Land Reform (Scotland) Bill: business and regulatory impact assessment

Options

4.1 Sectors and groups affected by the Land Reform (Scotland) Bill 2024

4.1.1 In this BRIA, the impact(s) of various requirements of the Bill are considered for two main groups in detail: private landowners and local communities that live on land that are subject to the main duties of the Bill outlined below. Further impacts are also considered on other groups such the Scottish Government (including the Scottish Courts and Tribunal Service (SCTS)), the Scottish Land Commission (SLC), Local Authorities and other Public Sector and Third Sector Organisations (principally those that have large-scale landholdings). The impacts of each option are set out in the costs and benefits sections 4.3 and 4.4.

4.1.2 This BRIA primarily considers first round effects of the legislation on different sectors and groups, however it is recognised that there may be indirect second round effects arising from the implementation of certain elements of the Bill which may have longer-term benefits and costs, particularly those linked to future changes in land management. The need for further BRIAs will be considered during the development of secondary legislation as appropriate.

4.2 Options considered in this BRIA

4.2.1 For the purposes of this BRIA we group the measures in the Bill into two parts (A and B) to assess costs and benefits to different groups, as set out at point 2.1.4.

Strengthening the Land Rights and responsibilities Statement (LRRS) through implementing compulsory Land Management Plans (LMP)

4.2.2 The Land Reform Act 2016 requires Scottish Ministers to publish and regularly review a land rights and responsibilities statement (LRRS). This was published in 2017, reviewed in 2022^[20], and is supported by good practice protocols developed by the SLC^[21]. The aim of the LRRS and the protocols (which are currently voluntary for all landowners regardless of size of landholding) is to support landowners, land managers, and communities to work together to make better, fairer and more transparent decisions about land use.

Table 6: Policy options considered in this BRIA for enforcement of land management plan and community engagement obligations and Land Management Plans

Option 1 (Do Nothing, Voluntary)

Enforcement of obligations

Existing voluntary LRRS, no statutory obligations.

Land Management Plan (LMP) obligations

Existing voluntary approach

Option 2 (Minimal Intervention)

Enforcement of obligations

Apply to landholdings over 3,000 ha, & according to islands criteria. Statutory obligations set out in regulations – administrator has advisory powers in relation to breach (similar to tenant farming commissioner).

Land Management Plan (LMP) obligations

Apply to landholdings over 3,000 ha, & according to islands criteria. Requirement for a LMP. New plan required after 10 years or subject to significant change in management of the land. Plan must be published/made available but no consultation required to develop a plan.

Option 3 (Preferred Option – as set out in the Bill)

Enforcement of obligations

Apply to landholdings over 3,000 ha & according to islands criteria. Statutory obligations set out in regulations – administrator can set financial penalties in relation to a breach.

Land Management Plan (LMP) obligations

Apply to landholdings over 3,000 ha, & according to islands criteria. Requirement for a LMP. New plan required after 5 years or subject to significant change in management of the land. Draft plan should be shared with local community for views prior to publication and final plan published/made available.

Option 4

(Maximum intervention)

Enforcement of obligations

Apply to landholdings over 1,000 ha. Statutory obligations set out in regulations – administrator can set financial and ‘cross compliance’ (impacting subsidies) penalties in relation to a breach.

Land Management Plan (LMP) obligations

Apply to landholdings over 1,000 ha. Requirement for a LMP. New plan required after 5 years or subject to significant change in management of the land. Formal consultation/ community meetings on draft plan required prior to publication and final plan published/made available.

4.2.3 The ‘do nothing’ option (option 1) considered in this BRIA for these aspects of the Bill is the continuation of the current voluntary approach to LRRS and LMPs. There is clear evidence that some landowners have drawn up LMPs under the current voluntary basis. Through the Good Practice Programme in 2019-2020 the SLC provided support to over 150 landowners and communities to help them put LRRS protocols into practice in both rural and urban Scotland. Participants included a wide range of landowners including private landowners, public bodies, community landowners, environmental non-government organisations and faith organisations.

4.2.4 As reported in the consultation analysis, some landowners of private estates are also applying LRRS principles in their current practice, providing a number of sectoral plans to manage specific resources within the landholding and/or complying with particular local plans or community action plans.

4.2.5 In their response to the consultation, the SLC reported that the Good Practice Programme showed that although significant progress can be made through a voluntary approach, there remain situations in which land owners or managers (in any sector) choose not to engage with LRRS, or do not see it as being of significance in decision making.

4.2.6 Hence the alternative policy options (Options 2,3 and 4) that were considered in the policy development process for the Bill, and which are set out in this BRIA and summarised in Table 6, set out proposals that formalise this voluntary approach and place LMP obligations on a statutory footing.

Each of these three options would strengthen compliance with the principles of the existing Scottish Land Rights and Responsibilities Statement, and enforce compliance with certain aspects of the principles.

4.2.7 Each requires owners of large-scale landholdings to produce a land management plan, make that plan publicly available, and review and revise the plan, as appropriate (with the frequency of such updates varying between options). Some options – including Option 3 as set out in the Bill – require landowners to engage with communities on the development of and significant changes to that plan.

4.2.8 Under each policy option, the information that is included in a LMP is similar (although the consultation requirements and frequency of update to the plan varies as set out in Table 6), including:

• details of the land owned including the owner;
• the long term vision and objectives for the management of the land, including high level management proposals and potential for future sale;
• how the landowner is demonstrating compliance with obligations relating to land (such as those in the Outdoor Access Code and Deer Code) as applicable; and
• how the landowner is managing the land in a way that contributes to carbon reduction and/or nature restoration.

4.2.9 The details of what will be required to meet the requirements of the duty to engage with communities (under Options 3 and 4) and further detail in relation to land management plans (including the procedures by which plans must be produced, consulted on, published, adhered to and updated, and the ways in which the plans will interact with other codes and obligations) will be set out as regulations in secondary legislation. The provisions in the primary legislation set out the parameters of the regulation-making powers, and so the costs and benefits that arise are assessed on the basis of these parameters and where possible, on the expected costs associated with detail that will be set out in regulations.

4.2.10 To support the enforcement of the LMP requirements, Options 2,3 and 4 include powers to enable alleged breaches of the duties or requirements to be reported to a new Land and Communities Commissioner. This will be an additional Commissioner within the SLC and require modifications to the Commission’s statutory functions. There are differing options for the extent of new statutory powers for the Commission to investigate an alleged breach, support landowners to remedy a breach where one is found, and (depending on the option) apply financial penalties for not remedying a breach where appropriate. Under options that include a penalty, there is provision for landowners to appeal the decision and any penalty in relation to a breach investigation as set out in the Bill.

Adopting Pre-Notification requirements and a Transfer Test on large-scale landholdings

4.2.11 As set out in section 2.4, the policy options considered in this BRIA for this aspect of the Bill aim to bring about “a Scotland with a strong and dynamic relationship between its land and people, where all land contributes to a modern, sustainable and successful country, supports a just transition to net zero, and where rights and responsibilities in relation to land and its natural capital are fully recognised and fulfilled”. It is recognised that not all communities wish to acquire and manage large estates: some will decide that their needs are best met by smaller parcels of land, for example, for housing, or community projects. The options considered offer communities the opportunity to be notified of proposed transfers from large-scale landholdings in scope, giving them an additional opportunity to make an application under the late application process set out in Community Right to Buy (CRtB) legislation (Land Reform (Scotland) Act 2003).

Table 7: Policy Options for adopting Pre-Notification requirements and a Transfer Test for large-scale landholdings

Sub-proposal

Option 1 (Do Nothing)

Pre-notification requirements

Do nothing

Transfer Test

Do nothing

Sub-proposal

Option 2 (Minimal Intervention)

Pre-notification requirements

Apply to landholdings over 3,000 hectares, & according to islands criteria. Introduce a requirement to notify Scottish Ministers of sale to allow for publication/notification of interested community bodies. No further prohibition on sale to allow community bodies to prepare application.

Transfer Test

N/A

Sub-proposal

Option 3 (Preferred Option – as set out in the Bill)

Pre-notification requirements

Apply to landholdings over 1,000 ha. Applies to all sales from a landholding that is in scope, so long as the transfer would be in scope of CRtB. Following notification of an intended sale, community bodies have 30 working days to express interest, then 40 working days to complete an application (total 14 weeks) during which period landowner prohibited from selling.

Transfer Test

Apply to landholdings over 1,000 ha. Applies only where intended landholding for sale is over 1,000 ha (i.e. not to smaller part). Test on landholding before intended sale. If initial screening is passed, SLC produce report and Ministers may, if tests met, require land to be sold as lots.

Sub-proposal

Option 4 (Maximum Intervention)

Pre-notification requirements

Apply to landholdings over 1,000 ha. Pre-notification process same as Option 3 but length of prohibition on sale for community groups to prepare application extended to 26 weeks/6 months.

Transfer Test

As per option 3, above.

4.2.12 One of the aims of the pre-notification requirement is to ensure that place-based community bodies have advance notice of sales of large-scale landholdings, as well as of sales of portions of such landholdings.

4.2.13 There are already some restrictions on land sales under the ‘do nothing’ option (Option 1). Communities can pre-emptively register an interest in a particular area of land under current ’Part 2’ Community Right to Buy (CRtB) legislation, if they meet certain conditions. Landowners (regardless of size of landholding) who chose to put land on the market where a community has an active registered interest under CRtB are not able to sell the land freely but must first allow 30 days for the interested community body to confirm it wishes to purchase the land, subject to agreement by Ministers. Some transfers are exempt from Part 2 under section 40(4) of the 2003 Act and will continue to be exempt from the requirements set out in the Bill and this BRIA.

4.2.14 Under the policy options for change considered in this BRIA (Options 2, 3 and 4 as set out in Table 7), community bodies would have the opportunity to be informed about prospective sales and then have an opportunity to make an application to register a community interest under the CRtB Part 2 process. Large-scale landowners (as defined under each option) would be required to notify Scottish Ministers should they intend to transfer all or part of their landholding, to allow for those community bodies that had registered an interest in being informed of such transfers in the area to be notified.

4.2.15 Under Options 3 and 4, community bodies would have a period of protected time where the landowner would be prevented from taking further steps to transfer the land to express an interest, and - should they pass an initial screening - produce a formal application under Part 2 Community Right to Buy (under Option 2 there would be no protected period of time). The criteria for decision making in relation to any application would follow what is currently set out for CRtB legislation.

4.2.16 Should a formal application be accepted, the community body would have a registered right to buy over the relevant land and would follow the process to complete purchase set out in existing Part 2 Community Right to Buy.

4.2.17 If a landholding proposed for sale was over 1,000ha, screening for the Transfer Test would be carried out as well as the Pre-Notification requirement under Options 3 and 4. Ministers would request that SLC prepare a report to inform a lotting decision.

4.2.18 Ministers will consider as part of the lotting decision whether they are satisfied that requiring this landholding to be sold in smaller lots to different purchasers could be anticipated to increase the supply of more varied plots of land in a way that might be expected to have a positive impact on the ongoing sustainability of communities in the area.

4.2.19 If Ministers decide to order lotting, they must specify the lots, and the lots must then be transferred to different purchasers. Landowners can apply for review of, or appeal, Ministerial lotting decisions.

4.3 Costs and Benefits of options to strengthen the LRRS obligations and introduce compulsory Land Management Plans (LMP)

Private Landowners

4.3.1 Under Option 1, the LMP would continue to be voluntary and therefore landowners who choose not to engage with the LMP currently would not incur any additional costs (or realise any benefits) associated with having to engage and comply with new regulations in future.

4.3.2 As stated above, there is clear evidence that some landowners have drawn up LMPs under the current voluntary basis. This demonstrates that there are benefits in engaging with LRRS principles through a LMP.

4.3.3 Under Options 2, 3 and 4, it would be compulsory for owners of large-scale landholdings to publish a Land Management Plan. The benefits of producing land management plans for landowners include:

• Providing an effective method to ensure and demonstrate that large-scale landowners are complying with the requirements of regulations, and thus mitigate against any potential action by the SLC in enforcement^[22] (more significant under options 3 and 4).
• Enabling stronger links between day-to-day land management activities and longer-term strategic objectives for a landholding, which may assist decision making and prioritisation around the use of resources on the estate by landowners.
• Creating a tool to improve land management, providing direction and focus so that everyone involved in the business or others connected to the land are clear of their role in the longer-term vision for the land.
• Providing a framework for regular review or benchmarking of a landholding and identification of any issues in particular at times of transition of ownership/succession.
• Supporting open communication – a point of access to information for people in the local community, wider public and investors/developers who want to find out more about land management and opportunities for investments in natural capital or other projects.

4.3.4 These benefits have been identified from responses to the consultation and through engagement with the SLC, but it has not been possible to quantify them robustly across all land owners who would be required to draw up a LMP. This is because any benefits will be contingent on the individual context in which a LMP is put in place in a given landholding, the decisions of individual landowners, the outcome of any required consultation exercises (under Options 3 and 4) and the relative costs and benefits associated with opportunities for alternative uses for land in the future, amongst other factors.

4.3.5 Under Option 2 and 3, benefits of compulsory LMPs would be realised for large-scale landowners with more than 3,000 hectares (or where land is more than 25% of a permanently inhabited island, with a minimum area of 1,000 hectares). As set out in section 2.2, this would apply to an estimated 414 landowners. Under Option 4, the number of landowners that would benefit would be significantly higher (at 1,050) due to all landholdings with a hectarage above 1,000 being in scope. It should be recognised that under all options, owners of smaller landholdings could chose to benefit by putting in place a LMP, although there would be no legal duty to do so.

4.3.6 Under Option 2, a LMP would be published every 10 years or following a significant change in the management of the land with no specific requirements for local consultation (although landowners may choose to do this as a matter of course). Under Options 3 and 4, a LMP would be published every 5 years and there would be specific consultation requirements. Any landowner found to be in breach of this requirement could be investigated by the SLC, although no financial penalties for a breach in compliance would be applied under Option 2.

4.3.7 The principal costs to landowners will be costs associated with developing and publishing a land management plan and - for Options 3 and 4 – the cost of any consultation requirements. If non-compliant there may also be costs associated with financial penalties that could be imposed by the SLC for breaches of the regulations under Options 3 and 4.

4.3.8 The precise details of what will be required in a LMP and consultation requirements are not set out in the Bill and will follow in subsequent secondary regulations and, as such, will be subject to a further BRIA. For the purposes of this BRIA, it is anticipated that the level of detail and required consultation will be broadly equivalent to that in woodland Management Plans as currently required for smaller scale woodlands^[23]. The elements that are likely to be required in a management plan under Option 2-4 are set out in para. 4.2.8.

4.3.9 Each LMP will be specific and tailored to the landholding according to the size, types of existing land uses, and specific requirements of existing and planned land management activities. As part of the stakeholder engagement for this BRIA, cost estimates were gathered from public bodies that have developed similar management plans for land in different contexts (NatureScot and FLS) as well as some large-scale landowners (e.g. NTS) that have developed land management plans in recent years.

4.3.10 We expect that many large-scale landholdings (in particular landholdings of public bodies such as Forestry Land Scotland^[24] and NatureScot) will already have some or all of the information that is expected to be required in LMP, such as the extent of their landholding, a long term vision and objectives for their land, and actions to be taken to remain compliant with existing codes and other statutory requirement. In line with the Financial Memorandum, we estimate that public bodies may incur additional costs in relation to publication of a LMP of £2,000-£4,000 per plan, on top of activity currently undertaken.

4.3.11 Based on information provided by stakeholders, we expect that the costs of drafting a land management plan would be between £3,000-£15,000 for a given landholding for private landowners. These costs will be less for some landowners, who have already determined some or all of the information required.

4.3.12 Some of the information expected to be required by the plans, such as a map setting out the extent of the landholding will require technical specialists to determine it if a landowner does not already have the required detail. Based on engagement with land agents, if the extent of the landholding needs to be mapped by a land agent for the purposes of a land management plan, this could cost between £2,400-£3,600. This would be an additional one-off cost for landowners.

4.3.13 As the intention is that the landowner is only required to set out their plans in relation to carbon emission reduction and nature restoration, rather than being compelled to undertake certain activities, any costs associated with these activities would not be incurred as a result of the LMP measures. Consequently landowners would not incur any additional costs to provide that information for a land management plan.

4.3.14 The exact requirements for consultation and publishing – relevant for costs arising under Options 3 and 4 - will be set out in regulations which are still to be developed, and so cannot be fully quantified at this point but will be assessed during the development of the regulations. As an indication, if a landowner was required to make a draft land management plan available, allow time for comments on that land management plan, consider those comments as part of further development of the plan and then publish the plan (on their website, for example), we estimate this could cost between £1,000-£3,000 in publication costs for both the draft plan for consultation and the final plan.

4.3.15 Where parts of a landholding are leased, and the term of the lease is as such that the landowner does not have effective control over land management decisions, it is anticipated that more limited reporting and consultation requirements will be expected for the leased land. This detail will be set out in secondary legislation and is not within the Bill and not considered in this BRIA.

4.3.16 Table 8 sets out a range of estimated costs for private sector landowners and public sector bodies with landholdings above 3,000 hectares that will be under a duty to publish a LMP. The total cost is derived from assuming that each private landholding will incur costs associated with drafting a LMP, costs associated with employing a land agent to assist in mapping of the landholding and costs related to consultation with local communities. As set out above, public bodies in general are expected to broadly have already carried out work that could be used as the basis of a LMP, hence these costs are lower and reported separately.

Table 8: Estimated additional costs to landowners of the LMP duty under Policy Options

		Option 1	Option 2	Option 3 (SG preferred option)	Option 4
Private landholdings	Number of private large-scale landholdings	0	340	340	815
	Total cost of LMP/LRRS duty	£0	(£1.8m - £6.3m)	(£2.2m - £7.3m)	(£5.2m - £17.6m)
	of which:
	Cost of drafting a LMP	£0	(£1m - £5.1m)	(£1m - £5.1m)	(£2.4m - £12.2m)
	Cost of Mapping	£0	(£0.8m - £1.2m)	(£0.8m - £1.2m)	(£2m - £2.9m)
	Cost of Consultation	£0	(£0m - £0m)	(£0.3m - £1m)	(£0.8m - £2.4m)
	Total cost of LMP/LRRS duty (annualised)	£0	(£0.2m - £0.6m)	(£0.4m - £1.5m)	(£1m - £3.5m)
	Estimated cost per landholding (annualised)	£0	(£500 - £1,900)	(£1,300 - £4,300)	(£1,300 - £4,300)
	Estimated cost per ha (annualised)	£0	(£0.7 - £2.3 per ha)	(£0.8 - £2.6 per ha)	(£1.4 - £4.7 per ha)
1.	2.	3.	4.	5.	6.
Public landholdings	Number of public large-scale landholdings	0	75	75	235
	Total cost of LMP/LRRS duty	£0	(£0.2m - £0.3m)	(£0.2m - £0.3m)	(£0.5m - £0.9m)
	Total cost of LMP/LRRS duty (annualised)	£0	(£0.02m - £0.03m)	(£0.03m - £0.06m)	(£0.09m - £0.19m)
	Estimated cost per landholding (annualised)	£0	(£200 - £400)	(£400 - £800)	(£400 - £800)
	Estimated cost per ha (annualised)	£0	(£0.04 - £0.07 per ha)	(£0.07 - £0.14 per ha)	(£0.16 - £0.32 per ha)

4.3.17 The total cost of the LMP duty increases under each option. Under Option 2, the duty to comply with the LMP requirement is estimated to cost in total between £1.8m and £6.3m. As a LMP is only required to be produced every 10 years under this option, in order to compare this with other options, costs are annualised to £0.2m-£0.6m per year. The estimated cost per landholding is £500 - £1,900 per year under this Option. Under Option 3, the estimated costs are slightly higher due to the requirement that a plan is produced/reviewed at least every 5 years and the requirement that LMPs are consulted upon. Annualised costs under Option 3 for landholdings are estimated to be between £0.4m and £1.5m per year (£1,100 to £4,000 per landholding). Finally under Option 4, total costs are higher due to the requirement that landholdings over 1,000 ha must draw up on a plan (£1m- £3.5m per year), although the cost per landholding is similar to Option 3.

4.3.18 It is likely that the cost of LMPs would fall in future iterations of the plans. It is also the case that some in-scope landowners may already be complying with LMP requirements voluntarily or providing that information already as part of other statutory requirements (large farms with whole farm plans or large woodlands with management plans, for example).

4.3.19 If a landowner is investigated for an alleged breach of the requirements to develop a LMP, there may be costs associated with complying with a breach investigation process as they may need to produce certain information and respond to requests. If a landowner was then found to be in breach there may also be costs associated with remedying the breach depending on the action needing to be taken. In most cases this would have been action that they should have carried out to be compliant in the first instance and so would be unlikely to be an additional cost beyond that set out in Table 8.

4.3.20 If a landowner then fails to remedy a breach within the required timescale, the Land and Communities Commissioner can apply a financial penalty of up to £5,000 to the landowner, which would need to be paid to the Commission within 28 days under Options 3 and 4 (there would be no financial penalties under Option 2). There will be provision for landowners to appeal the decision of the Commissioner and any penalty in relation to a breach investigation to the Lands Tribunal for Scotland. Both the landowner and the Commissioner would likely incur legal costs as part of any action.

4.3.21 Under Option 4, there would more extensive financial penalties that could impact other support the landowner may be in receipt of (such as agricultural subsidies). As Option 4 applies to more landowners, this would also be a more significant burden on private landowners compared to Option 3.

Community bodies located in (or adjacent to) large-scale landholdings

4.3.22 There are no additional benefits to local community bodies under Option 1 (the ‘do nothing option’). Communities that happen to be located in (or adjacent to) landholdings where the landowner voluntarily engages with LRRS would continue to see benefits from this level of community engagement, but this will not be shared more widely, and could be withdrawn in the future.

4.3.23 Broadly, Options 2, 3 and 4 would be likely to deliver a range of benefits to local communities which are set out in the table below

Table 9: Expected Benefits of Land Management Plans to Local Communities

Access to information

a. Better access to information.

b. Improved transparency and accountability around land ownership and land use.

c. Identification of opportunities for community purchase or partnership with landowners.

Community engagement

a. Community consultation, engagement, involvement or participation in the development of LMP, depending on the extent to which communities can influence the planning process (limited under Option 2).

Improved communication and better relationships

a. Enhanced understanding and collaboration, between landowners and communities

b. Alignment with national priorities.

c. Information sharing and transparency.

Other potential benefits

a. Safeguarding public access rights.

b. Environmental benefits, including with respect to climate and biodiversity.

c. Increased community volunteering.

d. Opportunities for local housing, small-scale renewables and ecotourism.

4.3.24 As with the benefits outlined for private landowners it is not possible to quantify these benefits, because they will necessarily be contingent on the individual context in which a LMP is put in place in a given landholding, the decisions of individual landowners, the outcome of any required consultation exercises (under Options 3 and 4) and the relationship between local communities and landowners.

4.3.25 In some cases, the LMP duty may not bring the expected benefits (in particular the ‘other potential benefits’ outlined in Table 9) to local communities as the landowner is ultimately under no obligation to change land management plans in response to consultation feedback (unless there is grounds for a breach of the duty, details of which would be set out in secondary legislation). However, it is potentially the case that a ‘second order’ effect of the LMP could be for more land in a large-scale landholding to be put to better use to meet the needs and aspirations of local communities, thus being a further benefit to them.

4.3.26 There may be some minimal costs under Option 3 and 4 associated with the requirement for landowners to consult with local communities, while local community bodies take time to consider responses to a draft plan before it is finalised. There may also be costs if communities feel that the consultation requirements were not carried out adequately by the landowner and decide to make a case to the SLC in order to report a breach. However, these are likely to be minimal.

4.3.27 There is potential for conflict between community aspirations for local land use change and the wider public interest as expressed in wider national priorities such as Net Zero and nature restoration.

Local Authorities

4.3.28 Under Option 1, there are not expected to be any additional costs or benefits arising for local authorities.

4.3.29 Under Options 2,3 and 4 local authorities would be one of the specified bodies that can make a report to the SLC should they become aware of an apparent breach by an owner landholding within their local authority area, but they are not under a duty to report such a breach. In considering whether to choose to make a report, local authorities would need to consider any resource implications of doing so. This will only be applicable to local authorities where there are landholdings in respect of which the LMP duty arises, so any costs will not be spread uniformly across local authorities.

4.3.30 If local authorities report an alleged a breach, they will need to complete a form and provide evidence to support a specific allegation. The length of time this will take to do will depend on the nature of the breach, but we estimate this could take between 1 – 2 days of staff time. They would not then have significant further involvement in the process, though they may be contacted by the SLC if needed during their investigation. As this process would not be undertaken on a regular basis, and the involvement of the local authority would be minimal, it is expected that reporting of breaches where necessary could be undertaken by the existing staff complement within local authorities.

4.3.31 Under Options 3 and 4 there may be some further indirect-and optional- costs as local authorities could potentially engage – as an interested party - in LMP consultations. This may potentially be a burden for local authorities with higher numbers of large-scale landholdings to which the LMP requirement applies. There would be a small financial cost for local authorities associated with preparing and submitting a response, taking up staff time. It is estimated to take 2-5 days of a staff member’s time to consider a land management plan and prepare and submit a response to the landowner with any comments, which would cost between £1,000-£2,000 in resource per plan.

4.3.32 Through engagement in LMP consultations of large-scale landholder in their area, under Options 3 and 4, local authorities may benefit from being able to formally influence the management of private land within their areas in line with wider local authority plans. The purpose of Local Authority local plans is to manage the development and use of land in the long term public interest^[25].

Public Bodies and Third Sector Organisations

4.3.33 As landowners, public bodies that manage public large-scale landholdings and third sector organisations which own large-scale landholdings are likely to be impacted under Options 2,3 and/or 4 considered within this BRIA.

4.3.34 Based on internal Scottish Government data compiled from various internal sources as outlined in para 2.2.16 there are approximately 75 large-scale landholdings that are over 3,000 ha (0.45 million hectares in total) which are managed by various public sector organisations on behalf of Scottish Ministers, UK Ministers and the Crown. There are significantly more large-scale landholdings over 1,000 ha (0.61 million hectares of land) managed by public bodies. These figures reflect land managed by Forestry and Land Scotland, Scottish Water, the Scottish Crown Estate Scotland, NatureScot and MoD. The vast majority of landholdings consist of Forestry and Land Scotland landholdings. Under Option 3 (the option within the Bill) Forestry Land Scotland (FLS), Nature Scot, Crown Estate Scotland and Scottish Water are understood to have landholdings that are within the scope of the Bill’s provisions.

4.3.35 Similarly, it is recognised that there are a number of third sector organisations which own large-scale landholdings that we expect would be required to produce a LMP (or multiple plans) under the options consider in this BRIA such as the Woodland Trust, RSPB, Borders Forest Trust, NTS, John Muir Trust and Trees for Life.

4.3.36 As set out in the analysis in Table 8 above, many public bodies are likely to have already carried out work to determine some of the information that is expected to be required in a LMP, with the suggested costs for public bodies equating to less than £0.1m per year under each option considered in this BRIA. Therefore the costs arising for public bodies is expected to be minimal under all Options.

4.3.37 Similarly, for third sector organisations that are large-scale landholders, the costs associated with the LMP are a subset of the costings set out in Table 8. As is expected for public bodies, third sector organisations are more likely to have carried out work to determine some of the information that is expected to be required in LMP, such as the extent of their landholding, developing a long term vision and objectives for their land, and taking actions to remain compliant with existing codes and other statutory requirements. This means the cost per landholding is likely to be at the lower end of the range used to estimate costings to landowners as a whole under each Option.

4.3.38 The benefits for public bodies and third sector organisations of engaging in a LMP will be similar to the benefits for private landowners identified in para. 4.3.3.

Scottish Government

4.3.39 There will be no additional costs to Scottish Ministers under Option 1 (‘do nothing option’). Under Options 2,3, and 4 there will be costs arising to Scottish Ministers due to the need to develop regulations to set out further details of the LMP duty (primarily resourcing and staffing costs), costs associated with compliance in cases where there are large-landholdings directly managed by Scottish Government, and costs to the Scottish Courts and Tribunal Service (SCTS) as a result of future potential appeals and additional costs for public bodies funded by the Scottish Government such as the SLC.

4.3.40 Under Options 2,3 and 4, Scottish Ministers would be responsible for preparing regulations which impose the obligations on landowners relating to the duties to engage with communities and to produce a LMP. Ministers will be required to consult with the Land and Communities Commissioner before making the regulations, and the regulations will be laid before Parliament as a Scottish Statutory Instrument.

4.3.41 Detail on the likely resourcing costs for the Scottish Government is set out in detail in the Financial Memorandum, with costs identified likely to be similar across Options 2,3 and 4.

4.3.42 There will be one-off resourcing costs associated with consulting on the development of the regulations and additional one-off resourcing and staffing costs linked to the need to lay draft regulations in parliament and produce required impact assessments. There is expected to be minimal ongoing work on the regulations once they are brought into force, with any ongoing costs potentially linked to future reviews of the regulations.

4.3.43 Under Options 2,3 and 4 there will be a new Commissioner within the SLC who will be a member of the Commission. The costs for this new Commissioner will mainly fall on the SLC and so are set out separately below. However, there may be some direct costs for Scottish Government associated with appointing the new Commissioner.

4.3.44 There will be compliance costs to the Scottish Government to ensure that any large-scale landholdings owned by Scottish Ministers a that are in scope of the regulations, such as the crofting estates, are compliant with its requirements, including the preparation and publication of a land management plan. The number of Scottish Government landholdings impacted by the obligations is expected to be between 10-15 (and may be higher under Option 4). The Scottish Government is likely to have already determined much of the information that is expected to be required by the plan and therefore the costs are expected to be minimal.

4.3.45 There will also be financial implications for the Scottish Courts and Tribunals Service under Options 3 and 4 in handling appeals in relation to the provisions. As there are no financial penalties for breaches under Option 2 and no Transfer test, there is not expected to be any costs for the SCTS under this option.

4.3.46 The landowner may appeal to the Lands Tribunal for Scotland regarding any financial penalty levied by the Land and Communities Commissioner under Options 3 and 4. Both the landowner and the Commissioner would likely incur legal costs as part of any action. Parties are not required to have legal representation at a hearing but even if parties choose not to incur costs for representation, there will be costs associated with lodging the appeal and administrative costs.

Scottish Land Commission

4.3.47 Under Option 1, the LMP would continue to be voluntary and therefore there would be no additional costs for the SLC, above the activity they already undertake to support voluntary compliance with LRRS and LMPs.

4.3.48 Under Option 2, the Bill would create a new Commissioner who will be a member of the SLC. The new Commissioner, supported by Commission staff, would have a duty to investigate complaints regarding compliance with landowners who may fail to comply with the requirements of the regulations e.g not publishing LMPs. The Commissioner would only have advisory powers in relation to breaches (similar to tenant farming commissioner), so would not have powers to impose fines for non-compliance to landowners in appropriate circumstances.

4.3.49 Experience of the Tenant Farming Commissioner (TFC) to date suggests that the advisory model has been successful in helping to bring stakeholders together and improve practice within the sector. A statutory review of the functions of the TFC was carried out in early 2020, which found that the Codes of Practice issued were easy to understand, useful, fair, and robust, and that they had helped to improve relations between tenants and landlords. Notwithstanding this finding, a key recommendation from this review was that - to foster compliance with the codes of practice - the TFC should be granted the authority to sanction and impose financial penalties on anyone found to have been in breach of the codes of practice, which would go beyond the powers outlined in Option 2^[26].

4.3.50 Under Options 3 and 4 the Bill would similarly create a new Commissioner who will be a member of the SLC. The Commissioner would be under duty in relation to the matters in regulations to:

• investigate complaints relating to failure to engage with communities in terms of the duty,
• investigate complaints relating to failure to meet the requirements regarding land management plans; and
• enforce compliance with the powers to introduce financial penalties.

4.3.51 There will be costs associated with a new Commissioner under Options 2,3 and 4. In practice, the work associated with the duties of the new Commissioner will be delegated to the staff of the Commission, and it is expected that in practice the Commissioner would take a strategic and decision-making role in the processes.

4.3.52 There is a high degree of uncertainty as to the volume of the work the Commissioner and the staff would have in relation to any breaches of new duties by landowners, as this will depend on the number of allegations lodged and the level of compliance by landowners .It should be recognised that breaches can only be reported by certain communities bodies,, a local authority (if all or part of the land which is the subject of the breach falls within its local authority area), Historic Environment Scotland, the Scottish Environmental Protection Agency, Scottish Forestry and NatureScot.

4.3.53 We are unable to identify any meaningful difference in the volume of work for a new Commissioner between Options 2, 3 and 4. It could be the case that the threat of financial penalties under Options 3 and 4 may encourage a higher degree of compliance amongst landowners and therefore a lower workload and costs for the Commissioner and their staff but this is only conjecture

4.3.54 As set out in the Financial Memorandum for the Bill, the Commission’s budget is entirely funded through grant in aid by the Scottish Government. The Commission will require ongoing resource funding to cover the costs for the new Commissioner and additional staffing costs. It is proposed that these costs would be partially met through existing funding to the Commission, by reducing their current activities. Additional funding will, however, be required in order to fully fund these new functions.

4.4 Costs and Benefits of options to Adopting Pre-Notification requirements and a Transfer test on transfers of large-scale holdings

4.4.1 Table 7 set out the policy options considered in this BRIA for the Pre-notification requirements and a Transfer Test.

Private Landowners

4.4.2 There will be no additional costs or benefits to any landowners under Option 1 (the ‘do nothing’ option). It should be recognised, that under current Community Right to Buy (CRtB) legislation, communities can pre-emptively register an interest in a particular area of land if they meet certain conditions. Landowners (regardless of size of landholding) who chose to put land on market where a community has an active registered interest under the CRtB would therefore not be able to sell the land freely, and instead must allow 30 days for the interested community body to confirm it wishes to purchase the land and then Ministers would need to consider whether to agree to this . Therefore, it is the case that restrictions on land sales would remain a feature of the Scottish rural land market under a ‘do nothing’ option.

4.4.3 Under Options 2, 3 and 4, owners of large-scale landholdings (as defined by the threshold used in each option) that intend to sell part or all of their land, in certain circumstances, will be subject to additional costs associated with likely delays in selling their land due to the new tests and potential restrictions on sale It is also possible that in some circumstances the policy could have an impact on land values as set out below.

4.4.4 The Pre-Notification requirements will apply to more land transactions than the Transfer test. A Pre-Notification requirement could apply to the sale of a small plot of land if that land is part of a large-scale landholding over 1,000 hectares. The Transfer Test will only impact transactions where the plot of land that is being transacted is itself over 1,000 hectares.

4.4.5 As set out in section 2.2, there is a higher degree of uncertainty as to the number of land transactions that the Pre-Notification requirement may be applied to under Options 2, 3 and 4 due to limitations regarding data currently collected and held by RoS. The data set out in Table 5 in section 2.2 is based on a methodology that may overestimate (to a unknown degree) the number of land transactions that could be subject to a Pre-Notification requirement.

4.4.6 Notwithstanding these limitations, based on the data set out in section 2.2, our best estimate is that under Option 2 a Pre-Notification requirement might reasonably impact between 60 and 100 land transactions per year from sales from landholdings above 3,000 hectares. Whereas, under Options 3 and 4, this would increase to between 100 and 170 land transactions per year.

4.4.7 Similarly, as set out in section 2.2 evidence gathered by the SLC’s latest rural land market report^[27] suggests the vast majority of rural land sales would not be affected by the Transfer test under Options 3 and 4 considered in this BRIA, with only 24 transactions of land that could have been in scope in 2020, 2021 and 2022. Of the 24 transactions above 1,000 ha, the majority of sales were attributable to ‘estates’ in the analysis (15 sales), with a very small number (3) being farmland (with no sales in 2020 and 2021) and a small number being forestry and woodland sales ( 6 transactions). Table 9 sets out the pattern of relevant transactions geographically^[28]. The vast majority of these sales were either in the Highlands and Islands region of Scotland or Eastern Scotland.

Table 10: Number of Sales, Total Hectarage and Average Price per Hectare of Land Transactions above 1,000 ha (2020 – 2022)

	No. of Sales	Total hectarage of sales	Average price per hectare
Eastern Scotland	10	27,000	£3,000
Highlands and Islands	11	27,000	£1,300
Rest of Scotland	3	10,000	£1,000
Total	24	64,000	£1,900

Source: Scottish Land Commission, note hectarage figures rounded to nearest 1,000 ha and price figures rounded to nearest £1,000

4.4.8 Under Option 2, it is expected that between 60 and 100 land transactions each year would meet the hectarage criteria and be subject to a Pre-Notification requirement. The Pre-Notification requirement under this option would compel the landowner to notify Scottish Ministers of the intention to sell any part of a landholding that is over 3,000 ha in size and for people who have previously registered an interest and certain bodies to be notified of the intended sale of relevant land. There is no Transfer Test under Option 2 and therefore no impacts arise from this test under this option.

4.4.9 Under Option 2, there is no advantage given to local communities in terms of protected time to formally register and buy land through the CRtB process. Off-market transactions continue to take place (i.e. private transfers not known to the public), with the effect that a community may not know about an intended transfer until after it has taken place. It would then be too late for a community body to make an application under the Part 2 procedure.

Community bodies located in (or adjacent to) large-scale landholdings

4.4.10 Under option 1 (‘the do nothing option’) there will be no additional costs or benefits for local communities. It should be noted that in order to benefit from pre-notification (by acquiring land for community purposes) under the alternative options considered in this BRIA, then there will be financial implications for any community body in preparing and submitting an application, through the established Part 2 CRtB process for private landholdings. However, this is not an additional cost arising from the Bill.

4.4.11 Under the other options considered in this BRIA, it is proposed that the prerequisites for community bodies to formally register an interest in land as set out in the CRtB process will not apply for the purposes of the initial notification of proposed sales under the pre-notification process. However a community body will have to meet these requirements by the point of submitting an application under Part 2 Community Right to Buy (after 14 weeks under Option 3, or 26 weeks under Option 4).

4.4.12 Under Options 2,3 and 4, the initial expression of interest for community bodies interested in submitting an application to pursue purchase of all or part of a notified landholding would have minimal costs for community bodies as they would be expected to provide information that they should already possess, such as their constitution.

4.4.13 Ultimately, under all policy options, there will be benefits arising for local communities due to the expansion in the opportunities to use existing Community Right to Buy mechanism to buy land for community purposes. The opportunity to expand community ownership is likely to be stronger in Option 4, due to the longer time period in which communities can organise and register a bid for land, and weakest under Option 2 where there is no protected time period and no Transfer Test.

4.4.14 The expansion of community ownership can benefit local communities by addressing some of the issues with concentrated land ownership. For example, benefits may accrue through improving the provision of affordable housing by opening up the supply of land to communities and improving opportunities for business expansion due to difficulties in securing suitable land/premises on reasonable terms outwith the community ownership model.

4.4.15 Under Options 3 and 4, there will be more restrictions on the sale of land due the introduction of a Transfer Test and a lower hectarage threshold for the Pre-Notification requirement. it is expected that 100 and 170 land transactions each year would meet the hectarage criteria and be subject to a Pre-Notification requirement under these Options. Local community bodies that have registered an interest in the land under sale would have either 14 weeks to register and produce a formal application under Part 2 CRtB under Option 3 or 26 weeks under Option 4. The criteria for decision making would follow what is currently set out for CRtB route.

4.4.16 Table 10 below sets out a range of estimates of the number of land transactions that are likely to be in scope for a Transfer Test under Options 3 and 4 based on recent land transaction data as set out in section 2.2, between 5 and 15 transactions per year are over 1,000 hectares and are likely to be subject to a Transfer Test screening, of which a much lower number may be subject to further intervention.

Table 11: Reasonable scenarios for the number sales per year subject to initial screening and a Ministerial decision to lot due to a Transfer Test

Rural land transactions per year	Low (per year)	Medium (per year)	High(per year)
Proposed sales in scope per year for the Transfer Test	5	10	15
Assuming approximately one third of cases result in a Ministerial decision to lot	2	3	5

4.4.17 Where the Land and Communities Commissioner considers that Ministerial tests for requiring lotting cannot be met, following an initial assessment of the information provided they may provide a short report to Ministers setting this out , and reasons for it, so allowing for a Ministerial lotting decision at this point. Otherwise, it is anticipated that the Land and Communities Commissioner will conduct further investigation and prepare a fuller report for Ministers. Ministers will then decide whether the plot of land under consideration should be ‘lotted’ and each parcel subject to a separate sale. It is unclear what proportion of land transactions (and therefore the number of landowners) that might be subject to this provision as Ministerial consideration will be based on the individual circumstances of the landholding and nearby communities, and lotting will not be appropriate in all cases. Table 11 sets out a high, medium and low scenarios based on an assumed proportion that would be affected under the Transfer test.

4.4.18 It should also be recognised under this Option 3 and 4 that landowners could circumvent the requirement to need a Transfer Test if they sold land in multiple parcels of less than 1,000 hectares. This would mean additional transaction costs (such as agent fees) and some additional delays in selling all the land that the landowner may ultimately wish to sell (a sale of 1,000 ha might need to be divided into 2 individual sales), but it would mean the sale(s) would be concluded without the need for a Transfer Test. To address this potential loophole, Ministers would have the discretion to subsequent notifications under the pre-notification process as a single sale for the purposes of the Transfer Test (if from the same owner, the land area of sales combined met the hectarage requirement and missives not concluded).

4.4.19 Landowners are likely to face some additional costs under Options 3 and 4 related to the Pre-Notification requirement and Transfer Test.

4.4.20 Firstly, there is the likelihood in some cases that landowners will face a delay in the disposal of their land compared to the ‘do nothing’ Option in cases where a community body registers an interest and applies to buy the land. A sale to a private buyer could have feasibly completed in a shorter timescale^[29]. Under each option, at the extreme, the additional delay as compared to existing community right to buy procedures could be up to 14 weeks (under Option 3) and 26 weeks (under Option 4) - if an application to register an interest is made, this will then need to be considered by Ministers which will further delay the owner from transferring the land. If the land sold is above 1,000 ha then the Transfer Test will apply and Scottish Ministers may make a decision that a land parcel must be lotted before a sale can take place, this could introduce further administrative delays in a land sale. The intention is that parts of the transfer test and the pre-notification processes take place concurrently to limit impacts on transfer timescales, although some delay is likely.

4.4.21 The cost implications of such delays to landowners is challenging to assess as it would depend on the number of sales in future years, the value of land sold and the length of any delay relative to a market transaction. Based on the data set out in Table 10 above, the average price achieved for a landholding over 1,000 ha in the last three years was £5.1m. Assuming that between 2 and 5 sales are affected by a delay each year, this means landowners may face a delay in receiving income from sales of anywhere between £10 million and £26 million per year across all landowners subject to a Transfer Test. There will be further potential delays in transactions which are lower than 1,000 ha which are subject to Pre-Notification only, and where a community body has registered an interest in the land. Such delays may have an impact on the timing of future investment decisions by businesses selling land, where the motivation for selling land is perhaps to raise capital for other purposes.

4.4.22 The Scottish Government would, however, be responsible for paying a compensation for certain losses and expenses as it is under the existing CRtB provisions to compensate for any losses arising due to delays in sale. However, it should be noted that there have been fewer than 5 successful compensation claims following a community right to buy process since 2004. The value of compensation would depend on several factors, including any additional required costs incurred through ownership during the period a sale is delayed.

4.4.23 Secondly, apart from the potential delay in the sale of land as a result of these tests, the Transfer Test under Option 3 and 4 could require some landowners to divide the land they intend for sale into smaller parcels through a process of lotting which may incur additional costs above those had the land been sold as a single entity. The costs following a requirement to lot are split between the Scottish Government and the landowner as is currently done in relation to existing community right to buy processes. The landowner would be responsible for the advertising and costs related to the sale of the lots, but not for the work relating to the determining of the lot boundaries and their valuation. If a landowner can demonstrate that these costs exceed what they would have been had the land been sold as a single holding, then the landowner can claim compensation from the Scottish Government and so costs to the landowner are expected to be minimal.

4.4.24 Where the transfer test applies, the landowner would be asked to provide information to the SLC to support their investigation and inform the report to Scottish Ministers. This would likely be basic information that the landowner should know or have to hand and so providing this information is not expected to be a burden to the landowner and doing so will have minimal to no cost implications for them.

4.4.25 If lotting was determined to be appropriate this would be subject to expert advice and landholder views would be considered. If Scottish Ministers direct that the land be transferred in lots, the landowner may incur additional costs above those had the land been sold as a single entity.

4.4.26 The landowner would be responsible for the advertising and costs related to the sale of the lots, but not for the work relating to the determining of the lot boundaries and their valuation. If a landowner can demonstrate that these costs exceed what they would have been had the land been sold as a single landholding, then the landowner can claim compensation from the Scottish Government to cover and offset such costs.

4.4.27 Where no lots are sold after a period of time after Ministerial decision, the landowner can apply to Ministers to review their decision. Ministers must either confirm their decision, withdraw it and make a new one, or offer to buy one or more of the lots. In summary, the landowner should not be significantly financially impacted by the decision to lot the land.

4.4.28 Finally, policy changes under Options 2,3 and 4 could feasibly have a an impact on the price of rural land. It is thus important to recognise that under Options 3 and 4, there may be unintended consequences on land prices. The property market for land is characterised as being relatively illiquid and often requires large capital expenditure and third party borrowing. It also functions without a central trading market and is subject to significant transaction costs (both fiscal and agent based). If these policy options have the effect of reducing the number of potential buyers they could reduce the likely exchange price of land. Recent rural land market reports however indicate competition with the land market which is reflected in prices, and where land is lotted this could increase the number of buyers able to enter the market.

4.4.29 The introduction of a Pre-Notification requirement and Transfer Test will increase the length of the settlement process in some cases, hence reducing liquidity of land further, and introduces the new risk of Ministers not approving a private sale of land in the form that would be desirable for a prospective buyer. Assuming that rational risk/return decision making applies in the land market, these factors may combine to negatively affect the amount a purchaser would pay relative to a do nothing option. This was reflected in responses to the consultation, with public interest tests seen to have the potential to impact on land values, act as a barrier to investment, and lead to some landowners choosing not to sell.

4.4.30 Requirements for the publication of land sale offers that are similar to a Pre-Notification requirement are used in many European countries such as Latvia, Lithuania, Hungary, Romania, Slovenia, Slovakia and Austria. The prenotification requirement is accompanied by measures such pre-emptive rights to facilitate local farmers in the acquisition of land and the discouragement of purchases from external investors that have no attachment to the place. It has been reported that these measures comes at a cost to buyers and sellers, may delay the execution of the transaction, and induce uncertainty in those buyers with no pre-emptive rights^[30].

4.4.31 Some countries (France, Austria, Germany and Belgium) go beyond the pre-notification to sell and have introduced procedures to test if transactions are counter to the wider public interest, analogous to the proposed Transfer Test. These countries have implemented restrictions on land use and sale imposed by a regulatory authority, accompanied by pre-emptive rights for farmers in need of land.

4.4.32 Research into public interest test interventions on land market transactions^[31] found it was not possible to definitively determine how such policy changes impacted land prices. This was due principally to a lack of detailed time series data for the period both before and after a policy change.

Local Authorities

4.4.33 There are no additional costs or benefits for local authorities associated with Option 1.

4.4.34 There are anticipated to be some indirect costs on local authorities as relevant bodies to be informed of pre-notification and to be consulted if a transfer test progresses to the investigation stage under other policy options. There are not expected to be any further direct or indirect costs on local authorities as a result of the pre-notification processes or the transfer test when it is engaged.

4.4.35 Indirect costs are likely to be negligible for pre-notification requirement, however, if a proposed sale proceeds to further SLC investigation as part of the transfer test as included in Options 3 and 4, SLC may consult local authorities relating to issues that may have been suggested by initial desk based assessment (e.g. if the local development plan suggested lack of land for housing then the SLC could request more detail, including if that may be influenced by concentration of land ownership in the area). Local authorities would be expected to either provide the requested information or confirm if they did not have anything to provide.

4.4.36 More detail on the requirements for local authorities in relation to the transfer test will be set out in secondary legislation. The financial implications for local authorities of any proposals in the regulations would need to be assessed and taken into consideration when the regulations are being developed.

4.4.37 Local authorities would indirectly benefit from pre-notification should the result of this be higher levels of community ownership in certain areas which may help to address long-standing needs of such communities (such as supply of housing needs).

Public Bodies and Third Sector Organisations

4.4.38 Similar to the costs set out for private landowners, land transactions will be subject to a potential delays compared to the ‘do nothing’ option if community bodies have expressed an interest in purchasing any land in a large-scale landholding owned and managed by a public body or a third sector organisation under Options 2,3 and 4.

Scottish Government

4.4.39 Under Option 1 (‘the do nothing option’), there will be no additional costs for Scottish Government or its agencies. Under the alternative policy options considered in this BRIA the Scottish Government would incur costs under three broad categories: resourcing costs, compliance costs and compensation costs (under options 3 and 4).

4.4.40 Under Options 2,3 and 4 the Scottish Government would incur some resourcing costs as a result of being responsible for providing a way for community bodies to register interest in being notified of proposed sales in their area. The Scottish Government would be responsible for reviewing pre-notification forms submitted by large-scale landowners to confirm that these met requirements. For valid pre-notifications, the Scottish Government will be responsible for issuing this to relevant community bodies on the pre-notification list and for publishing high level details of the pre-notification on a website. The Scottish Government would also be responsible for providing guidance and for informal discussions with landowners and community bodies in relation to the process, and administrative requirements for stages prior to formal application. Scottish Government staff will support Scottish Ministers in deciding whether to accept a formal application from the community body, taking into account any response from the landowner. If an application is accepted, Scottish Government staff will provide administrative support for the subsequent process which would follow established CrtB processes.

4.4.41 An existing staff provision within the Scottish Government supports CrtB processes, but additional staff resource is expected to be needed to support an increased volume of work, new responsibilities as set out above in relation to pre-notification, the list of community bodies and the transfer test, and support and provide guidance on this new process. Detailed estimates are set out in the Financial Memorandum. It is expected that an additional five staff members will be needed: two at B1 grade, two at B2 grade, and one at B3 grade. This would cost approximately £235,000 in salary, plus approximately the same in overheads (IT, T&S, pension costs), bringing the overall costs to around £470,000. These costs refer to the SG preferred option (Option 3).

4.4.42 Under Options 2,3 and 4 there will be minimal compliance costs for the Scottish Government associated with notifying communities in the event of a sale of any land owned by Scottish Ministers and directly managed by SG.

4.4.43 Under Options 3 and 4, the Scottish Government may also incur compliance costs associated with the Transfer Test, although the majority of costs will be covered by the SLC. For example, if a landowner is required to place the land in lots, the Scottish Government would be responsible for meeting the professional fees to determine the boundaries of lots and having them valued, seeking expert advice where required to do so. Costs related to the determination of boundaries of lots and their valuation will vary on a case by case basis.

4.4.44 In addition to additional staff costs, under Option 3 and 4, the transfer test may result in additional costs for Scottish Government related to potential compensation costs for landowners (as set out above) arising from matters such as losses arising from delays in the sale of lotted land following a transfer test. The amount of compensation in any individual case would depend on various factors such as the difference in sale value between the lotted estate and the whole estate. The Scottish Government’s total liability will also depend on how many landholdings Ministers direct to be lotted as a result of the transfer test. On an annual basis, the number of land transactions which are ultimately likely to be lotted will be small (up to 5 per year as per Table 11). It is also expected that expert advice will be sought as part of the transfer test process which may help Ministers understand the likelihood of lotting resulting in reduced ability for lots to sell. Ministers will also have the option to lift or amend lotting requirements subject to a review application which may reduce the value of any compensation claims. Given the degree of uncertainty, the relatively small number of transactions and case-by-case nature of land transactions it is not possible to provide a robust estimate of possible compensation.

4.4.45 Finally, under Options 3 and 4, decisions by Ministers relating to the Pre-Notification and Transfer test may also bring additional costs for the Scottish Courts and Tribunals Service (“SCTS”), as provision is made for Ministerial decisions in relation to the transfer test to be appealed to the Court of Session, and for compensation decisions to be appealed to the Lands Tribunal for Scotland. For Court of Session appeals against a ministerial decision, the potential initial costs of such an appeal to SCTS are in the region of £565 per appeal. This would be indicative of the initial procedural hearing only. Should the cause proceed to substantive hearings, the cost to SCTS would be in the region of £8,050 per day, based on an optimum 5 hour sitting time. This figure includes livestream costs. Initial costs for lodging and considering an appeal with the Lands Tribunal are likely to be in the region of £140 (plus 1.25 hours in members’ fees for their initial consideration and signing of first orders). For more substantive hearings (based on a five hour sitting time), costs will be in the region of £295 (plus around 15 hours in members’ fees) per day. There will be around an additional 25 hours of members’ time to draft the final written orders and any expenses orders.

4.4.46 These figure are indicative of the initial costs to the SCTS, and do not include running and overhead costs to the courts nor fees payable by the parties in paying for legal representation or court fees etc. Court fees are based on the statutory Fees Orders which are a matter for the Scottish Ministers. There is a fee for lodging an application with the Court of Session, if a case proceeds to proof or debate, etc. Procedure in an action, including length of any proof/debate etc. will vary depending on the circumstances of each case, including complexity and whether the application is opposed, etc., and so there is no ‘model case’ upon which typical court fees could be estimated for an action.

4.4.47 Given the degree of uncertainty, the relatively small number of transactions and the case-by-case nature of land transactions it is not possible to provide a robust estimate of possible costs to the SCTS.

Scottish Land Commission

4.4.48 Under Options 1 (the do nothing option) and 2, there will be no additional costs for the SLC.

4.4.49 Under Option 3 and 4, there will be new functions for a new SLC Commissioner in relation to the Transfer Test. In respect of this obligation the Commissioner would be under a duty to:

• conduct an investigation; and
• provide the Scottish Ministers with a report setting out the evidence gathered.

4.4.50 These new functions would be in addition to the functions set out at above to investigate complaints relating to failure to engage with communities or failure to meet the requirements regarding land management plans in terms of the obligations, and enforce compliance. A detailed assessment of the additional costs to the SLC is set out in the Financial Memorandum.

4.4.51 The Commission will require ongoing resource funding to cover the costs for the new Commissioner and additional staffing costs. It is proposed that these costs would be partially met through existing funding to the Commission, by reducing their current activities. Additional funding will, however, be required in order to fully fund these new functions.