The Land Reform (Scotland) Bill – is it really a potential nightmare of bureaucracy?

Background

The Land Reform (Scotland) Bill is a “potential nightmare of bureaucracy”. So says the leading land reform activist, Andy Wightman. If the criticism from land reform campaigners is severe, it is no less severe than the criticism from industry groups. Scottish Land & Estates have termed the Bill a "destructive full-on attack” on property rights.

As with the last Land Reform Act (the Land Reform (Scotland) Act 2016), land reform in Scotland now covers, on the one hand, classic land reform issues such as community rights to buy and, on the other hand, agricultural holdings legislation. If the Bill is enacted, it will have far-reaching implications for landlords under farm leases, and for owners of land with more than 1,000 hectares. This note is intended as a high-level summary, and a link to our more detailed Briefing Note is at the end.

Legal problems

Some pieces of Scottish legislation have been criticised in recent years, not necessarily because of the underlying policy, but because of the quality of the written word within legislation. The Bill is, unfortunately, no exception. There are a number of legal issues, including:-

  1. Certainty. Some passages of the Bill are very confusing and overly complex. The Bill also seeks to insert new sections of legislation into existing Acts of the Scottish Parliament (and cross refers to existing legislation elsewhere), meaning the legislation is not set out in a single place. Some of the words used are very vague, and open to many different possible interpretations. The consequential lack of legal certainty about the proposed measures is a concern.
  2. Proportionality. It is easy to see where Andy Wightman is coming from in identifying the Bill as bureaucratic. If the proposals are enacted, then a large landholder (more than 1,000 hectares) selling any of their land will be consumed by a complicated process by the time the Scottish Government intervention in the proposed sale is dealt with. The Bill adds further layers of onerous compliance for owners and managers of rural land. There are therefore concerns about how proportionate the legislation is.
  3. Requirement for secondary legislation. In many cases the can containing the detail is kicked firmly down the road, because the Bill sets out only a “framework”, with the fine (but crucial) details to be fleshed out by Scottish Government secondary legislation in due course. Given the very significant topics that these rules will cover, it is unhelpful that the full measures are not set out within the Bill (which is subject to a much greater level of scrutiny than secondary legislation). Further, the Bill proposes that, in the future, the Scottish Government have the power to change crucial parts of the legislation – including the hectarage threshold for large landholdings. Again, such future changes by the Scottish Government would be subject to far less scrutiny than an Act of Parliament.

Who does this affect?

The non-agricultural holdings sections of the Bill affect large landholders. The different measures are summarised below, and they apply to ownership of more than 1,000 hectares (except the proposed new Land Management Plans, which only apply to owners of more than 3,000 hectares, with special rules for islands). A positive feature of the Bill is that ownership throughout Scotland is not aggregated in order to reach the 1,000 hectares threshold. The rules take an individual landholding, and the rules apply if that particular landholding is more than 1,000 hectares. As such, an owner could have 999 hectares in one part of the country, and another 999 hectares in another part of the country – but would not be caught by the new rules. The Bill contains very complicated provisions in relation to “connected parties”, and the policy of the Bill is to avoid large landholdings being divided (below the 1,000 hectares threshold) amongst connected parties in order to avoid the regulations.

The seven things of Land Reform in 2024

  1. Land Management Plans. These will apply to owners with more than 3,000 hectares (and owners of more than 1,000 hectares which forms part of an island and which accounts for more than 25% of the island), and the full details will be set out in secondary legislation in due course. The framework set out in the Bill includes a requirement on the owner to detail ownership structures, and also when the owner plans to sell the property. The Plans will be public documents. Future intentions in relation to sales would not, therefore, be a private matter. The Bill also contains wording which suggests that landowners may have to carry out positive land management to promote net zero, etc.
  2. Community leasing requests. Again, the details of this will be set out in secondary legislation, but the Bill suggests that an owner of a large landholding (of more than 3,000 hectares), must consider “reasonable requests” from community bodies to lease the land, or any part of it. For such a far reaching proposal, it is unfortunate that the Bill says so little, and it will not be possible to ascertain the detail until the Scottish Government have proposed secondary legislation in due course.
  3. Prohibition on selling. If you own more than 1,000 hectares, then the Bill proposes that you will not be able to sell any of your land (however small an area) without first of all notifying the Scottish Government. The Scottish Government will then publicise the fact that you wish to sell your land, and also notify the local authority. The intention with this proposal is to highlight as much as possible to the local community that an owner plans to sell land, and therefore to encourage the local community to pursue a late community right to buy registration under the Land Reform (Scotland) Act 2003. If, however, the community are not interested in buying the land, or cannot comply with the procedure set out in the 2003 Act, then the owner is free to sell the land in question as they please – unless, of course, a lotting decision has been imposed (read on). The proposal that this catches the sale of any land is problematic. Estates will frequently sell small areas of land to local residents (for example to correct a boundary issue or to allow a property owner to extend their garden), but this will not be permitted in the future without the involvement of the Scottish Government.
  4. Lotting decisions. The proposed sale of a landholding of more than 1,000 hectares may result in the Scottish Government imposing a “lotting decision” which would require the owner of the land to sell in lots (the lots being imposed by the Scottish Government). The key difference is that the proposed legislation provides that the lotting is to be constructed not to maximise value for the owner, but to maximise the chances of community ownership. A lotting decision lasts for five years, and may only be reviewed after one year. The Bill provides that the seller may not sell where this results in the same person or connected persons owning more than one lot specified in the lotting decision. If the lotting plan is inappropriate (in marketing terms), then it may be that owners are left being unable to sell their whole property for quite some time.
  5. Land & Communities Commissioner. To work alongside the Land Commissioner and the Tenant Farming Commissioner, the Bill proposes that a Land & Communities Commissioner is established. Applicants must have expertise and experience in land management and community empowerment. Large landholders of more than 1,000 hectares, however, need not apply. The Bill bans large landholders from holding office as the Land & Communities Commissioner. If the Land & Communities Commissioner is not a large landholder when appointed to the role, but subsequently becomes a large landholder during their term of office, then their appointment will automatically cease.
  6. Agricultural holdings and small landholdings. The Bill contains a number of ancillary changes to agricultural holdings legislation, then main topics being:
    1. A) Rent review – the Scottish Government seems to accept that the legislation which they wrote in 2016 is unworkable, so they are effectively repealing it before even bringing the 2016 provisions into force. The Bill proposes that the rent review test should take account of the productive capacity of the holding, the rent payable on “similar holdings” and the prevailing economic conditions at the time (as well as other factors).
    2. B) Resumption – the Bill will modify existing private agreements in agricultural leases whereby the landlord is entitled to resume without paying development value compensation. The law will amend such private agreements to entitle the tenant to a sum of money being half the difference between the value of the land resumed (1) if sold with vacant possession and (2) if sold with the sitting tenant still in occupation.
    3. C) Small landholdings - the Bill proposes that small landholdings become even more like crofts. The Bill proposes new rules in rent review, assignation, succession and compensation for improvements. It is understood that there are fewer than 60 small landholdings in the whole of Scotland, but many pages of the Bill are devoted to this type of tenancy.
  7. A new form of environmental agricultural lease. The Bill provides that the Scottish Ministers will have powers to make available a model lease that can be used for certain specified environmental purposes. The interaction with the Agricultural Holdings Acts is not referred to in the Bill and it appears that such a lease, if it was an agricultural holding, would continue to be regulated by those Acts and as such its purpose is not clear.

Next Steps

This note is intended as a short overview of the Bill as it presently stands. A link to the full Turcan Connell briefing note is here.

It is likely that there will be a lot of discussion around the contents of the Bill as it proceeds through the Scottish Parliament, and it is unlikely that anything will be enacted as law until 2025. Amendments to the Bill are certain to be made. Once enacted, secondary legislation would be required for certain elements and it is likely that there will be transitionary provisions.

There is a consultation on the Bill which closes on 21 May 2024, and a link is set out here, if you wish to participate in that consultation.

Please do get in touch with your normal Turcan Connell contact if you would like to discuss any of this.