Improving transparency in land ownership in Scotland: consultation analysis

4. Workstream 2: Practical Aspects - Scope

4.1 This Workstream relates to the practical aspects of the regulations including the intended scope, where the information should be held, and what information should be publicly available.

The Scottish Government considers that to achieve the desired level of transparency, the regulations should apply to all types of land irrespective of whether it is urban or rural, built on or not, or what the land is used for. They also consider that the definition of "land" for the purposes of the new register should be the same as that used for the purposes of the Land Register. "Land" in the Land Register is denoted as including: buildings and other structures; the seabed of the territorial sea of the UK adjacent to Scotland (including land within the ebb and flow of the tide at ordinary spring tides); and other land covered with water.

Question 3: In your opinion, should the regulations apply to all types of uses of land? Yes/No. Please give details.

4.2 40 respondents answered this question with a majority of 34 agreeing that the regulations should apply to all types of uses of land. Table 4.1 shows views by category of respondent.

Table 4.1: Views on whether the regulations should apply to all types of uses of land by category of respondent

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	4	3	7
National non-governmental organisations/public sector	3	0	3
Stakeholder representative groups	4	1	5
Local government	0	1	1
Individuals	23	1	24
Grand total of individuals and organisations	34	6	40

4.3 The reasons given by respondents who agreed that the regulations should apply to all types of uses of land were:

• Aids transparency;
• Avoids leaving loopholes which could be exploited and/or opening the way for challenges;
• Equitable - applies to all;
• Aids accountability; and
• Simple approach which avoids complexities.

4.4 Those who did not agree that the regulations should apply to all provided the following rationales:

• Should apply only where the land is subject or likely to be subject to community interest;
• Should apply only where a significant transaction in respect of the land if effected; and
• Should be exemption of gardens of domestic properties if less than a certain size (e.g. 5 acres).

Question 4: Do you think that particular categories of land should be exempt?

Question 5: If yes, please give details.

4.5 37 respondents answered these questions, with a majority of 30 considering that there should be no exemptions. Table 4.2 shows views by category of respondent.

Table 4.2: Views on whether particular categories of land should be exempt by category of respondent

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	3	2	5
National non-governmental organisations/public sector	0	3	3
Stakeholder representative groups	0	4	4
Local government	1	0	1
Individuals	3	21	24
Grand total of individuals and organisations	7	30	37

4.6 Proposed exemptions were:

• Urban commercial property where the underlying policy considerations may not apply and there is a risk of disincentivising inward investment by applying the regulations;
• Volume short-term leases as part of a portfolio management approach;
• The principal residence of any home owner; and
• Philanthropic and/or charitable use of land.

4.7 One private company questioned whether government-owned property and that used for military and defence as well as Crown land, would be exempt.

Question 6: In your view, for the purposes of these regulations, should "land" have the same meaning used for Land Registration purposes? Yes/No. Please give details.

4.8 33 respondents answered this question, with a majority of 29 considering that for the purposes of these regulations, "land" should have the same meaning used for Land Registration purposes. Table 4.3 shows views by category of respondent.

Table 4.3: Views on whether, for the purposes of these regulations, "land" should have the same meaning used for Land Registration purposes

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	4	2	6
National non-governmental organisations/public sector	4	0	4
Stakeholder representative groups	3	1	4
Local government	1	0	1
Individuals	17	1	18
Grand total of individuals and organisations	29	4	33

4.9 The benefits of "land" having the same meaning for these regulations and for Land Registration purposes were identified as:

• The Land Registration meaning is already understood and is sufficient;
• Maintaining the same meaning will avoid confusion and unnecessary complexity;
• Administration costs would be incurred if two different meanings existed;
• Makes sense in preparation for digital transformation; and
• Will facilitate the merger of the different registers in future.

4.10 A view from a stakeholder representative group in favour of different meanings was that the meaning of "land" should be extended to "mineral rights" as well as "surface land". A contrasting view from another stakeholder group was that the inclusion of "mineral rights" within the meaning of "land" would be both difficult and costly to maintain in practice.

Question 7: In your opinion, should the regulations also apply where the proprietor of land is not recorded in the Register of Sasines or registered in the Land Register because either:

I. The property was acquired prior to the Register of Sasines commencing in 1617; or

II. They have acquired a personal right to property but have not yet registered the deed in their favour in the Land Register?

4.11 39 respondents answered this question, with a majority of 29 considering that the regulations should apply where the proprietor of land is not recorded in either of these registers on account of the reasons specified. Of the seven private sector and professional bodies who responded, the majority opposed this proposal. Table 4.4 shows views by category of respondent.

Table 4.4: Views on whether the regulations also apply in the circumstances stated

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	2	5	7
National non-governmental organisations/public sector	3	0	3
Stakeholder representative groups	5	0	5
Local government	1	0	1
Individuals	18	5	23
Grand total of individuals and organisations	29	10	39

4.12 The main reasons given in favour of the regulations applying where the proprietor of land is not recorded in the Register of Sasines or registered in the Land Register for the reasons stated were:

• For the sake of transparency;
• To provide a comprehensive picture;
• To close loopholes; and
• To ensure non-discrimination - "one law for all".

4.13 A few respondents supported the enactment of proposal in due course, but did not see this as an immediate priority, or considered that retrospective cases should come within its scope.

4.14 Two private sector respondents considered that the regulations were more relevant in the case of properties acquired prior to the Register of Sasines than where a personal right to property has been acquired. In the latter case, they argued that a personal right may not give you true control of the land, or the option may never be exercised, with such parties, legally speaking, not actually having rights in the land (only personal rights against the owner).

Question 8: In your opinion, should the regulations apply where a tenant in a high value lease that is not a long lease (a lease of 20 years or fewer) falls within the definition of persons with controlling interests in land owners and tenants?

4.15 36 respondents answered this question, with a majority of 22 agreeing that the regulations should apply where a tenant in a high value lease that is not a long lease, falls within the definition of persons with controlling interests in land owners and tenants. Of the seven private sector and professional bodies who provided a response, six of them disagreed. Table 4.5 shows views by category of respondent.

Table 4.5: Views on whether the regulations should apply in cases of high value leases that are not long leases

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	1	6	7
National non-governmental organisations/public sector	3	0	3
Stakeholder representative groups	3	0	3
Local government	0	1	1
Individuals	15	7	22
Grand total of individuals and organisations	22	14	36

4.16 Reasons provided in support of the proposal were that this would ensure transparency; would avoid creating exceptions and loopholes; and was not discriminatory. Three respondents, including two NGOs and one individual, commented that a lease of relatively little value and/or length, could still be important for the purposes of amenity management and sustainable development issues.

4.17 Six respondents questioned the relevance of value of lease. Two other respondents considered it difficult to provide a reasoned response as the consultation did not define "high value". Three respondents remarked that defining "high value" could prove to be problematic, one arguing that value could be viewed in ways other than simply rent.

4.18 Views against the proposal focused largely on practicalities, with questions over whether the benefits of the proposal would outweigh the envisaged costs and effort required:

"This is a clear over-regulation to the commercial leasing market in particular because it could capture an inordinate number of transactions without any real purpose" (Scottish Property Federation).

4.19 One stakeholder representative body did not predict much "buy-in" from those involved in short-term, high rent, seasonal lets (e.g. potato or pea farming). A private sector respondent identified potential issues over including unwritten leases such as those associated with sporting rights, which could be considered personal licences rather than legal leases.

Question 9: In your opinion, are there instances where natural persons who own land have an undisclosed relationship with another person who has a controlling interest in land? For instance, if the land in question is an asset of a partnership or trust, or part of a trust arrangement?

4.20 31 respondents answered this question, with a majority of 27 agreeing that there are such instances where natural persons who own land have an undisclosed relationship with another person who has a controlling interest in land. Table 4.6 shows views by category of respondent.

Table 4.6: Views on whether there are instances where natural persons who own land have an undisclosed relationship with another person who has a controlling interest in land

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	5	0	5
National non-governmental organisations/public sector	3	0	3
Stakeholder representative groups	4	0	4
Local government	0	0	0
Individuals	15	4	19
Grand total of individuals and organisations	27	4	31

4.21 Recurring comments were that the consultation document had, in effect, answered its own question by highlighting partnerships and trusts in this context. Several respondents emphasised that such cases where relationships are undisclosed are perfectly legal and may include family businesses such as farms. One stakeholder representative body took issue with the word "undisclosed" as suggestive of malpractice when this need not be the case.

4.22 One NGO suggested that relevant information may already be captured by legislation relating to controlling interests in businesses and in charities.

4.23 Several respondents repeated their previous comments that for the sake of transparency, all people associated with controlling interests in land should be identified.

Question 10: In light of the contents of this consultation, and this chapter in particular, can you foresee any ways in which the obligations under these regulations could be avoided, and, if so, what could the Scottish Government do to combat this?

4.24 26 respondents answered this question. A view expressed repeatedly was that those intent on avoiding the regulations would most likely find a way to do this, however the regulations are drafted. Circumstances in which avoidance is most likely to arise were suggested:

• If the definition of "controlling interest" and the scope of the regulations are not made sufficiently clear;
• Where there are complex structures of companies or trusts registered in other jurisdictions; foreign entities; or off-shore companies; and
• If penalties are not enough to act as deterrents; where enforcement is not rigorous.

4.25 Respondents urged that to minimise opportunity for avoidance of the regulations, these should be comprehensive with clear definitions to avoid any doubt regarding meaning and scope. It was suggested that lessons be learned from previous experience elsewhere (the Panama Papers were referred to in this respect). Robust enforcement and penalty frameworks were called for, with a few respondents recommending that the Scottish Government take ownership of assets which are not disclosed according to the regulations by the deadline specified. A few respondents suggested that requesting information on the title sheet when registering properties will go some way to combating avoidance.