Background

On 16th March 2016, the Land Reform (Scotland) Bill was passed, as expected, by the Scottish Parliament. The Bill was passed on a day that saw many long serving MSPs tender their farewell speeches before dissolution of the Parliament which was perhaps fitting, given that Land Reform has been synonymous with the Scottish Parliament since it was established in 1999.

The Bill was introduced into the Scottish Parliament on 23rd June 2015 (meaning the legislative process for a very complex piece of legislation was rapid) and the aim of the Bill was to “… end the stop-start nature of Land Reform in Scotland…”. Far from ending the stop-start nature of Land Reform, the latest Bill must be viewed as part of an ever increasing and developing area of policy. The late Donald Dewar once said that devolution was “a process, not an event” – and the same must be said of the Land Reform agenda, which has the benefit of cross party support in Scotland.

The passage of the Bill through the legislative process was notable for a number of reasons. The structure of the Bill was controversial because it was classed as a Land Reform Bill, but more than half the Bill is actually devoted to Agricultural Holdings Legislation. The Bill received criticism from certain quarters of the Scottish Parliament and in particular, the Delegated Powers and Law Reform Committee which went as far as to say that the Government’s response to the Stage 1 Report was “wholly inadequate”. Concerns remain that the Bill gives so much power to the Government to make the detailed law by secondary legislation. There are also concerns as to the compatibility of certain parts of the Bill with Human Rights legislation.

Therefore, whilst the latest piece of Land Reform law has now been made by the Scottish Government, it remains difficult to anticipate the full effect on rural Scotland because (a) much of the detailed legislation still requires to be made and (b) the Bill introduces certain provisions which will operate as something of a springboard – for example, the Scottish Land Commission, and the Land Rights and Responsibility Statement, which will no doubt have the effect of creating new rules, or will at least create expectations. On top of that, the Government’s appetite to continue to develop Land Reform policy appears to undiminished – evidenced by the fact that only a matter of days after the Land Reform Bill was passed into law, the Government launched consultations on the abandoned and neglected land right to buy, and also the crofting community rights to buy (both of which are aspects of Land Reform which have been on the statute book for a number of years).

The New Law

The Bill comprises 11 parts. Parts 1 to 9 (taking up 65 pages of legal text) deal with the more conventional aspects of Land Reform). Parts 10 and 11 (accounting for 83 pages of legal text) deal with agricultural tenancies. Please refer to our separate Briefing Note on the Agricultural Holdings aspects of the Bill.

Part 1 – Land Rights and Responsibilities Statement

The Government must prepare a “Land Rights and Responsibilities Statement” which the Act defines as “a statement of principles for Land Rights and Responsibilities in Scotland”. The Scottish Government must publish the statement within 12 months of the Act coming into force and the statement must be reviewed every five years. The statement is to serve as a reference point for the Land Commission and the Government is under a general statutory duty to promote the principles set out in the Land Rights and Responsibilities statement.

Part 2 – The Scottish Land Commission

The Act also establishes the Scottish Land Commission (or, in Gaelic, the Coimisean Fearainn Na H – Alba) which is to be a body corporate consisting of five land commissioners and also the Tenant Farming Commissioner. Commissioners will be appointed by the Scottish Ministers on a five year term, subject to the approval of the Scottish Parliament.

Section 20 of the Act sets out the functions of the Land Commissioners and these are, broadly:-

  • to review law and policy;
  • to recommend changes to law or policy;
  • to gather evidence;
  • to research land matters and prepare reports; and
  • to provide information and guidance.

Naturally, it will take some time for this new body to establish itself but it is anticipated that the Scottish Land Commission will play an increasingly important role in legal and policy matters relating to land in Scotland. Its very existence is likely to ensure that Land Reform remains on the political agenda in Scotland.

Part 3 – Information about control of land

This is one aspect of the Bill where the detailed legislation is left to the Government. However, the Bill requires that the Government “must” make regulations on the issue (as opposed to the Government simply having the power to do so, if it so wishes). It is expected that the Government’s consultation exercise in relation to the proposed regulations will take place in 2016, with a view to secondary legislation being presented to the Scottish Parliament in the course of 2017.

At this stage it is difficult to assess the impact this part of the Bill will have, but in general terms the regulations will cover “…information…about persons who have controlling interests in owners and tenants of land…”. What is meant by “controlling interest” is not entirely clear but the Act specifically permits the secondary legislation in due course to define that. It is significant to note that regulations must be made both in relation to owners and also tenants of land.

Without pre-judging the outcome of the consultation process and without anticipating what the law will eventually say, it is not difficult to anticipate how this requirement may impose a significant administrative burden on owners of rural land. It will be interesting to see to what extent the Government requires disclosure of this information.

Separately, the Bill also provides the Scottish Ministers with a discretionary power to enable the Keeper of the Registers of Scotland to request certain information regarding owners and tenants of land.

Part 4 – Engaging Communities in Decisions relating to Land

The Scottish Ministers are now under a statutory duty to issue guidance on “engaging communities in decisions relating to the land which may affect communities”.

Again, it is unclear as to what effect the statutory guidance will have on the ownership and management of land in Scotland, but it is understood that the Scottish Government propose to take the guidance into consideration when assessing applications (from landowners) to access public funds in relation to land related matters.

In addition to the comments which have been widely made that the new Act is difficult to interpret because so much is left to secondary legislation, a further comment may be made to the effect that the new legislation introduces quite a lot of “soft” law, that is the statutory guidance in relation to engaging communities, the codes of practice by the Tenant Farming Commissioner and so on. Legislation (in terms of Acts of Parliament) can be difficult enough to interpret themselves, and the job of those analysing and applying the law over the coming years could be even more difficult where guidance notes and codes of practice also begin to have some legal teeth. It is also important to note that “the law” relating to ownership of rural property is fast becoming the most complex and highly regulated area of law.

Part 5 – Right to Buy Land to Further Sustainable Development

This is a new right to buy which will affect both rural and urban land. The right to buy includes salmon fishings and mineral rights and, significantly, this new right to buy allows a community body (which is subject to statutory regulation) to nominate a third party purchaser to take title to the ground being acquired.

It should be noted that this latest right to buy is an absolute right to buy, meaning a community organisation may force the sale of land even where the owner of the land is not contemplating a sale.

The Bill sets out some quite strict requirements, however, which must be met before the right to buy may be activated. The key conditions are:-

  • the transfer of land is likely to further the achievement of sustainable development in relation to the land;
  • the transfer of land is in the public interest;
  • the transfer of land:-
    • is likely to result in significant benefit to the relevant community to which the application relates; and
    • is the only practicable, or the most practicable, way of achieving that significant benefit
    • not granting consent to the transfer of land is likely to result in harm to that community.

The exact meaning of this criteria is difficult to pin down with total certainty, and the tests are quite subjective. However, it seems that the bar has been set reasonably high as far as the expectations on community organisations wishing to buy land against the wishes of the owner.

If the Scottish Ministers sanction a sale, the price which is to be paid is the market value which is defined as the aggregate of (i) the open market value of the land; (ii) any resultant depreciation in value of other land or interests owned by the Seller and (iii) any amount attributable to any disturbance to the Seller.

A general comment which may be made about this further right is that the owner of rural land in Scotland is now faced with a multiplicity of rights to buy, including:-

  • the right to buy under the Land Reform (Scotland) Act 2003;
  • the crofting right to buy under the Land Reform (Scotland) Act 2003;
  • the abandoned and neglected land right to buy under The Community Empowerment (Scotland) Act 2015;
  • the agricultural tenants’ right to buy under the Agricultural Holdings (Scotland) Act 2003; and
  • the sustainable development right to buy under the Land Reform (Scotland) Bill.

Clearly not all rights to buy apply to all land, but it is quite possible that at least four out of five rights to buy could be exercised against an area of rural property.

Part 6 – Sporting Rights

The Bill ends non-domestic rates exemptions for shooting and deer forests. This aspect has received understandably significant publicity within the rural sector. There is a concern that the cost of re-introducing sporting rates could significantly outweigh the financial benefits to the Government and, indeed, it is understood that one of the organisations most heavily affected by the new requirement to pay the tax will be the Forestry Commission in Scotland which, to that end, possibly makes the financial justification even more circular.

It is understood that the change is to take effect at the next re-valuation in April 2017, albeit it remains to be seen as to how the Government propose to resource the task of carrying out the valuation process.

A late amendment to the Bill was introduced, the effect of which is that any deer management measures which are implemented are to be taken into account by the assessor.

Part 7 – Common Good

The Bill includes provision for some minor technical changes in relation to common good land.

Part 8 – Deer Management

Amongst the more contentious aspects of the Bill are those in relation to Deer Management. The Bill provides Scottish National Heritage (SNH) the power to require owners to produce deer management plans, most likely in conjunction with deer management groups. In some ways the “ultimate” position has not changed in that SNH have the power to impose control agreements and control orders (statutory powers set out in the Deer (Scotland) Act 1996), but there is no doubt that the new legislation increases the role of SNH in deer-related matters. There is also an increase in the penalty for failing to comply with a control scheme.

Part 9 – Access Rights

The Bill also makes minor amendments to core paths legislation, including a requirement on the local authority to consult with land owners where an amendment to a core path plan is imposed.

Conclusion

 As has been stated, the Bill itself leaves much of the detail to be decided and implemented by the Scottish Ministers. As such, it is not yet clear how several of the provisions will operate in practice. We will have to wait and see whether the widely expressed concerns regarding the speed at which the Bill passed through Parliament has any effect on the workability of the provisions.

Irrespective of the exact detail of the secondary legislation, it is clear that the bill will have an effect not only on the wider Land Reform Agenda but also on a practical level on the owners and managers of all land in Scotland and particularly rural land. This is one stage in a potentially long process and, as with any new legislation, detailed advice should be taken on the effect of that legislation.