The land of Scotland and the common good: report

Section 4 - Land Registration

4 The Review Group considers that an efficient and effective system for recording the ownership of land should be part of any modern system of land ownership and in this Section, the Group examines the slow progress in developing a comprehensive, map based register of land ownership in Scotland.

4.1 Title to Land

5 The owner of land or land rights in Scotland is, with two main exceptions, the person who is the registered title holder, as recorded in either the Register of Sasines or the Land Register.

6 The first main exception is Crown property rights such as the ancient legal presumption in Scots law of the Crown's ownership of Scotland's territorial seabed, or the Crown's statutory ownership of the right to gold and silver mining in Scotland from legislation in the 15th and 16th centuries. Crown property rights are considered further in Section 11.

7 The other main exception to a written title signifying ownership, is the system of udal tenure that operates in the Northern Isles, particularly the Shetland Islands. Under this distinctive system of Norse origin, occupation is ownership without the need for a title deed. This means that the rights held over particular land can be unclear. However, given the increasing benefits of a title deed (for example, for mortgages), it appears most udal land is now held on written titles. ^[1] There is thus no practical difference in conveyancing transactions for udal properties. For registration, the Keeper of Registers can note, for these titles in the Burdens Section of the Register, that such rights as are held under udal tenure continue to be held. The main distinction of significance under udal tenure is that the ownership of the foreshore goes with the adjoining land and there is therefore no need to consider whether the Crown might be involved (see Section 11). No particular issues over the current operation of udal tenure in the Northern Isles were raised with the Review Group as a result of its call for evidence and some follow up inquiries. It is therefore not considered further in this Report.

8 The Abolition of Feudal Tenure etc (Scotland) Act 2000 had the effect of making other land owners in Scotland more like udal owners, in the sense that it made them outright owners rather than vassals with a feudal superior having an interest in their land. The end of feudal tenure has radically simplified titles to land, while the associated Title Conditions (Scotland) Act 2003 has had a similar effect by modernising the types of interests and conditions or 'real burdens' that can be attached to titles to land.

9 Scotland's new and more straightforward system of 'outright ownership' has been a substantial improvement since devolution. However, as discussed below, major progress is still required to Scotland's system for recording titles to land. One result of that progress should eventually be an answer to the longstanding question of 'Who owns Scotland?'. ^[2]

4.2 Register of Sasines

10 An efficient regime for recording titles to land is a key aspect of a modern effective system of land ownership. While Scotland was a pioneer when the Registration Act 1617 created the Register of Sasines to record title deeds (sasines), Scotland might now be regarded unusual in a European context in not having a comprehensive map based system recording who owns the land. ^[3]

11 The recording of titles in the Register of Sasines was not compulsory, but the rule was that recording was necessary to establish a real or proprietary right and that ownership passed on recording. ^[4] While recording secured ownership, the purpose of the rule was, as the 1617 Act states, the protection of third parties by making transactions in or over land transparent.

12 The Register of Sasines still operates and the difficulties of searching it are eased to some extent by indexes that have been developed since the 19th century of people and properties. However, discussions started in Scotland in the early 1900s about moving from a system for recording deeds to a title registration system, and this eventually led to the Land Registration (Scotland) Act 1979.

1979 Act

13 The 1979 Act established a new Land Register in which properties are mapped by title boundaries and, for each title unit, there is a title sheet setting out who the owner is and what other rights there might be in the property. The other major change was the introduction of a state guarantee of title for the properties recorded. The change from the Register of Sasines to the Land Register is thus a change from a system where it was a title deed to be registered that represented ownership, to one where it is the registration that represents ownership.

14 The primary trigger in the 1979 Act for first registration in the new Land Register, was where there had been a transaction for value. The introduction of the Register was rolled out county by county, starting in 1981 and extending to the whole country by 2003, with property transactions in each area being recorded in the Land Register once it became operational in that area. Voluntary registrations were also allowed at the Keeper's discretion.

15 The 1979 Act had needed to be a relatively short piece of legislation, to enable it to conform with the limited time available for its consideration at Westminster. This resulted in significant aspects of the operation of the new land registration system having to be evolved subsequently to meet circumstances. A review of the 1979 Act by the Scottish Law Commission ( SLC) resulted in discussion papers in 2004 and 2005 and the SLC's Report on Land Registration in 2010. ^[5] These led to the Land Registration etc. (Scotland) Act 2012.

16 One of the primary objectives of the 2012 Act, while addressing the technical issues that had arisen from the operation of the 1979 Act, was to provide for the closure of the Register of Sasines and the completion of the Land Register. ^[6]

2012 Act

17 In their 2010 Report on Land Registration, the SLC wrote " Who owns Scotland is a familiar question. The Land Register is now providing that answer". However, progress has been very slow towards the stated aim for the Register of 100% coverage. By 2012, over 30 years since the introduction of the Land Register, 56% of Scotland's estimated 2.2 million title units were recorded in the Register ( Fig. 3). This was up 1% on the year before and by May 2013, had reached 57%. Registers of Scotland estimate that at the current rate, it will be a further 40 years before 80% of titles are on the Register. ^[7]

18 The Register's percentage coverage of Scotland's land area is substantially less than that for titles. This is essentially " because larger landward properties tend to be bought and sold less often than smaller urban ones". ^[8] In 2012, after over 30 years, 23% of the land area was covered ( Fig. 4). This was up 2% or 172,100 hectares from the year before. This was the largest increase for five years due to " a small number of registrations covering large areas of land". By 2013, the coverage of Scotland's land had reached 25%. ^[9]

Register

19 The Land Registration (Scotland) Act 2012, with its objective of completing the Land Register, provides for this in four main ways: new triggers for first registration; voluntary registration; the phased closure of the Register of Sasines and Keeper-induced registration.

20 The new triggers include the requirement that all transfers of title (whether for value or not) will induce first registration, as will the granting of a standard security over land. In addition, any grant or assignation of a long lease ( i.e. over 20 years) will induce registration of the land owner's title to the leased land. Registers of Scotland ( RoS) have estimated that these triggers will increase first registrations by around 6-7,000 in the year following the 2012 legislation coming into effect. With the second measure, voluntary registration, the 2012 Act creates a presumption in favour of the Keeper accepting voluntary registrations when no transaction is involved. There were few voluntary registrations prior to the Act. In 2013-14, by December, RoS had received 238 requests for voluntary registrations. ^[10] However, the Scottish Government has made it clear it is keen to encourage these. ^[11] Registers of Scotland also sees voluntary registration "as one of the keys to completing the Land Register". ^[12]

21 The third measure in the 2012 Act to promote completion of the Land Register, is the provision to allow for a planned, phased closure of the Register of Sasines. This could be done on an area by area basis, for example, county by county similar to the original roll out of the Land Register. ^[13] The Register of Sasines could also be closed on a type of deed basis, for example, standard securities. Once the Register of Sasines is closed, a person's deed will have to be voluntarily registered in the Land Register to secure their ownership or 'real right' in land. However, at present, there appear to be no specific plans for any closures of the Register of Sasines.

22 The fourth measure in the 2012 Act to help complete the Land Register, is the Keeper's new power to register an unregistered plot of land without having an application from the owner or the owner's consent. This power of Keeper-induced registration will be essential in due course for the final completion of the Land Register, enabling the Keeper to register areas that have not come on to the Register through transaction based registration or voluntary registration. However, it is also a power that could be used sooner in some areas and RoS expect to carry out a public consultation on this in 2014. ^[14]

23 The definition of land in the 2012 Act also establishes that the scope of the Land Register includes all Scotland's land out to the 12 nautical mile territorial boundary. ^[15]

Current Position

24 The Review Group notes that, in the lead up to the 2012 Act, " one of the constant themes…from parties giving evidence during the passage of the Bill, was the need to speed up completing the Land Register". ^[16] The Group recognises that the 2012 Act puts in place a legislative framework that will enable completion. However, the Group is concerned about how long that process might yet take.

25 The current relatively low extent of coverage by the Land Register and the slow projected rate of increase in the coverage, appear at odds with the widely recognised importance of an efficient and effective system of dealing with land titles as essential to the functioning of a modern economy. Without such a system, land transactions are more difficult and expensive. The value of annual land sales in Scotland is currently estimated at around £24 billion. The SLC have identified the Land Register as part of the 'national infrastructure' because it affects every square inch of the country and the whole of Scotland's economic life. ^{[17] [18]}

26 The Scottish Government has also recognised this importance and, for example, recently highlighted when referring to the 2012 Act, that an efficient, effective and indemnified land registration system is recognised by the World Bank as one of the most important factors in achieving economic development and business growth. ^[19] However, in Scotland, with the current limited coverage and the slow projected rates of increase, there is still a long way to go. The Review Group examined the position in Denmark as an example of the type of system that Scotland should have in place. In Denmark, the comprehensive map based land register is also part of a fully integrated land cadastre, which incorporates information on factors such as land use and planning status.

27 Given the clear and important utility of having a comprehensive mapbased system of land registration, there seems to be a conspicuous case for accelerating the rate at which properties become recorded in the Land Register. Otherwise, as the SLC has commented, the process could go on indefinitely. ^[20] The Review Group recognises that the 2012 Act is only just coming into effect, but we are not convinced that major progress towards completion of the Register is imminent. There also do not seem to be any statements by the Scottish Government or the Keeper of the Registers identifying any coverage targets to be achieved by some future date.

28 One feature of the current position is that a relatively large amount of public land owned by Scottish Ministers is not on the Land Register. Some land owned by Scottish Ministers is registered as a result of the normal triggers for first registration. However, the only specific initiative has been a rolling programme since 2005 of voluntary registration of Sasine titles held by Scottish Ministers and managed by Transport Scotland. In the eight years of this programme to date, approximately 900 of around 9,300 titles in the Register of Sasines have been registered by the Keeper in the Land Register. ^[21] The Review Group considers that the Scottish Government should be expanding this approach to include other land owned by Scottish Ministers, and land owned by other Scottish public bodies holding title to land in their own rights (see Section 9). This should develop into a planned programme for the registration of all government land. The Group recognises that a balance has to be struck between progress towards the goal of having all government land in the Land Register and the cost to public finances. However, the Group considers that the Scottish Government should be investing more in registering public properties in the Land Register for the benefits that will bring.

29 The Review Group also considers, as part of improving the coverage of the Land Register more generally, that the Keeper should take a proactive approach to Keeper-induced registration. This could include the areas of land covered by an appropriate community body registering a pre-emptive right to buy over land under the Land Reform (Scotland) Act 2003, as the information required from the community body under the Act would appear sufficient for the Keeper to register the land as in any first registration. The same approach could be adopted with agricultural tenants registering a pre-emptive right to buy under Part 2 of the Agricultural Holdings (Scotland) Act 2003. RoS already keeps separate registers to record both these types of interests.

30 The Review Group's view is that further steps should also be taken to increase the rate of voluntary first registrations for other properties. The Group considers that additional triggers for first registration could also be put in place. One approach to this would be making certain types of public grants and tax concessions to land owners for the management of buildings and land, conditional on the property involved being registered in the Land Register. With different types of public subsidies, this requirement could be based on receiving funding above a certain level and would provide the public interest benefit of increased transparency over what can be substantial payments. An example for this approach is the Scottish Rural Development Programme, which distributed £4.1 billion in the six years between 2007-13 and which already has a map based payments system. This could have a major affect on improving the particularly low current level of coverage in the Land Register of land in rural Scotland.

31 In introducing this type of requirement, sufficient notice would need to be given, to enable those planning to apply for the funding to carry out the work necessary to apply for registration first. The Review Group recognises that there could also be a capacity issue, if registrations were to be increased too quickly beyond a certain rate, both in terms of the availability of private sector professionals to prepare titles for registration, and in terms of the research required within RoS to issue the land certificates guaranteeing titles. However, the Group considers that there is scope to build up capacity to match an increasing rate of first registrations.

32 The Review Group considers the limited progress to date in the coverage of the Scotland's Land Register is a major issue. Given the economic and wider public benefits this will produce, the Group recommends that the Scottish Government should be doing more to increase the rate of registrations to complete the Land Register, including a Government target date for completion of the Register, a planned programme to register public lands and additional triggers to induce the first registration of other lands.