The Land Reform (Scotland) Act 2025 (the "Act") passed in December 2025 has been closely followed by those with an interest in the rural sector but must also be considered by those who may deal with landowners affected by the Act. The Act is not yet in force and more detail on how it will operate in practice will be provided in due course by secondary legislation. Before then, developers should be aware of some of the provisions which may impact their operations.
Large Landholdings
The parts of the Act referred to in this article will affect landholdings that exceed 1,000 hectares (“Large Landholdings”) and will therefore not affect the vast majority of housing development sites in Scotland. However, housebuilders who are considering acquiring land from, or entering into an option agreement with, the owners of "landed estates" would be well advised to consider the potential impact of the Act at a very early stage in their due diligence.
In assessing whether a landholding exceeds the 1,000 hectare threshold regard should be had to any land within 250 metres of the area that includes the proposed development site, even if on a separate title. Such neighbouring areas owned by the seller or a party “connected” to the seller will be aggregated for the purpose of assessing whether the threshold for a Large Handholding is exceeded. “Connection” can be achieved through various means, including ownership by related companies or trusts with trustees in common. The matter will often require to be covered by legal due diligence and appropriate contractual warranties, to ensure that a housebuilder’s plans will not be thwarted and that a landowner is complying with their own legal obligations under the Act.
The Act does not distinguish between urban and rural land and we expect that there will be areas on the edge of existing settlements or urban fringes that will nonetheless form part of Large Landholdings.
If a potential development site does form part of a Large Landholding then there are two aspects of the Act that will have particular relevance.
Land management plans
The owners of all Large Landholdings will (when the relevant provisions of the Act take effect) be required to prepare and then maintain a publicly available land management plan, which must include all of their plans for the land in question. This will include potential development objectives for any parts of the landholding. In preparing and then updating the land management plan, the landowner must consult with local community groups and demonstrate that they have done so.
The land management plan should include the long-term vision and objectives for managing the landholding and also outline how the owner is going to consider any local place plan in relation to the land. Whilst we await the detail we would expect that these obligations would include a requirement to publicise any plans to promote the land for development, whether by the owner and/or a potential development partner. Depending on the particular timescales, this may require a landowner to disclose its development plans (and possibly the identify of a development partner) before they would otherwise choose to put that information in the public domain.
There is also potential risk that this obligation to consult with the local community may introduce an additional opportunity (other than as part of the current planning process) for the community to object to development proposals or at least influence the scale and design.
Landowners will also be obliged to consider any reasonable request from a community body to lease part of a Large Landholding, albeit some types of land may be excluded. There has been no indication as to how this might apply where there are plans to sell the same area (or part of it) for development, but it would seem to create another potential hurdle to development.
The Act provides for substantial penalties (up to £40,000) to be imposed for breach of these obligations so we would expect that landowners will be very wary of taking steps that could result in allegations of breach.
Sale of land
The Act will prohibit the owner of a Large Landholding from selling any part of that landholding or taking any action in connection with a potential sale of such part. The prohibition will be imposed to give a community body an opportunity to register an interest to acquire the land in question and take steps to acquire the land at market value if their application is accepted by the Scottish Ministers. The community interest is effectively protected by a series of extensions to the initial prohibition on sale, to allow the body an opportunity to assess the opportunity, arrange funding and complete the purchase.
For the community body’s application to register an interest in the land to be successful, the Scottish Ministers must be satisfied that certain criteria are met, including that this registration would further sustainable development, would be in the public interest, would result in significant community benefit and is the most practicable way to achieve that benefit. If the interest is not registered then the Scottish Minsters should lift the prohibition on sale or action being taken with a view to a sale. The prohibition would be reimposed after two years, so there would be a period of two years for the landowner to complete the sale.
A landowner can apply for the prohibition to be disapplied where that is required in order to alleviate financial hardship, and the existence of the prohibition is likely to cause or worsen such hardship.
It is expected that secondary legislation will explain how this process will operate in relation to option agreements or sale contracts concluded after the Act comes into force. At the moment, on the face of it, preliminary discussions with a view to a potential sale would have to be disclosed to the Scottish Ministers who would then have to invoke the community engagement process.
It would appear however that any option agreement or sale contract in place before the Act takes effect (or concluded in accordance with the rules in the Act) will be protected, albeit the Act is not very clear on how this will specifically be achieved in practice.
Whilst the detail of the secondary legislation is crucial in assessing the potential impact of the Act on the development sector, it would appear that there will be additional administrative burdens when a development site forms part of a Large Landholding. It may be that the Scottish Government will decide that development of housing will be more in the public interest and of greater benefit to the community than a sale to a community body for other sustainable development but it remains to be seen if they will expedite matters where this is the case.
This article reflects a high level summary of complex legislation and our assessment of potential impact on parties looking to sell or develop potential development sites within Large Landholdings. We expect that at least some of the current uncertainty will be addressed by secondary legislation and hope that a framework will be developed to ensure that impact on development is minimised so far as possible.
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