This far-reaching new piece of legislation proposes an expansion on the existing community right to buy provisions to allow community bodies greater opportunity to register an interest in purchasing a large land holding or part of one.
This includes the introduction of a new prohibition on the transfer of land, to permit community bodies additional time to register their interest.
The existing legislation
The current community right to buy provisions were established in the Land Reform (Scotland) Act 2003. They permit local communities to form a “community body” to register an interest in purchasing land in their community.
The community right to buy is a pre-emptive right, meaning that it can only be exercised once a landowner looks to sell the land. Once a community body registers an interest in land, it must wait until the landowner decides they want to sell the land before the community body can purchase.
A registered interest lasts for a period of five years. The community body can apply to have the interest re-registered within six months of the expiry date. If successful, the interest will be registered for a further five years.
For as long as a community interest in the land is registered, the land cannot be sold or transferred until notice has been given, in accordance with the legislation, to the community body with the interest. There are some permitted exceptions to this, for example if the land is being transferred by way of a gift or within a corporate group.
The notice given by the landowner of their intention to sell or transfer then “triggers” the right to buy, and the community body can proceed with purchasing the land. If the community body decides not to proceed with purchasing the land, the interest will be removed from the register.
What land is affected by the new proposals?
The new community right to buy provisions will apply to “large holdings of land”, being either a single or composite holding of land exceeding 1,000 hectares in area.
A prohibition will be introduced which prevents any such areas, or any parts of those areas, being sold without the process below being followed.
A “composite holding” is where there are contiguous areas of land that are owned by different but connected people. In this situation, the land is treated as being a single piece of land. People are deemed to be connected if a controlling interest is present or they are companies in the same group.
It is currently proposed that reference will be made to the register of persons holding a controlled interest in land (“RCI”) to determine controlling interests.
The Proposed Changes
The Bill intends to prevent a landowner from selling or transferring any land affected by the prohibition such that community bodies are afforded additional time to decide if they wish to register an interest in buying the land.
To lift the prohibition and sell the land, the landowner must serve a notice on Ministers of the landowner’s intention to transfer. If there is already a community interest registered in the land, then the landowner is to follow the existing procedures for serving notice.
Once the notice from the landowner is received by the Ministers, they will publicise that the landowner intends to transfer the land and provide information on how a community body can register their interest.
In addition, Ministers will send information about the proposed transfer to a prescribed list of people and organisations, being:
- individuals who have provided their details for that purpose;
- The relevant community council;
- The relevant local authority; and
- National Park authority whose area includes the land.
A community body seeking to register an interest should then submit a note of their intention to do so within 30 days of the publication by the Ministers. The Ministers are able to lift the prohibition if no notes of interest have been received within that time.
Where a note of intention to register an interest in the land has been received and meets the criteria required by the Bill, Ministers will invite the community body to make an application to register an interest in the land.
Ministers will impose a further 40-day prohibition on any sale/transfer of the land to allow the community body issuing the note of intention to apply. If an application is received within the time limit, a further prohibition is implemented while Ministers determine the outcome of the application.
Any sale or transfer of affected land in contravention of these requirements will not be effective.
Watch out for these other key changes
As drafted, the proposed amendments will have a significant impact on the sale and transfer of large landholdings (or any part of them, however small).
The Bill does set out some “exceptional circumstances” where Ministers can lift the prohibition without all of the requirements being met.
Ministers can lift the prohibition where the landowner is transferring the land due to financial difficulty and the delay occasioned by the additional requirements is likely to cause additional financial difficulty.
Lastly, the Bill also introduces a requirement relating to the leasing of land by a community body. It is proposed that if a landowner receives a request from a community body to lease their land or to lease a building on it, the landowner is obligated to consider this request if it is a reasonable one.
Similar changes are also proposed to the legislation surrounding lotting of large landholdings, which will be covered in the next article in our Land Reform (Scotland) Bill 2024 series.
If you have further questions about the impact of these and any other amendments proposed by the Bill please get in with our market-leading Rural team who are on hand to guide you through them.
This article was Co-authored by Trainee Erin Connor