Community Rights to Buy: overview

Right To Buy Land to Further Sustainable Development (“the Part 5 Right to Buy”)

The Right to Buy Land to Further Sustainable Development was introduced under Part 5 of the Land Reform (Scotland) Act 2016 and is colloquially known as “the Part 5 Right to Buy”.

It is a right which allows compliant community bodies to apply to Scottish Ministers for consent to exercise a compulsory purchase of land or a building for the purposes of furthering the achievement of sustainable development.

It also includes the option to apply for the right to buy the tenant’s interest.

Where Ministers grant consent, the community body has the right to buy the land or building compulsorily.

An eligible community body applying for the right to buy land may also nominate a third-party purchaser to purchase the land on its behalf. If the right to buy is successful, the third-party purchaser would take title to the land being acquired. 

As a compulsory purchase, the requirements for the right to buy are complex and a community body is required to demonstrate, within its application, that the transfer of land:

• is likely to further the achievement of sustainable development
• is in the public interest
• is likely to result in a significant benefit to the community and is the most, practicable way of achieving that significant benefit
• and that not granting consent to the transfer of land is likely to result in harm to the community

The following information and links will guide compliant community bodies through the process of completing the required pre-application steps and applying for the right to buy.

• pre-application steps
• applying for the right to buy land
• views on the right to buy application
• decision on the right to buy application
• valuation of the land
• purchasing the land
• compensation
• grants towards the payments of compensation

Pre-application steps: preparing to submit an application

There are pre-application steps that a community body must undertake before it can submit an application under Part 5. 

A community body must not undertake any of these steps until it has received a letter from Scottish Ministers confirming that the body is a compliant community body.

Confirmation of the body’s incorporation must also have been received from the relevant regulator:

• Companies House
• the Office of the Scottish Charity Regulator
• the Financial Conduct Authority.

It is essential that these steps be carried out in the order presented. Failure to follow these steps, prior to undertaking the pre-application work, could result in any subsequent application being rejected.

Applying for the right to buy land

We have produced guidance, which is essential reading for any community body wishing to submit an application:

• Right to Buy: guidance book

As the Part 5 Right to Buy is a compulsory purchase it is important that communities are aware that Scottish Ministers will be looking for fully developed proposals for the land when considering an application.

A community body’s proposals should be evidenced as much as possible via a business plan and/or feasibility study and there should be an indication from where  the community body will source the funding to purchase the land.

If nominating a third-party purchaser, the community body should provide as much information as possible about the relationship between the third-party purchaser and the community body.

This includes any binding legal agreement if any exist, as well as information about the community body’s reasons for nominating a third-party purchaser.

A compliant community body wishing to apply for the right to buy land is required to complete a right to buy application form:

• Right to Buy: application form
• Right to Buy: application form guidance

An application must be received by Scottish Ministers within the 6-month period following the date of the ballot result. An application received outwith this period will not be considered by Ministers.

The completed application form, including maps and any supporting documentation should be emailed to the crtb@gov.scot mailbox. 

At the same time as submitting the final application to Ministers, the community body must send the application and the accompanying information to:

• the owner of the land to which the application relates
• the tenant if the application is to buy a tenant’s interest
• the third-party purchaser if one is nominated within the application form
• the creditor, where there is a standard security in relation to the land

Where there is a creditor, the community body must invite them to notify the community body and Scottish Ministers, within 60 days from the sending of the invitation about any calling-up notice or notice of default, whether any notice of default has been upheld or varied by the court or that a warrant has been granted by the court to the creditor in relation to the land, or any part of it.

Views on the right to buy application

Once a signed and dated application is received by Ministers, a temporary prohibition is placed on the landowner and, where relevant, the creditor, preventing them from taking steps to transfer or dispose of the land.

At the same time, Ministers will invite the following parties to give their views on the application:

• the owner of the land
• the tenant if the application is to buy a tenant’s interest
• the third-party purchaser if one is nominated within the application form
• the creditor, where there is a standard security over the land or any part of it
• any other person whom Ministers consider to have an interest in the application
• owners of all neighbouring land to which the application relates

All parties will have 60 days after the date of the sending of the invitation in which to respond with their views.

Ministers are also required to give public notice of an application. On receipt of an application, public notice will be given on the Scottish Government website.

Any views in response to a public notice must be sent to Ministers, in writing, no later than 60 days after the publication of the notice.

Copies of any views received by Ministers will be sent to the community body who will then have 60 days to respond to Ministers.

Decision on the right to buy application

Ministers will consider all views received before they reach a decision on the application.

Ministers cannot make a decision any earlier than 180 days after the date of the submission of the application.

Ministers will give notice, in writing, of their decision to consent or to refuse consent to the community body’s application. The notice will also give reasons for their decision.

The notice will be sent to the community body, the owner of the land and, if included in the application, the tenant, and the third-party purchaser. They will also send it to any other person who was invited to send their views on the application.

Valuation of the land

Should Ministers grant consent to an application, an independent valuer will be appointed, within 7 days of their decision, to conduct a full market valuation of the land. 

The definition of “market value” is set out at section 65(5) of the Land Reform (Scotland) Act 2016. The valuation is the combination of:

• the value on the open market if the sale were between a willing seller and a willing buyer
• any depreciation in the value of other land or interests belonging to the seller which may result from the transfer of the land or tenant’s interest, including depreciation caused by the division of the land or interests by the transfer of the land to the Part 5 community body or third-party purchaser
• the amount attributable to any disturbance to the seller which may arise in connection with the transfer of the land or tenant’s interest

The valuation may also take into account any factor attributable to the known existence of a person who would be willing to pay a higher price for the land or tenant’s interest because of a characteristic of the land or tenant’s interest that relates peculiarly to that person’s interest in buying it.

The valuer will invite the community body, the landowner, and if there is one, the tenant and third-party purchaser, to make written representations about the value of the land.

If the valuer receives representations from the owner or tenant, they will invite the community body and third-party purchaser to send views on those representations.

Similarly, the owner and tenant will be invited to send views on representations made by the community body or third-party purchaser.

The valuer will consider all written views when considering the market value of the land.

If the community or third-party purchaser and the landowner or the tenant have come to an agreement on the valuation of the land or, as the case may be, the tenant’s interest (at any point in the process), they must notify the valuer in writing of that agreed valuation.

The valuer has 8 weeks from the date of their appointment (or longer if decided by Ministers on appointment of the valuer) to notify all relevant parties of the assessed value of the land.

The price to be paid for the land is either:

• a price agreed between the relevant parties
• if no price is agreed, the valuation price provided by the valuer or
• if the valuation figure is appealed, the price determined by the Lands Tribunal

Once all relevant parties have been notified of the valuation figure the community body has 21 days to send notice confirming that they intend to proceed with the right to buy.

This must be sent to Ministers, the landowner and, where the application is to buy a tenant’s interest, the tenant. If the application nominates a third-party purchaser, then this notice must be sent by both the community body and third-party purchaser.

Ministers then have 7 days in which to acknowledge receipt of and send a copy of that acknowledgement to the landowner, the tenant where relevant and to the Keeper of the Register of Applications by Community Bodies to Buy Land (RoACBL).

Purchasing the land

If Ministers grant consent to an application, the owner of the land is obliged, to make available to the community body such deeds and other documents as are sufficient to enable the community body to proceed to complete the transfer of the title accordingly.

The community body (or third-party purchaser where applicable) is required to prepare the documents necessary to:

• effect the transfer of the land or, as the case may be, the assignation of the tenant’s interest; and
• include any conditions Ministers require to be imposed upon the title to the land.

The services of a solicitor will be required to complete the conveyance of the land or assignation of the tenancy.

The community body (or third-party purchaser where applicable) must pay the purchase price within 6 months from the date on which Ministers consented to the application.

In certain circumstances, this date can be extended, e.g. if all parties agree to a different settlement date. For full prescribed reasons for an amended settlement date, please see section 64(3) of the Act.

Further information and details on the transfer process is available in the ‘Transfer of the land’ section of the right to buy guidance book.

Compensation

Any person, including the landowner or tenant, who has incurred loss or expense is entitled to claim compensation for that loss or expense from the community body or third-party purchaser where applicable.

Full details of the types of costs that might be covered are in section 67 of the Act.

A Part 5 community body or third-party purchaser is not liable to pay compensation where an application for consent has been refused by Scottish Ministers.

In this case, the landowner or tenant is entitled to recover the amount of any losses or expenses incurred in complying with the requirement of Part 5 of the Act.

The process for making a claim for compensation and the period in which a claim can be made is set out in regulation 19 of the Right to Buy Land to Further Sustainable Development (Applications, Written Requests, Ballots and Compensation) (Scotland) Regulations 2020.

Grants towards the payments of compensation

In given circumstances, Ministers may pay a grant towards a Part 5 community body or third-party purchaser’s liability for compensation.

To apply for such a grant, the Part 5 community body or third-party purchaser needs to demonstrate that:

• after payment of outstanding liabilities incurred by the purchase of the land or tenant’s interest, the community body or third-party purchaser does not have sufficient funds to pay in full the compensation it is liable to pay;
• the community body or third-party purchaser has taken all reasonable steps to try to obtain the compensation amount required but have been unable to do so; and
• it is in the public interest that Ministers pay the grant

The Part 5 community body or third-party purchaser must make an application to Ministers within 90 days of the date on which the community body or third-party purchaser and the claimant agreed the amount of compensation payable or the date on which the Lands Tribunal determined the amount of compensation payable.

A schedule 5 form must be completed by the community body or third-party purchaser should it wish to apply for a grant towards compensation:

• Right to Buy: Schedule 5 form