scottish Ministers to produce a statement which sets out the vision and principles for land rights and responsibilities in Scotland.

Currently, the LRRS is voluntary. The consultation paper recognises the limitations which the voluntary approach brings and proposes to introduce measures placing a legal duty on large-scale holding landowners to comply with the LRRS. Alongside this, a statutory process to adjudicate on complaints of non-compliance and responses to breaches would be introduced.

It is envisioned that this would be akin to the model of the Tenant Farming Commissioner Codes of Practice, and would be underpinned by statutory Codes of Practice or protocols. 

2.    Compulsory Land Management Plans

Currently, there are no requirements for landowners to make available to the public their medium or long term plans for their land. The consultation paper considers it a “reasonable expectation” for any large-scale holding to prepare and publish a management plan. The consultation paper seeks views on the regularity with which these plans should be published, what information they should include, and whether this would benefit the local community. It is not clear from the consultation paper how plans or responsibilities surrounding the same will interact with parties who hold an interest in the land, for example agricultural tenants. 

3.    Regulating the market in large-scale landholdings

The consultation proposes to introduce a Public Interest Test (PIT). This test would apply at the point of transfer of a large-scale landholding and would assess whether there is a risk that the transfer would result in excessive power acting against the public interest. The paper does not suggest any definition or criteria for “excessive power”. If the test is met, the sale could only proceed subject to conditions which would seek to ensure that the land is managed in the public interest – for example, the land being split into lots so that no party could acquire all lots – and secondly, the land could be offered to community bodies. The paper suggests a sale could only proceed if the community bodies consulted indicated they did not wish to proceed with the sale. This proposal may go some way in controlling the power that is held by large landholders but it does not move to eliminate this. This is an extremely complex area of reform and the consultation paper invites views on a range of points, including an additional mechanism of a duty on landholders to give notice to community bodies that they intend to sell when the PIT criteria is met.

Subsidies

The consultation suggests new conditions on those in receipt of public funding. This is intended to capture a number of subsidies and grants, including tree planting and peatland restoration. This proposal is closely linked to the LRRS and the Land Management Plans discussed above, as the paper suggests that failure to comply with these measures should result in withdrawal of public funding. The paper also considers the possibility of a requirement for the land to be registered in the Land Register of Scotland as a condition of receiving public funds. This would apply to all landholdings, regardless of size. The paper does not address the situation of agricultural tenants in receipt of agricultural support payments where their landlord has not registered the land. 

Land Use Tenancy

The consultation paper also includes proposal for a new type of tenancy, called a Land Use Tenancy. This would allow tenants to undertake a combination of agricultural and non-agricultural activities, with the intention of helping to address both the climate change and biodiversity crises. Eligible activities may include woodland management, agroforestry, nature maintenance and restoration, peatland restoration, and agriculture. It is the intention that this new type of tenancy will encourage better use of land and encourage transparency, certainty, and opportunities for tenants and landlords. Tenant farmers and small landholders would be able to convert their tenancy into a Land Use Tenancy, albeit no proposal for the process or procedures for doing so are outlined in the consultation paper.

Transparency

Recent strides have been made towards transparency of land ownership in Scotland by the introduction of the Register of Controlling Interests (and the Register of Overseas Entities in England and Wales). The consultation paper, while recognising potential devolutional issues, wishes to introduce discussion around a requirement for those who seek to acquire large-scale landholdings in Scotland to be registered in an EU member state or the UK for tax purposes. It is suggested that this requirement could assist with dealing with issues of absenteeism and to ensure that income from these large-scale landholdings is not removed from Scotland and from benefitting local communities.

Conclusion

The consultation closes on 25 September. There are far reaching implications for rural land ownership which may arise from future legislation based on this paper.

If your organisation or business is interested in submitting a response, responses may be made using the Scottish Government’s consultation hub here: Land Reform in a Net Zero Nation - Scottish Government - Citizen Space (consult.gov.scot). 
With additional reporting by Catherine Donald.