The Land Reform (Scotland) Act 2016 is one of the most controversial pieces of legislation passed by the Scottish Parliament. Two controversial proposals put forward before the draft legislation was issued, capping the amount of land which can be held by one person or company and limiting the entities who may own land in Scotland to those registered within the EU, were not included in the Act. Below we review what was included in the final version of the Act passed by the Scottish Parliament.
The Scottish Land Commission
A Scottish Land Commission consisting of five Land Commissioners and one Tenant Farming Commissioner will be set up to review and recommend changes to law and policy relating to land and to carry out research and provide information and guidance. The Tenant Farming Commissioner will be responsible for producing codes of practice for agricultural landlords and tenants and for enforcing such codes of practice.
Information about the control of land
The Land Reform Act allows Scottish Ministers to pass regulations requiring information on persons with controlling interests who own or lease land in Scotland, wherever that person comes from. The Keeper of the Registers of Scotland will request the information when registering titles to land and long leases (over 20 years) of land, and will log the information in a register of such interests which will be accessible to the public. Ministers must first consult on any proposed regulations.
Engaging communities in decisions relating to land
The Act calls for further engagement of communities in decisions relating to land but gives no information on the types of land and the types of decisions in which the community may have a say, leaving the details to be set out in guidance to be issued by the Scottish Ministers.
Right to buy land to further sustainable development
One of the most controversial parts of the Act allows community bodies to apply to the Scottish Ministers to force a sale of land to the community in the interests of furthering sustainable development. A community body can be a company limited by guarantee defined by postcode units, a Scottish Charitable Incorporated Organisation or a community benefit society and must meet certain criteria in relation to numbers of members and connections with the land. They can apply to the Scottish Ministers for consent to buy land provided they have written to the owner of the land and asked for it to be transferred to the community within six months of making their application without success. Other than owner occupied homes, crofts, Crown land and any other type of land or property that the Scottish Ministers choose to exclude, all land and property in Scotland will be subject to this new community right to buy.
Scottish Ministers will seek the views of the owner, tenant, heritable creditor with the right to sell, the owners of adjacent land and the public on any application. They must also be satisfied by the community body's case for sustainable development. Sustainable development is not defined in the Act but the conditions are set out as follows:
- the transfer would further the achievement of sustainable development and be in the public interest;
- the transfer is likely to result in significant benefit to the community and is the only practicable or most practicable way of achieving significant benefit; and
- the refusal of consent is likely to result in harm to the community.
It has been said that the bar has been set quite high for a community body to obtain consent but that has to be the case if ownership rights in Scotland are to be protected.
If consent is granted, the land will be valued by an independent valuer appointed by the Scottish Ministers, after which the community body will have six months to buy the land. There are rights of appeal to the Sheriff Court against the grant of consent to the application for the owner, tenant or creditor with a right to sell the land. The community body, owner or tenant can appeal against the valuation of the property to the Lands Tribunal which will also deal with questions relating to the application. The application and supporting documentation will be registered in a new register, the Register of Applications by Community Bodies, which is to be compiled and managed by the Keeper of the Registers of Scotland and will be accessible to the public.
Shootings, deer forests, deer management, common good and access rights
Business rates will become payable in respect of shootings and deer forests which will no longer be excluded from the valuation roll. They will appear as separate entries on the roll. The Act also expands the functions of deer panels and enhances the powers of Scottish Natural Heritage to demand deer management plans and returns on the numbers to be killed. More control over the use of common good land by local authorities will be introduced and local authorities will be given more power to review core paths but must consult on any proposed changes.
Agricultural Holdings
A large part of the Act is dedicated to agricultural holdings and introduces amongst other things, the following.
Modern Limited Duration Tenancy - a new letting vehicle known as the "modern limited duration tenancy" (MLDT) with a minimum term of 10 years to replace Limited Duration Tenancies (LDT) in the future. The Act maintains any LDTs which are already in existence. Any lease seeking to run for more than five years but less than 10 years will convert to an MLDT.
Repairing tenancies - a new letting vehicle with a minimum of a 35 year term and a minimum five year "repairing period". During the "repairing period", the tenant will be responsible for the provision, maintenance, renewal and replacement of fixed equipment unless the lease provides otherwise.
1991 Act tenant's pre-emptive right to buy - by removing the need for 1991 Act tenants to register their interest in purchasing their agricultural holding, an automatic pre-emptive right to buy for all 1991 Act tenants.
Sale where landlord in breach - a right for a tenant to apply for a right to buy his agricultural holding when a landlord has failed to comply with an order of the Land Court to remedy a material breach of his obligations under a lease. If the tenant does not exercise that right, the tenant can apply to the Land Court to order the sale of the holding to a third party.
Rent review - a move away from "open market rent" to a "fair rent" for 1991 Act tenancies, LDTs and MLDTs which will take account of the productive capacity of the holding. "Productive capacity" will be defined by regulations.
Assignation and succession - a widening of the persons who can succeed to 1991 Act tenancies, SLDTs and LDTs. The grounds on which a landlord can object to an assignee of a 1991 Act tenancy are restricted and the automatic right to end a 1991 Act lease where the successor is a non-near relative is removed.
Relinquishment and assignation - a new process allowing tenants to offer to relinquish their tenancy to the landlord in exchange for statutory compensation. If the landlord does not "buy out the tenancy", the tenant can assign it to a new entrant to, or an individual who wishes to progress in, farming.
Compensation for tenant's improvements - a three year amnesty period during which a tenant farmer may serve notice on the landlord of the intention to treat a specific item, not previously eligible for compensation, as a tenant's improvement at waygo.
The substantive parts of the Act will be brought into force when regulations are passed, but no timescale has been given. Those regulations will in some cases contain more detail on some of the provisions, including those requiring information on the control of land. With the passing of such regulations bringing with them the new right to buy for sustainable development, the Scottish Government will continue to push forward with its aim to have one million acres of land in Scotland in community ownership by 2020. Only time will tell if this new right to buy combined with the right to buy abandoned and neglected land introduced by the Community Empowerment (Scotland) Act and the extension of the original community right to buy to the whole of Scotland will go any way towards achieving that goal.
For more information on the new private residential tenancy please contact Johane Murray, or your usual Brodies contact.
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Head of Real Estate & Partner
