Improving transparency in land ownership in Scotland: consultation analysis

6. Workstream 3: The duty to provide information

Currently, anyone who wishes to know more about who controls land can obtain information about the legal owner by searching for this information in the Land Register or Register of Sasines. However, it is often the case that having information about the legal owner will not assist in reaching the person(s) who controls the land owners or tenant of the land in question. In most cases land owners and tenants should know who the person(s) with controlling interest is.

Question 27: In your view, should a duty to provide information about persons with controlling interests in land owners and tenants apply to land owners and tenants with titles in the Land Register or Register of Sasines and:

1. Land owners and tenants where the property was acquired prior to the Register of Sasines commencing in 1617?

2. Land owners or tenants who have acquired a personal right to property, but have not yet registered the deed in their favour in the Land Register?

3. Tenants in a high value lease that is not a long lease (a lease of 20 years or fewer? Yes/No

Views on applying the duty to land owners and tenants where the property was acquired prior to the Register of Sasines commencing in 1617

6.1 39 respondents answered this question with a majority of 28 considering that a duty to provide this information should apply to land owners and tenants where the property was acquired prior to the Register of Sasines commencing. Table 6.1 overleaf shows views by category of respondent.

Views on applying the duty to land owners and tenants who have not yet registered the deed in their favour in the Land Register

6.2 39 respondents answered this question with a majority of 28 considering that a duty to provide this information should apply to land owners and tenants who have not yet registered the deed in their favour in the Land Register. Table 6.2 overleaf shows views by category of respondent.

Table 6.1: Views on whether the duty should apply where property was acquired prior to the Register of Sasines commencing

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	2	6	8
National non-governmental organisations/public sector	3	0	3
Stakeholder representative groups	5	0	5
Local government	0	1	1
Individuals	18	4	22
Grand total of individuals and organisations	28	11	39

Table 6.2: Views on whether the duty should apply where the land owners or tenants have not yet registered the deed in their favour in the Land Register

	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	5	0	5
Local government	0	1	1
Individuals	19	4	23
Grand total of individuals and organisations	28	11	39

Views on applying the tenants in a high value lease that is a lease of 20 years or fewer

6.3 37 respondents answered this question with a majority of 23 considering that
a duty to provide this information should apply to tenants in a high value lease
that is a lease of 20 years or fewer. Table 6.3 shows views by category of respondent.

Table 6.3: Views on whether the duty should apply where tenants are in a high value lease that is a lease of 20 years or fewer

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	1	7	8
National non-governmental organisations/public sector	3	0	3
Stakeholder representative groups	4	0	4
Local government	0	1	1
Individuals	15	6	21
Grand total of individuals and organisations	23	14	37

Question 27: If no, why not?

6.4 13 respondents answered this question, although a few of these simply referred to their response(s) to other questions.

6.5 Arguments against applying a duty to provide information in the scenarios outlined were largely on practical grounds:

• All public land will be registered by 2019 and the Land Register will be completed by 2024 anyway;
• There can be uncertainty over information such as precise boundaries and the extent of titles in property acquired pre-Sasines, and in registers such as the Sasines; attempting to bring relevant land owners and tenants within the duty to provide information could be unenforceable and could require a relaxation of mapping requirements; and
• Defining a high value lease could be challenging and requiring tenants in a high value lease that is not a long lease to provide information about persons with controlling interests will create a disproportionate administrative burden for little gain.

Question 29: If yes, in your view what are the advantages of this arrangement?

6.6 27 respondents answered this question. Four key advantages were identified and are listed below from most frequently mentioned to least:

• Greater transparency;
• Completeness; minimising loopholes;
• Equity; level playing field; and
• To meet the purpose of the regulations.

Question 30: If yes, in your view what are the disadvantages of this arrangement?

6.7 Nine respondents suggested potential disadvantages of this arrangement. Several anticipated increased costs to those needing to register (depending on who becomes in-scope) and to those managing the register and attempting to identify owners and tenants of land acquired pre-1617.

6.8 A few respondents considered that where the title has not yet been registered, non-compliance could be challenging to address.

6.9 Two individuals anticipated potential legal challenges to the Scottish Government arising from the application of the duty under the arrangement.

6.10 A local government respondent suggested that the arrangement will require clear definitions to be established (for example, the meaning of "high value").

It may also be appropriate to place the duty to provide information on the person(s) with a "controlling interest". This may be difficult in practice to enforce, if it cannot be ascertained if such a person exists from available information or if these persons are established or resident outside the UK.

Question 31: In your view, should a duty to provide information apply to the "person with the controlling interest"? Yes/No.

6.11 37 respondents answered this question with a majority of 32 considering that a duty to provide information should apply to the "person with the controlling interest". Table 6.4 shows views by category of respondent.

Table 6.4: Views on whether the duty to provide information should apply to the "person with the controlling interest"

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	6	1	7
National non-governmental organisations/public sector	3	0	3
Stakeholder representative groups	4	0	4
Local government	1	0	1
Individuals	18	4	22
Grand total of individuals and organisations	32	5	37

Question 32: If no, why not?

6.12 Very little response was provided to this question. Those providing a response considered the proposal to be potentially unenforceable and not practical, particularly in relation to persons residing outwith Scotland. An individual respondent argued that the duty should be placed on the legal owner at the point of application of registration in the Land Register.

Question 33: If yes, in your view what are the advantages of this arrangement?

6.13 22 respondents answered this question. The most common response, largely from individuals, was that this arrangement would lead to greater transparency and certainty about where duties lie.

6.14 Five respondents, four of them private companies and professional bodies, considered that information gained from this arrangement would be more likely to be accurate and up-to-date than that obtained by placing the duty on those holding title, who may not be aware of all controlling interests.

6.15 A few respondents across different sectors argued that as information about those with controlling interests is key to the regulations, then it makes sense to place the duty on them.

6.16 Two respondents suggested alternative approaches:

• Place the duty on both those with controlling interests and the legal owner(s); and
• The duty should apply to those with controlling interests, but in complex ownership structures (particularly corporate vehicles registered off-shore) the duty should then apply to the legal person(s) that are the registered land owner or long-term lease holder.

Question 34: If yes, in your view what are the disadvantages of this arrangement?

6.17 11 respondents answered this question. The three main disadvantages identified were:

• Those with controlling interests may inadvertently breach the regulations due to not knowing they have such interests and/or not knowing about their obligations under the regulations;
• There may be a reluctance of people with controlling interest to divulge information; and
• Enforcement could be challenging particularly where there are complex ownership and controlling interest structures.

It may also be possible that there are intermediate persons who hold the information necessary to determine who has a controlling interest, such as solicitors in law firms or accountants who have been dealing with either the land owners or tenants, or the person with a controlling interest in a land owner or tenant.

Question 35: In your view or experience, are there parties who serve as intermediaries between registered proprietors and persons with a controlling interest in land? Yes/No.

6.18 32 respondents answered this question with a majority of 29 considering that there are parties who serve as such intermediaries. Table 6.5 shows views by category of respondent.

Table 6.5 Views on whether there are parties who serve as intermediaries between registered proprietors and persons with a controlling interest in land

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	2	2	4
National non-governmental organisations/public sector	3	0	3
Stakeholder representative groups	4	1	5
Local government	1	0	1
Individuals	19	0	19
Grand total of individuals and organisations	29	3	32

Question 36: If yes to Q35, in what scenarios do you think that there are parties who serve as intermediaries between registered proprietors and persons with a controlling interest in land?

6.19 30 respondents answered this question. A few law firms expressed reservation about solicitors being classed as intermediaries on the grounds that they act for their client only, with their primary duty to their client, therefore they are not acting as intermediaries.

6.20 The most common response amongst others was that professional agents such as solicitors and accountants serve as intermediaries between registered proprietors and persons with a controlling interest in land. The remaining recurring responses were: factors; companies; and trusts/trustees.

Question 37: If yes, in what capacity are there parties who serve as intermediaries between registered proprietors and persons with a controlling interest in land?

6.21 Several respondents answered this question by referring to their response to the previous question. Where further response was made, respondents across all categories considered that such parties served in professional management and advisory capacities.

Question 38: In your view should a duty to provide information apply to such intermediaries? Yes/No.

6.22 38 respondents answered this question with views divided almost evenly between those who considered a duty to provide information should not apply to such intermediaries (a slight majority) and those who considered that they should be under such a duty. Table 6.6 shows views by category of respondent.

Table 6.6 Views on whether there are parties who serve as intermediaries between registered proprietors and persons with a controlling interest in land

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	0	7	7
National non-governmental organisations/public sector	2	1	3
Stakeholder representative groups	3	2	5
Local government	0	1	1
Individuals	13	9	22
Grand total of individuals and organisations	18	20	38

Question 39: If no, why not?

6.23 17 respondents answered this question. The most common view from private sector and professional respondents and from stakeholder representative groups was that applying this duty to intermediaries such as advisory agents would challenge the principle of client confidentiality. A few suggested that this might deter individuals from taking professional advice which could be to the detriment of the overall registration system.

6.24 Another recurring view across several categories of respondent was that there did not appear to be a valid reason for applying the duty to intermediaries in this context, when this does not occur in other areas such as paying tax.

Question 40: If yes, in your view what are the advantages of this arrangement?

6.25 14 respondents answered this question. The most common view was that this arrangement would contribute to achieving a comprehensive and accurate register which contained reliable information. One stakeholder representative body suggested that this arrangement was particularly important in cases where those with controlling interests are resident and/or registered off-shore.

6.26 Other advantages were identified as:

• In keeping with requirements in other areas such as those applying in anti-money laundering regulations;
• To increase transparency;
• Cost-efficient for tax payer; and
• Intermediaries are likely to be aware of the regulations.

Question 41: If yes, in your view what are the disadvantages of this?

6.27 There was very little response to this question, with only a few respondents suggesting potential disadvantages of: cost; resistance; and challenges arising in enforcing the arrangement.

Question 42: In your view, should the duty to disclose information about any person with a controlling interest in a land owner or tenant apply either when a person is a person with a controlling interest in a land owner or tenant when the regulations come into force, or becomes a person with a controlling interest in a land owner or tenant when the regulations are in force?

6.28 33 respondents answered this question with a majority of 21 considering that the duty should apply either when a person is a "person with controlling interest" when the regulations come into force or becomes such a person when the regulations are in force. A few further respondents indicated, however, that they did not fully understand the question and had not responded with yes or no on account of this. Table 6.7 overleaf shows views by category of respondent.

Table 6.7 Views on whether the duty to disclose information should apply when a person has controlling interest when the regulations come into force or when a person becomes one with controlling interest when the regulations are in force

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	1	4	5
National non-governmental organisations/public sector	2	1	3
Stakeholder representative groups	4	1	5
Local government	0	1	1
Individuals	14	4	18
Grand total of individuals and organisations	21	11	32

Question 43: If no, why not?

6.29 Only nine respondents provided relevant commentary with a few others indicating that they were not clear about how to respond.

6.30 The main emerging theme, from across different sectors of respondent, was that applying the duty to those with controlling interests at the time the regulations come into force could place an excessive regulatory burden on existing larger landowners which may not be enforceable and would create significant logistical challenges.

6.31 Respondents considered a more realistic approach would be to apply the duty to those who acquire controlling interest in land owner or tenant following the enactment of the regulations, and then to maintain the register by introducing an annual confirmation statement along the lines of that applying in company law in the UK.

Question 44: If yes, in your view what are the advantages of this arrangement?

6.32 16 respondents answered this question. They identified the following advantages of this arrangement:

• Completeness/comprehensive;
• Transparency;
• Accurate/up to date;
• Accountable; and
• Usefulness/fit for purpose.