The Land Reform Bill introduced by the Scottish Parliament in March 2024 proposes significant changes that affect large landholdings in Scotland. Three parts of the Bill refer to large landholdings: the provisions relating to community engagement and land management; the provisions requiring a landowner to notify the Scottish Ministers of their intention to transfer a large landholding; and the lotting of large landholding provisions. Each has its own definition of a large landholding.

For detailed analysis of the relevant sections of the Bill please go to our Land Reform Hub.

Community Engagement and Land Management

The land management and community engagement provisions define a large landholding as a single holding or a composite holding that exceeds 3,000 hectares or a single or composite holding of more than 1,000 hectares located on an inhabited island where the holding makes up more than 25% of the land forming the island.

Notifying an Intention to Transfer

This section of the Bill defines a large landholding as a single holding or composite holding exceeding 1,000 hectares, with no distinction between land in mainland Scotland and that forming an island.

Lotting Decisions

The prohibition on transferring a large land holding without first receiving a lotting decision from the Scottish Ministers affects any single holding or composite holding which exceeds 1,000 hectares. However, these provisions also apply to any part of a large landholding exceeding just 50 hectares where the landowner has already registered a notice of intention to transfer another part of the same holding, and the total of both exceeds 1,000 hectares.

Composite Holdings

In all cases, the reference to a large landholding includes composite holdings. A composite holding can be made up of any number of single holdings but certain conditions apply. For separate single holdings to be considered composite, they must (a) have boundaries that are wholly or partly contiguous (the land must be connected geographically); and (b) there must be a connection in terms of ownership of the single holdings, either because they are owned by the same person or by connected persons. The owners of single holdings are connected if (i) they are both companies in the same group; (ii) one has a controlling interest in the other; or (iii) a person holds a controlling interest in both.

The definition of a group company is the same as used in relation to taxation of companies and the concept of a controlling interest is the same as that used for the recently introduced Register of Persons Holding a Controlled Interest in Land.

Let us consider some examples:

  1. Company A owns land extending to 2575 hectares in the Scottish Borders. It is held on a single title in the sole name of the company. Clearly, this is a single landholding which is in excess of 1000 hectares and therefore, the provisions relating to lotting would apply to a transfer of Company A's ownership of the holding, as would the provisions allowing interested persons to request to be notified about a possible transfer. However, the community engagement provisions would not apply to Company A since the holding does not exceed 3000 hectares.
  2. Company X, a wholly owned subsidiary of Company A, owns 500 hectares in the Scottish Highlands. This holding is below each of the thresholds in the Bill. It is not a composite holding because although the persons are connected, the holdings do not have a contiguous boundary. Therefore, Company X's ownership does not fall under the scope of the Bill and it does not change the position in relation to Company A's holding.
  3. If Company X instead owned an estate extending to 500 hectares which was located next to Company A's holding in the Scottish Borders, sharing a mutual boundary of any length, then the two holdings together would form a composite holding (Company A and Company X being connected persons and the boundaries of the holdings being partly contiguous) extending in total to 3075. This would mean that both holdings would be subject to each of the three sections of the Bill relating to large landholdings.

Although aspects of the Bill may change between now and it passing into law, it is clear that the provisions relating to large landholdings will be far reaching. Any landowner that may be affected by these provisions of the Bill would be best to monitor the Bill as the legislative process progresses and to take legal advice.

Contributors

Gary Webster

Partner

Debbie Grant

Solicitor