Proposals on secondary legislation the Land Reform (Scotland) Act 2003 part three: crofting community right to buy as amended by the Community Empowerment (Scotland) Act 2015: consultation

8. Compensation

Amounts payable in respect of loss or expense incurred as mentioned in section 89(1) of the Act

Background

Section 89(4) provides that Ministers may specify amounts payable in respect of loss or expense incurred by a landowner, person entitled to sporting interests or tenant, in respect of section 89(1) of the Act.

Question 18: What amounts should be payable as compensation in respect of loss or expense incurred by a landowner, persons entitled to sporting interests or the tenant (as mentioned in section 89(1) of the Act)?

All respondents provided a view on the amount of compensation which should be payable.

It was generally agreed that amounts should be reasonable and vouched for. Different views emerged, however, on ways of determining reasonableness. Suggestions included the court or Ministers deciding what is reasonable; compensation based on actual loss incurred and actions which were required to be taken; market value; or district valuer's assessment.

Shetland Islands Council and Shetland Partnership both recommended that loss of income, loss of investment and blight should be compensated for.

Highlands and Islands Enterprise considered it fair and appropriate to assess compensation claims on a case-by-case basis examining each case in detail. In contrast, Scottish Land and Estates proposed a statutory formula for determining claims at a fair market rent, with disregard to the rights of existing tenants, that is the free open market value of the ground, not a price reflecting that there is a community right.

Community Land Scotland provided their view that the proposed 60 day time limit for agreeing (or otherwise) compensation appears potentially demanding for a CCB which may have to engage with a range of interests in coming to a judgement about how to respond to a compensation claim. 90 days was perceived by Community Land Scotland to be more realistic.

Amounts payable in respect of loss or expense incurred by a person of such other description as may be specified

Background

Section 89(4)(b) provides that Ministers may specify amounts payable in respect of loss or expense incurred by the crofting community right to buy by a person of such other description as may be specified.

Question 19: Who (what persons) should be specified by Ministers in relation to the above?

Six respondents provided a view. A view shared by several was that specification of particular categories of person may be inappropriate, but instead anyone who can demonstrate a loss could potentially receive compensation. For example:

"It may be possible to provide a general statement stating the characteristics of such a person, but not the 'types' of person" (Highlands and Islands Enterprise).

The view of Comhairle nan Eilean Siar was that only landowners or those with sporting rights or mineral rights separate from landowners should be specified by Ministers as eligible.

Question 20: What amounts should be payable as compensation in respect of loss or expense by these persons (in section 89(4)(b) of the Act)?

Six respondents addressed this question. Four proposed that compensation should cover whatever expenses are deemed to be reasonable. Community Land Scotland and Highlands and Islands Enterprise both recommended that compensation be determined on a case-by-case basis as expenses could vary considerably depending on factors such as value of land, size of area, complexity of land use, and so on.

Scottish Land and Estates highlighted their general opposition to limits being set on compensation receivable by landlords and others affected by a crofting community right to buy application. They argued that arbitrary or absolute limits would not be helpful, rather guidance on types of expense would be of more use. Shetland Islands Council and Shetland Partnership both agreed that there should be no limit on the amount where losses can be vouched. Where losses are consequential they recommended that these should be determined by Ministers.

In contrast, Comhairle nan Eilean Siar considered that compensation should be limited to the valuation of assets and a ceiling should be in place to ensure legal costs do not become dis-proportionate to the value of land being purchased under the legislation.

Application for a grant towards compensation liability: application form

Background

Ministers may, in certain limited circumstances, pay a grant to a CCB to assist it in meeting its liabilities to pay compenstaion with its exercise of the crofting community right to buy (section 90). The consultation document set out proposals for the procedure by which an application for such a grant should be made. It also set out the proposed form of application.

Question 21: Are there any changes you would make to the application process outlined above?

Eight respondents addressed this question with all agreeing that the application process appeared to be reasonable as proposed with no changes suggested.

Question 22: Do you agree with the form of the application form for a grant towards a crofting community body's liabilities to pay compensation, set out above?

Of the six respondents who answered this question, all stated that they agreed with the form of the application form for a grant.

The individual respondent also proposed that if the CCB has funds in its accounts earmarked for other purposes (including revenue requirements), this should not make it ineligible for a grant. Nor should it be necessary for the CCB to make an exhaustive search for other ways of raising funds before a grant is payable.

Highlands and Islands Enterprise sought clarification on whether compensation has to be paid directly to the CCB (which they assume) or whether it can be paid to the 'beneficiary', that is, the party affected.