The right to buy land to further sustainable development: consultation analysis

Prohibitions On The Transfer Of Land And Other Matters Relating To Land That A Community Are Seeking To Buy Under Part 5

Question 15

Do you agree with the relevant dates and timescales outlined above, which will apply to prohibiting certain dealings relating to land and suspending certain rights over land in the case of a Part 5 application?

• There were 17 responses to this question. Eleven were in agreement with the dates and timescales, 2 disagreed and 4 partially agreed.
• The NFUS agreed with the relevant dates and timescales on the proviso that the landowner is made clearly aware in writing of when the application appears on the relevant register.
• Scottish Land and Estates (SLE) noted that the restriction period begins on the date a pending application appears on the Register of Applications by Community Bodies to Buy Land rather than when the person is notified. As with concerns they have around the Part 3A regulations, SLE seek reassurance that the landowner will be notified before an application appears on the register.
• SLE said that while the proposed date makes sense, the owner or creditor as the case may be should not be held liable for the vagaries of the postal system. They said it would be inequitable for prohibition to take place without the owner being informed and on such an important matter service would need to be by recorded delivery.
• The James Hutton Institute said that it is critical to the success of the Part 5 regulations that sufficient time is allowed for facilitated dialogue to take place between the community body and the landowner, and added that tactics used by either party to delay the process should be identified and overcome.
• Community Land Scotland (CLS) said they support modelling the Part 5 prohibitions on those for Part 3A.
• CLS also have concerns regarding the provision that restrictions would not affect transfers between companies in the same group. In addition they would like to see further guidance on how anti-avoidance provisions would operate, given the potential scope for a landowner to grant an option to a shell company.
• One organisation thought the prohibitions on transfer may be largely hypothetical, as it appears unlikely that any community body would seek to use the Part 5 provisions without first having a Part 2 registration in place (with the immediate prohibition on transfer that this provides).
• Another organisation noted the risk of land being ‘frozen’ in terms of certain dealings and rights for some time during the process of a community right to buy application. This may impact on a landowner’s ability to undertake particular actions in relation to land. It may also impact upon the ability to obtain subsidies for work or projects and/or funding from a lender and there is the potential for the market value of the land to change during the period. They said consideration should be given to safeguards to protect against communities seeking to use the provisions for purposes other than those intended.

Scottish Government Response

The Scottish Government believes it has the right dates and timescales, and that by the time an application has been submitted, there will already have been 6 months within which dialogue could have started. Scottish Ministers will take a dim view of any attempt to use the regulations for purposes other than those for which they are designed, and of any attempt to use tactics rather than genuinely engage with the process for its proper purpose.

Question 16

Do you agree with the prohibitions outlined above?

• There were 16 responses to this question, with 12 responses agreeing with the proposals for the prohibitions. One respondent disagreed and 3 partially agreed.
• The James Hutton Institute were concerned that a number of the exemptions to the prohibitions had the potential to stall the right to buy process and cause communities to have to restart the process. They cited the exemption for transfer other than for value, and a transfer in consequence of the assumption, resignation or death of one or more partners in a firm, or the assumption, resignation or death of one or more of the trustees of a trust.’ They ask how can a community body anticipate any of these likelihoods, and how can they overcome these barriers to the transfer of land for sustainable development.
• Scottish Land and Estates sought assurance that the prohibitions would not infringe on an owner’s right to sell a property or land prior to any formal request for a Part 5 is submitted.
• One organisation said that clarification on the interaction of the various rights to buy would be welcome, and another said they agree there is merit in ensuring consistency in approach with the list of prohibitions already stipulated for land subject to a Part 3A application under the 2003 Act.

Scottish Government Response

The Scottish Government takes the view that, in general, there should be consistency with the prohibitions for Part 3A, and that the prohibitions are reasonable ones.

Question 17

Do you agree with the exemptions to the prohibitions outlined above?

• There were 16 responses to this question, and 11 of these agreed with the exemptions. One person disagreed and 4 partially agreed.
• The NHS suggested adding as an exemption a transfer required under statute due to the reorganisation of a public body.
• The James Hutton Institute said they would like to draw attention to the likely challenge of recognising, or holding to account, any evidence of avoidance. They suggested the Scottish Government bring forward further details setting out whose responsibility it would be to detect and document such avoidance of the requirements for, or consequences of, a Part 5 transfer.
• The Development Trusts Association Scotland (DTAS) expressed some concerns about the provision stating that the restriction would not affect transfers between companies in the same group or share purchase arrangements, saying this effectively gives corporate landowners ways to circumvent the legislation that are not available to individuals.
• DTAS were also concerned about the provisions stipulating that the existence of an option agreement would prevent an application being registered at all, given that a landowner could potentially grant an option to a shell company and circumvent the legislation that way. They said they appreciate there are anti-avoidance provisions in the legislation, but would like further guidance on how these would operate in practice.

Scottish Government Response

As with the prohibitions themselves, the Scottish Government takes the view that, in general, there should be consistency with the exemptions to the prohibitions for Part 3A. The exemptions to the prohibitions are reasonable ones and the Scottish Government does not believe they create grounds for significant avoidance activity. The Scottish Government will of course monitor the use of the regulations and will be concerned if any evidence comes forward of any sharp practice.

Question 18

Do you agree with the Scottish Government’s proposals with regard to suspension of certain rights over land, as outlined above?

• There were 17 responses to this question, 13 of them being in agreement with the proposals, 3 disagreeing and 1 partially agreeing.
• The Scottish Churches Committee agreed with the proposals but only if this suspension applies to pre-emptions, redemptions or reversions created some time after the effective date of Part 5, when it comes into force. They said that to do otherwise would be counter to ECHR Protocol 1, Article 1 as it would be likely to deprive individuals of a “possession”. They said that an individual or organisation who sold a piece of land or building subject to a pre-emption, redemption or reversion has in the usual case forfeited the immediate receipt of the market value of the land on the basis that either the land will be returned to them for no consideration in due course or that they will have the opportunity to re-acquire it on the occurrence of certain specified events. They have, in effect, “lent” their property to another party for a specified duration and should be entitled to recover possession of it.
• The National Trust for Scotland said that the proposals here have the potential to cut across existing arrangements, and it is not clear how or if these may be resumed, or that the likely impact of such disruptions have been fully considered. They said by way of example there may be a right of pre-emption if a property is sold – would this be triggered if the property was part of a community compulsory purchase? They asked whether the right of pre-emption would continue in effect after the purchase? They said consideration also needs to be given to where land is being used as a security.
• Another organisation noted that the kind of rights to be suspended may themselves be subject to time limits. It should therefore be specifically provided that the running of any such time limits is also suspended during the standstill period occasioned by the Part 5 right to buy. The operation of negative prescription should also be suspended in any standstill period.

Scottish Government Response

In drafting the regulations, the Scottish Government will take account of the issues raised above, including the issue of pre-emption where this is relevant.