Proposals for further land reform in Scotland

After much anticipation, the Land Reform (Scotland) Bill was introduced to the Scottish Parliament on 23 June 2015, introducing a host of reforms and new measures to take forward policies adopted by the Scottish Government following the Land Reform Review Group’s consultation on Land Reform.

26 June 2015

After much anticipation, the Bill was introduced to the Scottish Parliament on 23 June 2015.

The Bill brings in a host of reforms and new measures to take forward policies adopted by the Scottish Government following the Land Reform Review Group’s consultation on Land Reform.

The Bill omits two measures which were expected to be included in the Bill. The Bill does not prevent Companies registered outside the European Union from buying land in Scotland, nor does it change the law of succession by expanding legal rights claims to include heritable property.

The Bill is to contain a “land rights and responsibilities statement” but that isn’t available yet.

The main features of the Bill are:

  • The establishment of the Scottish Land Commission. This has a remit to do whatever it thinks necessary or expedient for the purposes of its functions.
    •  It also makes provision for the functions of the recently set up Tenant Farming Commission.
  • Public access to information about who owns and controls land. Powers are given to the Keeper of the Registers of Scotland to request information relating to individuals having a controlling interest in proprietors of plots of land and leases
    •  The Bill leaves certain key definitions undefined such as “controlling interest”. This will open the way for there to be more scrutiny of the categories of individuals or bodies owning land.
  • Abolition of the exemption from non-domestic rates on shootings and deer forests.
    • This effectively reverses the removal of sporting rates in 1995.
  • Provision to allow Local Authorities to change the use of common good land.
    •  This will avoid situations where a Private Bill had to be introduced in the Scottish Parliament to allow the new Portobello High School to be built on park land.
  • Introduction of measures regarding the management of deer.
    •  Environmental groups have been pressing for the right to force landowners to cull deer to reduce road accidents and protect forestry.
  • A new form of agricultural tenancy - the Modern Limited Duration Tenancy (“MLDT”).
    • This will be for a minimum period of 10 years. The existing Limited Duration Tenancy (“LDT”) will be abolished but the Short Limited Duration Tenancy (“SLDT”) which can be used for agricultural lettings of up to 5 years survives. The SLDT is seen as being essential to the ability to maintain short term letting flexibility.
    •  The new MLDT will have a break option after 5 years for new entrants but otherwise it is broadly similar in content to the LDT, notably in relation to the provision and maintenance of fixed equipment. This may be seen by some as a missed opportunity to allow the parties freedom of contract in relation to fixed equipment obligations.
    •  In certain circumstances traditional “1991 Act” tenancies may be converted into the MLDT.
  • Agricultural tenants no longer require to pre-register their interest in certain holdings as a requirement of the exercise of their right to buy.
    •   Although we won’t have the clarity of a register of agricultural tenants’ right to buy, this change will remove the pitfalls of the current regime, where there is uncertainty as to what stage discussions pursuant to a sale trigger the pre-emptive right to buy.
  • A new power of sale of agricultural holdings where a landlord is in material breach of their obligations.
    •  Some of the detail has still to be completed, but broadly this will give tenants some form of recourse against landlords who persistently fail to implement their obligations. The Land Court must sanction the sale provided certain grounds are met and the price is determined by an independent valuer if agreement cannot be reached.
  • A new statutory framework regarding rent reviews in agricultural leases.
    •  Rents are to be based on the “productive capacity” of the holding rather than the current open market value. Open market value rents have been difficult to determine in view of the different types of agricultural tenancies being used as letting vehicles.
  • Expansion of the list of people to whom agricultural holdings can be assigned or bequeathed and to whom holdings can be transferred on intestacy.
  • The class of persons proposed by the Bill is much wider than the current list of “near relatives”. This may mean that some landowners are obliged to accept individuals as tenants who have little or no connection with the holding.
  • A two year amnesty period in relation to certain improvements carried out by tenants.
    • This is to allow tenants to register and claim compensation for improvements made under the existing regime where they may have fallen foul of the statutory notice requirements.
  • To enable certain persons to buy land to further sustainable development.
    • Certain community bodies (yet to be defined) can have land transferred to them if they can demonstrate that this would further the achievement of sustainable development in relation to the land, if the transfer would result in significant benefit to the community and not granting consent would result in significant harm to the community.
    •  The Scottish Ministers have powers to determine the application after having regard to all views on it from interested parties (including the owner and neighbouring proprietors). The community can nominate a third party purchaser in place of their own right to buy.
    •  “Land” includes bridges and other structures, inland waters, canals, the foreshore, salmon fishings and mineral rights. But you can only acquire fishing and mineral rights if you are also acquiring the relevant land to which they pertain. There are excluded subjects such as individual dwellinghouses and croft land, some Crown land and land “of other description” that the Scottish Ministers may specify.
    • Any sale of land under the right to buy must be at market value which is determined by an independent valuer appointed by the Scottish Ministers.
    • There is no definition of “sustainable development” and that is also expected to follow.
    • The Bill also requires the Scottish Ministers to issue guidance on engaging communities in decisions relating to land which may affect communities.  What this guidance will entail is expected to be included in secondary legislation.

The lack of detail in the Bill in some keys areas means that its full impact cannot be assessed at this stage. We will continue to follow the progress of the Bill as it is debated and further briefings will be issued as and when the shape of the content becomes clearer.