Improving transparency in land ownership in Scotland: a consultation on controlling interests in land

WORKSTREAM II: PRACTICAL ASPECTS

This workstream is concerned with the practical aspects of the regulations including the intended scope, where the information should be held, and what information should be publicly available.

The key factors which are likely to have an impact on decisions in this area are set out below and, where appropriate, several options may be suggested. For some of these questions, the Scottish Government has suggested a way forward and is seeking comments.

Chapter 3: Scope

1. This consultation seeks views on the scope of the regulations. There are two main questions to consider:

1. what type of land the regulations should apply to; and

2. who the regulations should apply to.

2. The answers to these questions are likely to be dependent on the agreed definitions of "controlling interests" and "person with a controlling interest in a land owner or tenant".

Type of land

3. The Scottish Government considers that to achieve the desired level of transparency, the regulations should apply to all types of land irrespective of whether the land is urban or rural, built on or not, or what the land is used for. We invite views on whether particular categories of land should be exempt - though at this stage we do not consider there to be any policy rationale for any type of exemption in respect of the type of land and what it is used for.

4. We consider that the definition of "land" for the purposes of the new register of "persons with controlling interests in land owners and tenants" in Scotland should be the same as that used for the purposes of the Land Register. Our rationale here is that the information about persons with controlling interests in land owners and tenants will primarily relate to land transactions that will be registered, or are capable of being registered, within the Land Register. For the purposes of the Land Register, "land" is denoted as follows:-

5. "Land" includes -

a. buildings and other structures;

b. the seabed of the territorial sea of the United Kingdom adjacent to Scotland (including land within the ebb and flow of the tide at ordinary spring tides); and

c. other land covered with water ^[19] .

QUESTION 3: In your opinion, should the regulations apply to all types and uses of land? YES/NO. Please give details.

QUESTION 4: Do you think that particular categories of land should be exempt? YES/ NO

QUESTION 5: If YES, please give details.

QUESTION 6: In your view, for the purposes of these regulations, should "land" have the same meaning used for Land Registration purposes (outlined above)? YES/NO. Please give details.

Type of proprietor and interests in land

6. As previously stated to the Scottish Parliament, the Scottish Government considers that the regulations should apply to all land owners and tenants who have titles in the Land Register or Register of Sasines where there is a person with a controlling interest in a land owner or tenant.

7. Since the Parliamentary stages of the Bill, further consideration has been given to the types of proprietor, and the interests in land, which the regulations should apply to. We also consider that the regulations should apply to owners of land who do not have a registered or recorded title either because they hold land that pre-dates the Register of Sasines coming into being, or because they have acquired a personal right to property but have not yet registered the deed in their favour in the Land Register.

8. There are leases of 20 years or less that are not in the Register of Sasines or the Land Register because they are not long leases and therefore cannot be registered. However, these leases may potentially be of high value. The Scottish Government invites views as to whether such unrecorded or unregistered interests should also fall within the scope of the legislation where there is a person with a controlling interest in a tenant of land.

9. As we have set out in chapter 2 land can be owned by either natural persons in their own name, or by legal persons, or by individuals in their capacity as trustee. Land in Scotland can also be held by a legal entity incorporated in accordance with the legal system in another jurisdiction. It is also possible that a legal title could be held by a natural person but the title is in the name of the person who is, for example, a partner of a partnership and as such is acting as a trustee for the partnership or otherwise the person is acting as a trustee on behalf of a trust.

10. The concerns expressed during the consideration of the Land Reform (Scotland) Bill in Parliament and elsewhere have focused on the perceived lack of transparency of land ownership in situations where legal entities are alleged to be used to conceal the identity of the individuals who have control of land. To address these concerns we propose that the regulations should provide greater transparency where the legal owner of land is a legal body or an individual owning land in a special capacity such as a trustee.

11. Since the passage of the Land Reform (Scotland) 2016 Act, the Scottish Government has given further consideration to the scope of the regulations and we invite views on the application of these regulations to natural persons. It is possible that a land owner who is a natural person could be subject to a person with controlling interest. For instance, it is possible that a person could own land or buildings in his or her own name and bring that property in to a partnership as an asset for the partnership without transferring the legal title to the partnership.

12. We welcome views on the extent to which persons own land but do so by virtue of an undisclosed relationship of trust for the benefit of others and whether this is a legitimate concern that the regulations should provide for. It is also theoretically possible that natural persons who own land could have some form of "secret" contractual or hidden trust relationship with another party, which would mean that the other party can exercise control over the natural person and in turn the land. In considering the scope of the regulations and the types of proprietor that the regulations should apply to, we also invite respondents to consider whether there is any way of avoiding the requirements/obligations of the regulations. We invite views and comments on how the Scottish Government could draft the regulations to combat such activity.

QUESTION 7: In your opinion, should the regulations also apply where the proprietor of land that 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?

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?

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?

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?