The Land Reform (Scotland) Bill: What do the proposals for large landholdings look like?

Reading Time: 9 minutes

Contents show

The Land Reform (Scotland) Bill was introduced in the Scottish Parliament on Wednesday 13 March 2024. It is accompanied by the following key documents:

The PM states that the Bill covers four principal policy areas:

Land reform
A new Land Management Tenancy
Agricultural holdings
Small landholdings

This blog provides an initial overview of what the proposals relating to “land reform” contained in Part 1 Large Land Holdings: Management and Transfer of Ownership look like.

SPICe has previously published the following blogs, which consider the origins of large landholding proposals, consultation, and the reaction of key stakeholders:

What do the proposals intend to do?

The PM sets out the Government’s underlying vision of land reform as being to bring about:

a Scotland with a strong and dynamic relationship between its land and people, where all land contributes to a modern, sustainable and successful country, supports a just transition to net zero, and where rights and responsibilities in relation to land and its natural capital are fully recognised and fulfilled.

The Bill therefore brings forward new requirements “in relation to the ongoing management and transfer of large landholdings” which “are intended to be targeted and proportionate ways of addressing the risks identified by the Land Commission through their work on scale and concentration of land ownership”. The work of the Scottish Land Commission is explored in previous blogs, and in their Land Reform Bill webpage which draws together relevant research and evidence.

These new requirements on the management and transfer of large landholdings aim to:

Further improve the transparency of land ownership and management.
Strengthen the rights of communities in rural areas by giving them greater involvement in decisions about the land on which they live and work.
Improve the sustainable development of communities by increasing opportunities for community bodies to purchase land when it comes up for sale.
Ensure a sufficient and adequate supply of land by enabling Ministers to require that the land is sold in lots if a large landholding is to be transferred where that will help to promote the sustainability of local communities.

What are the headlines – obligations, requirements, and definitions?

The PM provides a summary of the key measures which would apply to owners of large landholdings:

New obligations on landowners to produce Land Management Plans and to engage with local communities, to support compliance with the principles of the Land Rights and Responsibilities Statement.
Community bodies to receive prior notification in certain cases that the owner intends to transfer a large landholding, or part of it, and provide an opportunity for them to purchase the land.
Introduction of a transfer test at the point of certain transfers of all (or part of a large landholding) if the land to be transferred is over 1000 hectares (ha), to determine if the owner should be required to transfer the land in smaller parts (known as lotting).

The PM states that a “fundamental policy decision”, is the definition of a large landholding, and that the Bill sets out different thresholds for different purposes:

For community engagement and land management plan requirements, the Bill defines a large landholding as more than 3000ha, or land of at least 1000ha that accounts for more than 25% of a permanently inhabited island.
For pre-notification and transfer test, the Bill defines a large landholding as more than 1000ha.

The following sections consider the proposals in more detail.

The details – how’s it proposed to work?

Section 1– Community-engagement obligations in relation to large landholding

Section 1 amends Part 4 of the Land Reform (Scotland) Act 2016, which required Ministers to issue Guidance on engaging communities in decisions relating to land.

It gives Ministers the power to introduce regulations at a later date, meaning that much of the detail will be in secondary legislation. These regulatory powers will require owners of landholdings over 3,000ha, or land of at least 1,000ha that accounts for more than 25% of a permanently inhabited island, to promote community engagement in relation to the holding. In particular, relevant holdings will have to have a land management plan and consider requests from Community Bodies to lease land. Regulations are to be informed by the Land Rights and Responsibilities Statement in consultation with the (newly established) Land and Communities Commissioner, considered later in this blog.

The PM notes that:

According to data from Registers of Scotland, approximately 40% of the land in Scotland is made up of landholdings of over 3000 hectares. The obligation for owners of these landholdings to publish Land Management Plans will therefore give local communities and the wider public access to high-level information about how a large percentage of the land is intended to be used and managed in the medium to long term.

The Bill sets out what should be included in the land management plan, i.e. ownership structure, long-term vision and objectives (including potential sale), as well as compliance with the Outdoor Access Code, the Deer Management Code, and how the owner is managing or intends to manage the land in a way that contributes to:

Achieving net zero emissions
Adapting to climate change
Increasing or sustaining biodiversity.

Alleged breaches of the land management plan can be reported to the Land and Communities Commissioner by local Community Bodies or statutory authorities, and these breaches can be investigated, with enforcement action taken, and (following investigation and the opportunity to remedy) fines of up to £5000 imposed.

When measures in relation to land management plans and the Land Rights and Responsibilities Statement were consulted on, it was proposed that there would be a “legal duty on owners of large-scale landholdings to comply with the LRRS”, with potential penalties for breaches, as well as potential “cross-compliance penalties […] mean[ing] that breaches could prevent landowners from accessing land-based subsidies”. It was also proposed that the outcome of any investigation into a breach “could be taken into account in any subsequent public interest test”, and that there could be additional conditions attached to receipt of public funds, such as that all relevant land was registered in the Land Register, and that all recipients of Scottish land-based subsidies should be registered and liable to pay tax in the UK or EU. None of these proposals has been brought forward in the Bill.

The PM does not specifically mention cross-compliance, however in relation to placing “certain conditions on public funding” notes that:

measures are being brought forward in the Agriculture and Rural Communities Bill that will enable the Scottish Ministers to attach certain conditions when providing financial assistance.

The Agriculture and Rural Communities (Scotland) Bill is currently at Stage 1 in the Scottish Parliament. Among other things, it provides broad powers for Scottish Ministers to provide support for land managers and rural communities, and general powers to make regulations about support, for example in relation to eligibility criteria, and “conditions that may or must be imposed when providing support” (section 13(2)). Section 10 of the bill also provides that Scottish Ministers may make regulations regarding the refusal or recovery of support where this is in the public interest. These powers may be relevant to land reform plans, though the accompanying documents to the bill do not set out any explicit intentions to use these or any other powers in the bill to deliver the proposals set out in the original land reform consultation.

Section 2– Community right to buy: registration of interest in large landholding

Section 2 amends Part 2 of the Land Reform (Scotland) Act 2003, which legislates for and sets out the Community Right to Buy process, where eligible Community Bodies can register an interest in land before it comes on the market, and a temporary prohibition is then placed on the landowner preventing them from transferring the land without giving first refusal to the Community Body.

Detailed provisions are made for a new enhanced procedure for Community Bodies to register an interest in Community Right to Buy of land that forms all or part of a large landholding. The Bill therefore introduces a prohibition on transfer (or action with a view to transfer) to allow time for interest to be registered, as well as a requirement for a prior notification of intention to sell large landholdings.

The Explanatory Note sets out that this section relates to “land that is held by one person (or by several persons where there is one person with the controlling interest) and that extends to more than 1,000 hectares in area”. This definition of large landholdings appears to be in line with the original recommendations of the Land Commission, who stated:

It is suggested that the aim should be to establish a threshold that would ensure that family farms and small businesses would not fall in scope, but that modest estates that could pose risks would. It may be reasonable to expect that, for example, holdings over 10,000ha would always be in scope, while those under 1,000ha would always be exempt.

It is however significantly lower than the 3,000ha proposed in the consultation.

The PM notes that:

this is intended to provide an opportunity for a community body to buy land that is part of a large landholding where the body may not have expected that the land would be sold.

Existing exemptions under the 2003 Act are also exempt from these requirements e.g. transfers between spouses, and transfers between companies in the same group.

The prohibition on transfer may be lifted by Ministers in exceptional circumstances e.g. in order to alleviate, or avoid, financial hardship.

The PM notes:

Land ownership in Scotland is highly concentrated, with a relatively low number of owners holding a large proportion of Scotland’s land. Analysis by the James Hutton Institute to support this Bill identifies 1,066 landholdings above 1,000 hectares, representing 4.32 million hectares, or 55% of Scotland’s land.

Section 3 is short and makes minor changes to other legislation in connection with section 2.

Section 4 – Lotting of large land holding

Section 4 is significant and introduces a prohibition on the transfer of large landholdings except in accordance with a lotting decision. It inserts a new Part 2A into the 2003 Land Reform Act after Part 2 (Community Right to Buy).

These provisions mean that a large landholding (or more than 50ha of a large landholding) cannot be transferred without applying to Ministers for a decision on whether to sub-divide the land into “lots”.

This allows for Ministers to consider whether requiring the land to be sold in smaller lots, to different purchasers, could increase the supply of more varied plots and have a positive impact on local community sustainability. Before making a lotting decision, Ministers have to request a report from the Land and Communities Commissioner to inform their decision. Ministers must also be satisfied that:

ownership of the land being transferred in accordance with the decision would be more likely to lead to its being used (in whole or in part) in ways that might make a community more sustainable than would be the case if all of the land were transferred to the same person.

And they must consider:

How often land in the community’s vicinity becomes available for purchase on the open market, and
The extent to which ownership of land in the community’s vicinity is concentrated.

There is provision for a review and appeals procedure, and for an expedited process to alleviate, or avoid, financial hardship, as well as for compensation (decided by Minsters). There are also provisions for Minsters to buy land following a lotting decision if, according to the PM, Ministers “are satisfied that it is likely that the land has not been transferred as it is less commercially attractive than it would have been had the lotting decision not been made”.

The PM provides further context for how the report of the Land and Communities Commissioner interacts with the decision of Minsters. The report:

[…] can include seeking advice from those with appropriate experience of lotting land on whether lotting would be appropriate in order to improve the availability of land in the area, and on how the land should be lotted (if viable). The investigation could for example reference information on the landholding provided, relevant documents such as local development plans, local housing strategies incorporating housing need and demand assessments, enterprise agency assessments, and consultation with the landowner, appropriate authorities (e.g. local authority, enterprise agency), and/or other parties (e.g. relevant community groups or community councils).

In assessing potential contributions to the sustainability of communities, regard could be given to high level objectives such as economic development, repopulation, maintenance of populations, regeneration, public health, social wellbeing and environmental well-being.

In relation to the decision of Minsters, consideration:

[…] will be based on the individual circumstances of the landholding and the particular communities, and lotting is not expected to be appropriate in all cases.

Whilst the Bill sets out that the Commissioner must “prepare the report in accordance with any instructions given by Ministers”, it does not set out what these instructions should or may include.

Section 5 is short and provides for minor modifications in connection with section 4.

Section 6 – Establishment of the Land and Communities Commissioner

Section 6 amends Part 2 of the Land Reform (Scotland) Act 2016 (which establishes the Scottish Land Commission and the Tenant Farming Commissioner) to establish the office of a new commissioner called the Land and Communities Commissioner. There are no proposals to change the Parliamentary approval process for appointments to the Commission.

The proposed Commissioner has a remit and functions that are distinct from other commissioners and is required to have expertise or experience in land management and community empowerment.

A person is disqualified from this role if they have been the owner of a large landholding in the preceding year.

Where is the proposed public interest test?

In 2021 the Land Commission’s Legislative proposals for addressing concentrated landownership called for a proportionate and clear test “for significant land acquisition, at the point of transfer, to test whether there is a risk arising from the creation or continuation of a situation in which excessive power acts against the public interest”.

The Bute House Agreement, and subsequent consultation undertook to “ensure that the public interest is considered on transfers of particularly large-scale landholdings [with an] aim to introduce a pre-emption in favour of community buy-out where the public interest test applies”.

The PM considers that:

The community right to buy element of this public interest test commitment has been taken forward as the pre-notification proposals set out above. The test on transfers has been taken forward as the transfer test proposals set out in this section. These measures combined give effect to the Bute House Agreement commitment.

Has the Scottish Government considered potential human rights implications?

The original consultation, and many of the responses to that consultation noted that any proposals would have to be compliant with the European Convention on Human Rights (ECHR), which requires a strong justification for interference in the rights it accords to property owners.

The PM notes that any interference with individual property rights must be justified by reference to the three-part test of lawfulness, pursuit of a legitimate aim, and proportionality.

It details how the Government considers the Bill to be compliant, and cites exemptions, rights of appeal, review, compensation, clear prohibitions, and legitimate policies for community benefit and sustainability. When considered overall, the PM states that these safeguards ensure that the provisions are a “proportionate interference” with an individual’s property rights.

What happens now?

The Parliament’s Net Zero, Energy and Transport Committee is expected to be designated as lead committee for scrutiny of the Bill. A call for views and further engagement will be issued in the near future.

Alasdair Reid, Senior Researcher; Climate Change, Energy and Land Reform