Improving transparency in land ownership in Scotland: consultation analysis

3. Workstream 1: Defining Controlling Interest

3.1 This Workstream relates to the approach to be taken in the regulations to defining a "controlling interest" and seeks views on the key considerations which Scottish Ministers and the Scottish Parliament should take into account in doing this.

Transparency of land ownership and controlling interests in Scotland

Scotland has a long history of public registration of rights in land. The General Register of Sasines, Scotland's original national register of property deeds, dates back to 1617. In 1981, the map-based Land Register of Scotland, "the Land Register" began to be rolled out across Scotland. Together, these registers have ensured that information about the owner of a right in land is publicly available.

Calls for greater transparency of land ownership in Scotland have increased over recent years, driven in part by concerns over the potential for legal entities to obsure or hide the identity of persons with controlling interests in land owners and tenants.

The Scottish Government is keen to ensure that land in Scotland is sustainably owned, used and developed in the interests of land owners, communities and wider society. Improved information about who controls land owners and tenants in Scotland is seen as helping empower people, including community groups, and gives them the opportunity to understand who is in control of land owners and tenants. Several other benefits are associated with increased transparency over land ownership and controlling interests, including identifying the perpertrators of wildlife crime; helping local authorities in their exercise of compulsory purchase powers or enforcement actions; enabling the Scottish Environment Protection Agency to take action on unlicensed landfill sites; and helping to address tax fraud and evasion.

Question 1: Do you have any comments about making information about persons with controlling interests in owners and tenants of land available?

3.2 52 respondents addressed this question, including all of the individual respondents.

Views in general support

3.3 There was much general support, largely from individuals, for the principle of making information about persons with controlling interests in owners and tenants of land available. Recurring views were that making this information available was fitting for a modern democracy and in line with practice in other jurisdictions. Several respondents stated that they agreed with the rationale underpinning this proposal, set out in the consultation. A few of the NGO/public sector respondents specifically welcomed the proposal in terms of public interest. Others focused on benefits for their own organisation and members, for example, the Scottish Orienteering Association and Paths for All.

3.4 The majority view from those expressing an opinion was to make registration obligitary in all but the most exceptional circumstances.

3.5 A view shared amongst several individuals and stakeholder representative groups was for details of persons with controlling interests in owners and tenants of land to be made freely available.

3.6 Two private companies suggested maximising opportunities to streamline approaches across the UK, for example, using the same unique identifier number for overeas companies investing in UK land and property.

Concerns and considerations

3.7 Five general concerns and further considerations arose from responses:

• The purpose of the proposals could be clearer according to a few respondents, with some questioning the overriding driver. It was suggested that identifying the controlling interests in land may not serve to improve transparency in land ownership, nor help communities engage in decisions on matters relating to land in Scotland. A few respondents suggested that simply requesting contact details on the title sheet for land would serve the same purpose in terms of enabling communities to communicate on land issues; others suggested information on controlling interests be required only where lack of this is impeding community engagement over land issues.
• The themes of maintaining proportion and containing costs emerged across several responses. A few respondents considered that costs would outweigh benefits; others that the proposals represented a "sledgehammer to crack a nut"; some expressed their support for the overall principle of greater transparency in land ownership and controlling interests but felt that there were higher priorities for public funding.
• A few of the private sector respondents shared the view that the proposals should not be so burdensome as to put off foreign investment in Scotland, and urged that consideration of modern market economies are taken into account in developing the proposals.
• The need to avoid duplication in data collection was raised by several respondents. They suggested that a significant amount of the required information is already existing in various databases including the Sasine and Land Registers, Companies House, Office of the Scottish Charity Regulator, Council Tax and Rating records, and so on.
• A common concern across sectors was that accessible data should not lead to misuse of data. Some considered that a balance should be struck between making information widely accessible but also adhering to data protection requirements and protecting the privacy of land owners or those with controlling interests.

Question 2: In your view, taking into consideration the contents of Chapter 2 of the consultation and the associated Annex C, what are the key considerations that Scottish Ministers should take into account in defining a "controlling interest" or "persons with controlling interests in land owners and tenants" for the purposes of these regulations?

3.8 38 respondents addressed this question.

General views

3.9 A repeated theme was that once the overall aim of the proposals is clearer, then definitions will be easier to determine. Several respondents suggested that as the key aim appeared to be to identify decision-makers in relation to land, then definitions should focus on this rather than including ownership or beneficiary criteria:

"A person who benefits financially from the land but does not control decision-making will not be in a position to engage with statutory authorities or with communities in relation to its administration and use." (Church of Scotland General Trustees)

3.10 A few respondents remarked that beneficial owners may have little or no involvement in decisions on land, with one commenting that in some cases there may be no one meeting the dual criteria of decision-maker and financial benefactor.

3.11 A second overarching theme was that Scotland should harmonise new definitions as far as possible with relevant existing definitions used in other jurisdictions and contexts. The benefits of this were cited as avoiding unecessary complexity, double-counting, and duplicated effort. One respondent commented:

"In an ideal world there should therefore be some synergy between registers, either to ease navigation from one to the other or to somehow allow for the updating of one to follow the updating of the other." (Individual)

Views on the PSC framework

3.12 There was a body of support across sectors for building upon the PSC framework currently used for UK companies, learning from its teething problems, and firming up what some perceived to be vague criteria or criteria which created tensions (the situation of Scottish share pledge holders was mentioned in this regard). One stakeholder commented that this had further advantages in that concerns regarding compatibility with the Data Protection legislation and protection of privacy rights have already been addressed and resolved by the PSC framework.

3.13 A few respondents suggested broadening its scope to encompass all types of corporate vehicle and legal entity such as trusts and limited partnerships.

Other suggested frameworks

3.14 One individual considered that definitions in the the Money Laundering Regulations could be adopted to be consistent and simple. However, an opposing view from a stakeholder representative group was that the purpose of these regulations was entirely different from the aim of the proposed register, and therefore the definitions were not appropriate.

Other considerations

3.15 Some respondents cautioned that care should be taken in relation to charities, with contrasting views on whether or not they should be included within the scope of the new regulations. Trustees were seen as potentially being classed as having a controlling interest, despite possibly not being responsible individually for land. Another view was that, even if complex, there should be transparency over interests within charities and trusts.

3.16 A few private sector companies argued for banks and other mortgage lenders to be exempt from being designated as having a controlling interest. Likewise, there were arguments made against the inclusion of pension funds.

3.17 One NGO considered that those leasing land (agricultural tenants, crofters, commercial lease holders) who have control over land and property management decisions, but are not the owners, should not come under the auspices of the proposed regulations.

3.18 A private sector respondent anticipated further questions arising over definitions on account of the extension of the community right to buy.