Improving transparency in land ownership in Scotland: consultation analysis

7. Workstream 3: Sanctions and enforcement

The duty that will apply will require to be underpinned by proportionate enforcement mechanisms in order to be effective. The Land Reform (Scotland) Act 2016 enables the regulations to include provision for criminal or civil penalties.

Question 45: In your view, should a civil penalty be imposed for failure to comply with any of the duties contained in the regulations? Yes/No. Please give details.

7.1 32 respondents answered this question with a majority of 25 considering that a civil penalty should be imposed for failure to comply with any of the duties contained in the regulations. Table 7.1 shows views by category of respondent.

Table 7.1 Views on whether a civil penalty should be imposed for failure to comply with any of the duties contained in the regulations

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	3	0	3
National non-governmental organisations/public sector	2	0	2
Stakeholder representative groups	4	1	5
Local government	0	0	0
Individuals	16	6	22
Grand total of individuals and organisations	25	7	32

7.2 25 respondents provided more details to support their view. It was broadly acknowledged that without some form of penalty for failure to comply, the regulations would lack teeth. However, a few respondents recommended a reasonable period of "grace" to enable those new to the duty to understand this and have time to act:

"….depending on the content of the regulations there may be a significant programme of compliance awareness required. We would hope to see a positive engagement process to raise awareness with those who advise and are controlling interests in land in Scotland. (Scottish Property Federation)

7.3 One stakeholder representative group suggested that penalties should not apply in the case of genuine mistakes.

7.4 Amongst those who supported civil penalties for failure to comply, four individual respondents suggested financial penalties proportionate to the land assets involved. Two individuals envisaged forfeiture of the land to the Scottish Government; one stakeholder representative group suggested compulsory purchase of the asset as the penalty.

7.5 Amongst those opposed to applying civil penalties for non-compliance, the prevailing view was that these were not strong enough deterrents.

Question 46: In your view, should failure to comply with any of the duties contained in the regulations be a criminal offence? Yes/No. Please give details.

7.6 30 respondents answered this question with 18 considering that failure to comply with any of the duties contained in the regulations should be a criminal offence. Table 7.2 shows views by category of respondent.

Table 7.2 Views on whether failure to comply with any of the duties contained in the regulations should be a criminal offence

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	1	3	4
National non-governmental organisations/public sector	1	1	2
Stakeholder representative groups	2	3	5
Local government	0	0	0
Individuals	14	5	19
Grand total of individuals and organisations	18	12	30

7.7 22 respondents provided more details to support their view. Those in favour of a criminal penalty being imposed for failure to comply with any of the duties considered this to be a powerful and appropriate deterrent which will ensure that the regulations are respected.

7.8 Those opposed to failure to comply being a criminal offence felt this to be a disproportionate response. A few suggested that perhaps failure to comply should be criminalised only after all civil penalty options have been deployed, or only in cases of very large/valuable land assets.

7.9 An individual respondent recommended that further discussion on the relative merits of civil and criminal penalties should take place, including consideration of the resources required for enforcement.

Question 47: In your view, should an application for land registration be rejected if the applicant fails to supply information about any "person with controlling interest"? Yes/No. Please give details.

7.10 38 respondents answered this question with a majority of 25 considering that an application for land registration should be rejected if the applicant fails to supply information about any "person with controlling interest". All of the private sector and professional bodies who answered the question were opposed to the proposal. Table 7.3 overleaf shows views by category of respondent.

Table 7.3 Views on whether an application for land registration should be rejected where information about "person with controlling interest" has not been supplied

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	0	8	8
National non-governmental organisations/public sector	3	0	3
Stakeholder representative groups	3	1	4
Local government	0	1	1
Individuals	19	3	22
Grand total of individuals and organisations	25	13	38

7.11 The main reason provided in favour of the proposal was that this represented a sensible and practical solution to ensuring complete information:

"….one of the most effective ways of making sure the information on controlling interests is provided is to require this information as part of the application for land registration, and rejecting such applications if the information is not provided or accurate." (Global Witness)

7.12 One respondent suggested that the proposal be supported by appeal procedures. Another suggestion was for leeway to enable owners to have their registration accepted, even if incomplete, if they have taken all "reasonable steps" to identify those with controlling interest.

7.13 Two respondents questioned how missing information would be identified and by whom?

7.14 Those providing arguments against the proposal were largely private sector and professional bodies. Their reasons to oppose it were:

• Not a proportionate response to the problem;
• Could be self-defeating in providing a barrier to progressing towards a complete Land Register by 2024;
• Could result in delays in the conveyancing process;
• Could unwittingly affect innocent parties;
• Could deter commercial investment in Scotland; and
• May be human rights arguments around statutory loss of land if this results from delays in registration.

Question 48: In your view, should an application for land registration be rejected if the applicant fails to certify that no such "person with controlling interest" exists. Yes/No. Please give details.

7.15 36 respondents answered this question with a majority of 24 considering that an application for land registration should be rejected if the applicant fails to certify that no such "person with controlling interest" exists. All of the private sector and professional bodies who answered the question were opposed to the proposal. Table 7.4 shows views by category of respondent.

Table 7.4 Views on whether an application for land registration should be rejected where the applicant fails to certify that no such "person with controlling interest" exists

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	0	6	6
National non-governmental organisations/public sector	3	0	3
Stakeholder representative groups	3	2	5
Local government	0	1	1
Individuals	18	3	21
Grand total of individuals and organisations	24	12	36

7.16 12 respondents gave more details. Several others referred to their previous responses, particularly their response to question 47.

7.17 A few individual respondents queried whether the situation could arise in which there is no one with controlling interest, in so far as the owner will ultimately have this, and if there is no owner, then the land will be owned by the Scottish Government.

7.18 Those providing reasons in agreement with the proposal considered it to be logical, sensible and minimising loopholes.

7.19 Those opposing the proposal felt that this could create delays in conveyancing; could risk the security of heritable creditors; the information should be collected only when required and not routinely; and could be challenging to sustain where controlling interests change independently of actual land transactions.

Question 49: In your view, taking into consideration all of the sanctions and enforcement options set out in this chapter, what mechanisms would be most appropriate to enforce the duty to provide information? Please explain your answer.

7.20 21 respondents answered this question although a few further respondents referred to their comments relating to previous questions.

7.21 The most common response, largely from individual respondents, was that registrations attempted without the required information should be rejected and knowingly provided false information should be subject to criminal law (as at present):

"The cleanest method of enforcement would be to prevent registration. This will ensure that all parties require to be disclosed. The only way to avoid that would be to keep the interest off register, which would have significant adverse effects with the owner's ability to transact with their property." (Individual respondent)

7.22 A few of the stakeholder representative groups outlined their vision of an incremental scale of mechanisms, from the "softer" end of voluntary registration, to the final stage of criminalisation for repeated failure to notify of controlling interests and persistent obstruction.

7.23 The possibility (raised in the consultation) of placing a charge on the relevant title sheets which would prevent any dealing in a property where information is incomplete, received explicit support from a few respondents.

7.24 Three respondents suggested that threat of forfeiture of land/loss of controlling interest where information is not disclosed, could provide the necessary deterrent.

7.25 One stakeholder representative group commented that raising awareness of the regulations and making registration simple and low cost would be important steps to increasing compliance with the duty.

Challenge and exemptions

The Scottish Government considers that privacy exemptions will be necessary in some limited circumstances such as where publication of information about persons will put them at serious risk of harm. The PSC register framework, for example, allows for application for protection, for instance if there is a serious risk of violence or intimidation.

Question 50: In your view, are there instances in which there should be exemptions? Yes/No.

7.26 34 respondents answered this question with a majority of 22 considering that there should be no exemptions. All seven of the private sector and professional bodies who answered the question were in favour of exemptions. Table 7.5 shows views by category of respondent.

Table 7.5 Views on whether there are instances in which there should exemptions

	Number of respondents providing view:		Total
Category of respondent	Yes	No
Private sector and professional bodies	7	0	7
National non-governmental organisations/public sector	0	1	1
Stakeholder representative groups	2	4	6
Local government	0	0	0
Individuals	3	17	20
Grand total of individuals and organisations	12	22	34

Question 51: If no, why not?

7.27 16 respondents answered this question. They provided the following reasons for not permitting exemptions:

• For completeness of information;
• To minimise loopholes;
• Otherwise the register will be ineffective; undermined;
• There are no cases which will warrant an exemption;
• To minimise appeals;
• To keep things simple; and
• To ensure transparency.

Question 52: If yes, in your view what is the justification for such exemptions?

7.28 Six respondents answered this question although a few others stated that they had already provided relevant text in response to previous questions.

7.29 Five of those who responded considered that there could be valid cases, for example where there is a risk of violence, where the identity of those with controlling interest should not be requested for a public register. The final respondent suggested that there should be allowances made in cases of genuine error on behalf of the person registering information, if they then corrected this within a set time period.