Improving the transparency of land ownership: consultation on draft regulations

Introduction

Purpose

1. The purpose of this consultation is to gather views on the proposed draft Land Reform (Scotland) Act 2016 (Register of Persons Holding a Controlled Interest in Land) (Scotland) Regulations.

2. We have published these proposed draft regulations to establish a new Register of Persons Holding a Controlled Interest in Land as required by Part 3 of the Land Reform (Scotland) Act 2016. A draft explanatory document has been published to accompany the proposed draft regulations. It sets out in detail the meaning of the proposed draft regulations and the policy intention behind them.

3. The overarching purpose of our proposals is to increase public transparency in relation to individuals who have control over decision-making in relation to land. They are intended to ensure there can no longer be categories of land owner or tenant where, intentionally or otherwise, control of decision-making is obscured.

4. This will help enable communities and individuals to identify who they should engage with over decisions about land where that person cannot be identified already. It will also aid policy making by enabling a fuller picture of those individuals who have control over decisions about land in Scotland.

5. Our proposals for a Register of Persons Holding a Controlled Interest in Land will require categories of entities who may own land in Scotland and where the controlling interests in the entities is not currently transparent, to make details of their controlling interests publicly available.

Consultation

6. This consultation will run until 8 November 2018. The 2016 Act requires that we consult on the proposed draft regulations for a period of 60 days, not including periods of parliamentary recess. This consultation document seeks views on the proposals in the draft regulations and on the proposed implementation of the new Register.

7. This consultation makes extensive cross-reference to the proposed explanatory document which should be used as the main source of explanation for our proposals. Although we have summarised key aspects of our proposals below, the proposed explanatory document contains full details of our proposals and we would recommend that respondents consult this document to inform their responses. For each question in this consultation we have indicated where the relevant material is to be found in the proposed explanatory document.

8. We have structured this consultation around three overarching questions that we would welcome views on:

• Is the proposed Register going to deliver the desired outcome? We set out in the draft regulations how the Register will function including who will provide information, how it will be displayed, and how the duties associated with the Register will be enforced. Part 1 of this consultation seeks views on the proposals we have set out in the draft regulations.
• Are we proposing to register the right people? In the draft regulations we propose particular approaches to each category of land owner or tenant that our regulations will apply to. We would particularly appreciate views on whether these proposals have correctly identified the persons who can control decision making in relation to land in Scotland – both in common and unusual land ownership structures. There are also categories of land owner or tenant that we consider to already be transparent based on their reporting requirements elsewhere and we are proposing not to duplicate this by requiring them to report in the Register.
• How can we ensure that the Register is easy to use and that information about the control of land in Scotland is accessible? Part 3 of this consultation seeks views on how the Register can best be made accessible. We are aware that under our proposals the Register, once operational, will be among a number of sources of information about control of land in Scotland. We are keen that the new Register makes it easier, and not more complex, to gather information. We recognise that there can be challenges inherent in using existing sources of information. We would welcome views on how the user experience of the Register can best be realised. We would also welcome stakeholder views and experiences of using existing registers and any issues that currently make this challenging.

9. As well as this consultation document we will be engaging with key stakeholders during and after the consultation period. As set out in the 2016 Act we will subsequently lay another draft of the regulations and the explanatory document. The explanatory document must be revised to give details of consultation activities undertaken, the views received as a result of the consultation, and the changes (if any) made to the proposed draft regulations as a result of those representations.

UK Government Proposals

10. The UK Government has committed to establish an operational Register of Overseas Entities' Beneficial Owners by 2021. They have committed to publish their proposals in a draft bill before the 2018 summer recess. Their proposed register will apply to overseas companies that own land anywhere in the UK or who bid for central government procurement contracts.

11. It remains our intention that our respective proposals are complementary and that we do not duplicate information where there is already transparency. We will therefore consider the UK Government's proposals and, if we consider them suitable for our purposes, our final regulations may take account of them.

12. We will monitor the further development of the UK Government's proposals and will continue to engage with the UK Government on this matter as necessary.

Summary of the proposals in the draft Regulations

13. The draft Regulations require that a new Register be created – the Register of Persons Holding a Controlled Interest in Land. This is referred to throughout as 'the Register' (although in the Regulations themselves, it is referred to as the " RCI").

14. The Register will contain information about the persons who can influence or control owners and tenants of land. As such, there will be an entry for each controlled person detailing who is in a position to influence or control them.

15. Duties will be placed on owners and tenants of land, and persons who can influence or control them, to provide information for inclusion in the Register. This information will enable members of the public to engage with the respective parties. It will be a criminal offence not to comply with the duties, punishable by a fine.

16. The Register will be created and held by the Keeper of the Registers of Scotland who will be under duties to enter the relevant information onto the Register, and to act on any notices provided to her if there are changes in the relevant information.

17. The Keeper will have the power to amend the Register should the information in it be inaccurate, and questions about the accuracy of information in the Register can be referred to the Lands Tribunal.

18. Individuals whose information is to be included in the Register as a person with influence or control over another may make a "security declaration". This would be made on the basis that inclusion in the Register of one or more of the individual's required details would put them, or another person connected to them, at risk of violence, abuse, threat of violence or abuse, or intimidation. While a security declaration is in force no information about that individual will be disclosed in the Register.

19. The draft Regulations apply to owners of land and tenants of registrable leases (that is, leases of over 20 years). The draft Regulations primarily seek to address two particular scenarios in which there is currently a lack of transparency as to the control or influence of the decision-making of an owner or tenant of land. Firstly, where the legal owner or tenant of the land is an opaque legal entity, such as an overseas company, or secondly, where they hold the title or lease in an arrangement which is not necessarily discernible from the Land Register itself, such as a trust arrangement.

20. Accordingly, the draft Regulations will result in the disclosure of information about persons who have influence or control over the person listed as the owner or tenant of the land by means of the existence of one of the following types of association:

• a contractual or other arrangement with a person to give that person influence or control over significant decisions in relation to the land,
• a partnership, including any Scottish partnership where at least one partner is an individual,
• a trust,
• an unincorporated association, and
• an overseas legal entity.

21. Where information similar to that which is required for the Register is already reported and publicly available, the information is not duplicated in the Register. This prevents the same information being gathered, recorded and held in different places, and minimises the administrative burden on public services and those who are already under requirements to report this information elsewhere. Categories of entities who are an owner or a tenant of land and who meet this condition are therefore not required to provide more than basic information for inclusion in also report to the new Register as an owner or tenant of land. They may, however, still be recorded as an associate of another owner or tenant of land.