SPICe has recently received enquiries about the Register of Persons Holding a Controlled Interest in Land (RCI), its history, the process for registration, who it applies to and who is exempt. Possible criminal penalties were due to apply to those with obligations to register who had not done so by 1 April 2023, however this transitional period has recently been extended by 12 months.
This blog provides information on the RCI and explores these issues.
What is the Register for?
The Scottish Government states:
The purpose of the register is to improve transparency about land ownership by making information about those who have a controlling interest in land publicly available – those who ultimately make decisions about the management or use of land, even if they are not necessarily registered as the owner of the land.
How did the Register come about?
Part 3 of the Land Reform (Scotland) Act 2016 requires Scottish Ministers to make regulations for a new public register holding information about persons with controlling interests in relation to land. Following extensive public consultation, and consideration by the Parliament under the super-affirmative procedure (totalling nearly five years between 2016 and 2021), the Land Reform (Scotland) Act 2016 (Register of Persons Holding a Controlled Interest in Land) Regulations 2021 were unanimously passed.
The Register of Persons Holding a Controlled Interest in Land, which is held by the Registers of Scotland, became operational on 1 April 2022, and is free to submit to and to search. The RCI Regulations make provision for it to be a criminal offence not to comply with the duties in the Register, punishable by a fine.
Who needs to make an entry in the RCI?
In short, there are three different parts to RCI. These are:
- the land
- the owners and tenants of land (known as the recorded person)
- people that might have a controlling interest in land (known as associates).
The RCI has been established to provide transparency about land in Scotland where there are persons with a controlling interest (e.g. where someone can influence decisions concerning the land or property in relation to changing use, leasing, or directing the activities of the owner). Therefore, a submission is only required where land and property has a recorded person and an associate or associates. Individual owners where there are no associates with a controlling interest are not recorded in the RCI. It may be that they are recorded on the Land Register, the Register of Sasines or another register, dependent on circumstances.
Because the RCI is a register of persons (not parcels of land), it is also possible for there to be multiple recorded persons, with an entry being required for each individual.
Not all owners and tenants of land are required to make an entry; only those who are classed as a “recorded person”. Several conditions need to be met to be classed as a recorded person and there are exemptions. A recorded person is someone who, in Scotland:
- owns land and has an associate with a controlling interest over the land, or
- tenants land on a registered or recorded lease of more than 20 years and has an associate with a controlling interest over the land.
If these conditions are not met, or the exemptions apply, then there is no need to make an entry. Where there is any doubt, legal guidance should be sought.
In the RCI, the definition of “land” includes buildings and other structures, seabed and other land covered by water, and other interests in land (known as “legal tenements”) which can be owned separately from the land itself such as minerals or salmon fishings.
The Registers of Scotland has provided guidance, as well as an online support tool for those assessing whether and how to make an entry in the RCI.
Who is exempt?
Those who are subject to other transparency regimes, are not subject to the RCI. This includes some charities, UK companies, Limited Liability Partnerships, Scottish Limited Partnerships, and public bodies.
Why is the transitional period being extended?
Following a transitional period, offence provisions were expected to come into effect on 1 April 2023. However, on Tuesday 21 February, when considering the Land Reform (Scotland) Act 2016 (Register of Persons Holding a Controlled Interest in Land) Amendment Regulations 2023, the Parliament’s Net Zero, Energy and Transport Committee agreed to recommend to the Parliament to extend the transitional period for relevant offences by 12 months, to 1 April 2024.
In short, this means that whilst in principle there is a requirement to register with the RCI, in practice there is a one-year extension to this requirement as the criminal offences, including those for not registering, do not come into force for another year.
The Draft Policy Note for the most recent regulations explains that:
Despite the extensive consultation and Parliamentary scrutiny, in recent months, some stakeholders have raised concerns in relation to the cost of compliance with the RCI and the maintenance of entries, owing to the number of titles they hold or the complex nature of their structure.
Extending the transitional period by 12 months will ease the burden on those in scope of the RCI by giving them more time to prepare their submissions before the offence provisions take effect. The requirement to register is maintained, but an extension alleviates the immediate pressure to comply at this difficult time, owing to Brexit, Covid, and inflationary pressures.
An extended transitional period will also allow for a further, targeted programme of stakeholder engagement and awareness raising.
The Church of Scotland has recently highlighted that the RCI “will have impact particularly on the Church of Scotland, Scottish Episcopal Church, United Reformed Church and others due to the way they are structured internally and because of the number of churches, halls, manses and glebes which are covered by the legislation”, and notes:
Churches have been engaging with the Scottish Government for many months and have proposed alternative arrangements to ensure that the policy aim of achieving transparency in this area is met whilst also recognising the unique legal structure of congregations and taking into account the reliance on local volunteers and the hugely disproportionate impact of the legislation on the churches. The Scottish Government have failed to recognise the position of the Churches and have not responded to the Church’s constructive suggestions.
In oral evidence to the Committee, Màiri McAllan MSP, Minister for Environment and Land Reform, explained that she has had “intense engagement over recent months […], principally with religious stakeholders”, but that she was in no doubt that “the concerns are spread right across the charitable and third sector”.
The Minister explained that the administrative burden arises principally where there is a significant volume of titles, and where there is a complex ownership structure. However, the “register actually exists to try and shed light on and to provide transparency” on these issues. She stated:
There are significant reasons why retaining the Church of Scotland and other religious denominations within the scope of this RCI are really important. I think the Church of Scotland own something like 6000 titles in Scotland which makes them probably one of the largest landowners by title parcel numbers. A lot of their land still is registered in the Register of Sasines which dates from the 1600s, and even experienced solicitors can struggle to note title on, so for all these reasons it’s very important that they are part of the Register.
I considered all of the options that the Church of Scotland and other denominations put to me, some of them were a full exemption from the Register itself, some of them were an amendment to Schedule 2 of the RCI, which would have created a special treatment for, I think as they put it, the main Scottish churches, which in itself is a vague term. But there were other reasons why that wasn’t acceptable, including the fact that that would immediately raise the concerns of other stakeholders who were being treated differently […]. So, I considered all of the suggestions of Church of Scotland and I continue to liaise with them on that.
Alasdair Reid
Senior Researcher, Climate Change, Energy, and Land Reform