Land reform in a Net Zero nation: consultation analysis

9. Transparency: Who owns, controls and benefits from Scotland’s Land

The consultation paper highlights the Scottish Government’s commitment to managing inward investment in Scotland’s land in a responsible manner, ensuring transparency around who owns, controls and benefits from the land.

Improving transparency to respond to contemporary challenges

Despite progress to date and ongoing work to improve transparency of land ownership, the Scottish Government considers that further consideration of issues around restricting the acquisition of land in Scotland is warranted to support land reform objectives. This reflects the extent to which these objectives require that those who live and work in Scotland share the benefits of wealth generated by land.

It is therefore proposed that Scottish Government should explore potential for a requirement that those seeking to acquire large-scale landholdings in Scotland must be registered in the UK or EU for tax purposes. This is considered to have potential to address issues of absenteeism, and ensure that income generated from Scotland’s land is not at the expense of local communities. The proposal may be limited by the current devolved settlement, and will require consideration of complex legal issues, but the consultation paper notes that the Scottish Government is committed doing all it can within the current settlement.

Question 41 – Do you agree or disagree with our proposal to explore:

• Who should be able to acquire large-scale landholdings in Scotland?
• The possibility of introducing a requirement that those seeking to acquire large-scale landholdings in Scotland need to be registered in an EU member state or in the UK for tax purposes?

Responses to Question 41 by respondent type are set out in Tables 56 and 57 below.

Percentages may not sum to 100% due to rounding

A majority – 77% of those who answered the question – agreed that the Scottish Government should explore who should be able to acquire large-scale landholdings in Scotland. Individual respondents were more likely to agree than organisations, at 84% and 60% respectively. Landowner and Private sector organisation respondents were relatively evenly divided on this issue.

A smaller majority – 67% of those who answered the question – agreed with the proposal to explore potential for a requirement that those seeking to acquire large-scale landholdings in Scotland must be registered in the UK or EU for tax purposes. Again, individual respondents were more likely to agree than organisations at 76% and 44% respectively. Among organisations, Landowner respondents were again divided, and a majority of ‘Private sector’ and ‘Representative body’ respondents disagreed.

Please give some reasons for your answers

Around 285 respondents provided a comment at Question 41.

Exploring who should be able to acquire large-scale landholdings in Scotland

Some respondents commented on the various issues that the proposals seek to address, in particular a lack of transparency around land ownership, absenteeism and community wealth building. These were acknowledged as significant issues requiring a policy response, especially in the context of increasing overseas interest in Scottish land market investments. It was also noted that these issues can be interlinked, for example the potential for reduced landowner absenteeism to support community wealth building, suggesting that resident landowners are more likely to engage positively with the local community.

There was also a view that land reform proposals have the potential to have a significant impact on these issues and that land ownership and management is integral to Scotland’s culture, heritage, economy and wellbeing. It was argued that consideration should be given to who should be able to acquire large-scale landholdings, with a specific focus on ensuring that Scotland’s land benefits the public interest and wider policy objectives such as net zero.

However, a range of respondents – including Landowners, Representative bodies, and Third sector respondents – questioned whether measures limiting land acquisition would be an effective means of addressing issues around transparency, absenteeism and community wealth building. For example, it was suggested that transparency around who owns land is not equivalent to restricting who should be able to acquire land. There was some scepticism on the extent to which such restrictions would make a significant contribution to transparency, including from some who opposed restrictions on land acquisition but supported other measures to improve transparency.

There was also a view that proposals would not necessarily address landowner absenteeism nor support community wealth building, – including from those who supported more restrictions on acquisition of landholdings. For example, it was noted that registration for tax purposes is unrelated to domiciled status, and that a landholder may still be absent (and extract wealth to the detriment of local communities) even if they live and work in the UK.

Some respondents felt that placing restrictions on land acquisition is a ‘blunt’ approach to addressing issues around transparency, absenteeism and community wealth building, and may discourage foreign investment in Scotland’s land. This included concerns around potential for restrictions to undermine the investment required to support net zero targets. Concerns that restrictions could lead to a reduction in land values, potentially increasing the risk of legal challenge from landowners were also highlighted.

In the context of these concerns, there was a view that the focus should be on ensuring responsible land management, rather than who owns land (and how much they own). There was also a call for a focus on ensuring that land management is supported by effective engagement to support community wealth building.

Other issues or concerns raised in relation to consideration of restrictions on who can acquire large-scale landholdings included a view that existing measures – such as the Register of Controlling Interests and Register of Overseas entities – should be sufficient to improve transparency of land ownership. It was suggested that a proper assessment of these provisions should be undertaken before any further measures are introduced. Other concerns raised included that:

• Any restriction on who owns, controls and benefits from Scotland’s land must be underpinned by an effective transparency regime. Points discussed earlier around improving transparency of ownership, for example the value of ensuring a complete Land Register of Scotland were reiterated.
• Any consideration of this issue should be supported by full stakeholder engagement.
• A consistent approach across the UK would be beneficial, if this can be secured.

Limiting acquisition of large-scale landholdings to those registered in the UK/EU for tax purposes

In terms of the specific proposal to limit acquisition to those registered for tax in the UK or EU, some supported this as a means of improving transparency and accountability around land ownership. Respondents also saw potential for the proposal to prevent land being acquired through shell companies registered overseas, and to reduce potential for money laundering. It was also noted that similar controls are common internationally, including in EU territories, to protect legitimate public interests.

However, a range of respondents raised concerns around the extent to which the proposal is likely to achieve the anticipated policy objectives. This included comment from Landowners, Representative bodies, Government and NDPBs, Community organisations, and Third sector respondents.

Some respondents questioned how absenteeism would be addressed by restricting land ownership on the basis of tax registration rather than domicile and, while there was some support for a measure that would ensure tax income remains within the UK or EU, there was concern that landowners would still be able to practice absenteeism irrespective of where they are registered for tax. In this context, some respondents wished to see restrictions based on residency, and similar requirements currently placed on crofters were referenced. However, there were also concerns that restrictions based on nationality, country of origin or similar measures could be discriminatory, potentially breaching equalities legislation.

It was also argued that the proposal may not make a significant contribution to transparency of land ownership. A range of respondents questioned the logic of restricting land ownership to those registered in the EU, especially in the context of the UK’s exit from the EU with some describing the proposed criteria as ‘arbitrary’. It was suggested that any criteria for acquisition of land should be linked specifically to transparency of ownership and tax arrangements, with some noting that EU territories may still have limited transparency in tax registration. Clarity was also sought around what ‘registering for tax’ would mean in practice for landowners, with reference to different mechanisms for different UK taxes.

Alternative proposals

Reflecting some of the concerns and issues noted above, respondents suggested several alternatives to restricting large-scale landholdings to those registered for tax in the UK or EU.

Suggestions most commonly involved tighter restrictions on acquisition of large-scale landholdings, reflecting views that the proposed restriction will not be sufficient to effectively address absenteeism and support community wealth building. Specific proposals included that this should be limited to those registered in Scotland or the UK for tax purposes. It was noted that, in addition to addressing absenteeism, this would also ensure that tax revenue benefits the UK.

Other respondents went further, wishing to see ownership of large-scale landholdings limited to those who are resident in Scotland or the UK. Again, it was noted that this is a requirement in several other territories. Limiting acquisition to those on the electoral register in the relevant local authority area was also suggested.

There was also a call for restriction on acquisition of land apply to a wider range of landholdings, including by setting a lower landholding size threshold and for restrictions to apply to urban landholdings.