This is the second in a series of land reform blogs. It sets out current Scottish Government proposals for land reform. The most significant of these proposals take forward Scottish Land Commission recommendations that are explored in the first blog in this series.
Bute House Agreement
In August 2021, following Scottish Parliamentary elections three months earlier, the Scottish Government and the Scottish Green Party reached an agreement on a shared draft policy programme. Known as the Bute House Agreement, this undertakes to introduce a Land Reform Bill “by the end of 2023” and states that it will:
aim to ensure that the public interest is considered on transfers of particularly large-scale land holdings, and we will aim to introduce a pre-emption in favour of community buy-out where the public interest test applies, and where it is appropriate to do so. Our proposals will complement existing community right to buy mechanisms.
The consultation
In July 2022 the Scottish Government published Land Reform in a Net Zero Nation, a consultation on measures to “address the impact of scale and concentration of land ownership”.
This recognises the commitment to land reform made in the Bute House Agreement, the Land Commission’s previous recommendations, and the objectives set out in the Land Rights and Responsibilities Statement (LRRS). The consultation states:
[…] we must take every opportunity to bring about a just transition to net zero, and tackle the biodiversity crisis. Land has a fundamental role to play in how we respond to the climate crisis and biodiversity crisis. Its potential to contribute to our national priorities of a just transition to net zero, and to nature restoration, can hardly be overstated. Central to the ‘just transition’ concept is that communities and the wider public must be supported in the transition. An important aspect of this is ensuring that communities can benefit from investment in Scotland’s natural capital, whether directly through ownership, or through engagement and co-operation with landowners. Actions taken in pursuit of tackling climate change and increasing biodiversity must not have the effect of displacing people from the land.
The consultation goes on to propose the following measures.
Defining “large-scale”
It is intended that further land reform measures will apply solely to “large-scale landholdings”, and the consultation recognises that accurately defining these is necessary if “disproportionate duties” e.g. “administrative burden” will not fall on small-scale landholdings or family farms. Meeting one or more of the following criteria would mean that a landholding would be considered ‘large-scale’.
- A fixed threshold of 3,000 hectares.
- Land that accounts for more than a fixed percentage of a data zone (or adjacent data zones) or local authority ward(s) designated as an Accessible Rural Area or Remote Rural Area, through the six-fold urban/rural classification scheme.
- Land that accounts for more than a specified minimum proportion of a permanently inhabited island.
According to Registers of Scotland, 386 of the 1.86 million titles in the Land Register had a total land area of over 3,000 hectares. These titles are thought to equate to around 20% of Scotland’s total land mass, however the Land Register is not yet complete. The fixed percentage of a data zone or the minimum proportion of an island is not specified.
Compliance with LRRS
A legal duty to comply with the LRRS and associated codes of practice will be placed on “large-scale landholdings”, with an accompanying statutory process to provide for adjudication and remedies. As recommended by the Commission, it would be underpinned by statutory Codes of Practice, similar to those of the Tenant Farming Commissioner.
Reporting potential breaches could be done by “defined parties” only, not the public. These parties are expected to include community, charitable or public service organisations with a connection to the local area.
If breaches of the LRRS are found to have taken place, potential outcomes could include mediation, recommendations on how to comply, or directions to implement changes. The outcome could also be considered in any subsequent public interest test. The option of enforcement powers to include financial and cross-compliance penalties are also proposed, meaning that breaches could prevent landowners from accessing land-based subsidies. Cross-compliance means linking with wider regulatory consents or financial support.
Compulsory land management plans
“Large-scale landholdings” would be required to prepare and publish a management plan, which:
- Demonstrates how the owner will implement the principles set out in the LRRS.
- Demonstrates how land will be used and managed to meet requirements set out in LRRS codes/protocols for sustainable management, contributing to net zero and nature restoration goals.
- Sets out how they will engage in line with Guidance on Engaging Communities in Decisions Relating to Land.
These plans will also allow owners to increase the transparency of their objectives and operations, and to set out how these connect with local priorities, opportunities, and public policy. The consultation states:
Plans could potentially provide a means not only of demonstrating how the use and management of land will contribute to carbon emission reduction and/or nature restoration, but also a mechanism for monitoring this. Plans could be required to contain information on land to be used for purposes that would generate revenue from carbon offsetting/carbon credits.
Again, cross-compliance enforcement measures are proposed.
Regulating the market in large-scale land transfers: a new Public Interest Test, and a requirement to notify an intention to sell
It is proposed that a Public Interest Test (PIT), applicable to large-scale landholdings or where one would be created, would assess whether there is a risk of creating or continuing a situation where excessive power acts against the public interest. The Scottish Government recognises that this proposal means that “there will be a number of complex issues to resolve”, in particular:
[…] it is imperative that any proposals are fully compliant with the European Convention on Human Rights (ECHR). The ECHR requires a strong justification for interference in the rights it accords to property owners.
The consultation proposes applying this PIT to both the prospective buyer and the seller. The seller would be obliged to provide information about whether the property fell within the scope of the test, and so that new issues of concentration are not created, a test would also need to be applied to the buyer, who may already have other land holdings. There are however complications to this approach, with the consultation noting:
Our aim is to ensure that all types of transactions involving large-scale landholdings are brought in scope of the public interest test, but this is challenging. A test that constituted part of the formal conveyancing process, or was a requirement for Land Registration in Scotland will not capture transfers that are not subject to formal conveyancing such as the sale of shares in a company. We cannot, within the current devolved settlement, make legislative changes that would require modifications to companies law. We will therefore seek to engage with the UK Government to ensure that all transactions involving large-scale land transfers – including those involving company shares – fall within scope of the public interest test.
The Scottish Government sets out the following potential outcomes of the PIT:
- There is insufficient public interest to warrant interference in the sale, and the land in question could be sold as the seller wishes.
- There is sufficiently strong public interest in reducing scale/concentration that the sale can only proceed subject to specific conditions (which would reflect the reason that the sale was not considered to be in the public interest).
Conditions could include:
- That the land should be split into lots and could not be sold to (or acquired by) one party as a whole unit.
- The land, in whole, or in part, should be offered to constituted community bodies in the area, and the sale can only proceed if the bodies consulted, after a period of time, indicate that they do not wish to proceed with the sale.
It is intended that the PIT should consider any steps previously taken by a seller to diversify ownership, and/or who has used their Management Plans to engage with community bodies over opportunities to lease or acquire land. Further outcomes could also include specifying that the buyer must restore degraded peatland or make part of their holding available to a community body.
Other proposals in the consultation include requiring those in receipt of relevant public funding to register their holding with the Land Register and to demonstrate compliance with the LRRS; creating a new “flexible land-use tenancy”; modernising small landholding legislation; and tightening controls on who can buy and own land. These will be considered in detail in the SPICe Bill Briefing, published when the Bill is laid in Parliament.
What next?
The Bill was expected to be laid in Parliament before the end of 2023, however it has recently been delayed.
The next blog in this series considers the reaction of key stakeholders.
Alasdair Reid, Senior Researcher; Climate Change, Energy and Land Reform