Selling land in Scotland is about to get more complicated - Graeme Leith

​Graeme Leith considers some upcoming legislative challenges as contained in the Land Reform Bill published in March

The Scottish Government’s long-trailed proposals for dealing with the concentration of land ownership in Scotland were published in its Land Reform Bill in March. If passed in its current form, the Bill will have significant implications for the sale of all, or part of, large holdings of land – “large holdings” being all adjoining land areas, including those owned by “connected” parties (composite holdings) that span 1000 hectares or more. This will catch land owned by others in the same corporate group and those associated with the land through the Scottish Register of Controlled Interests.

Land sales could be affected in two ways; the extension of the existing community right to buy and the lotting of large holdings. Both will delay and potentially prohibit the planned sale of land until a decision is made by Scottish ministers.

The extension of the existing community right to buy could put on hold the sale of any part of a large holding until community bodies have been notified and given an opportunity to register an interest in buying the property. Some transfers would be exempt from the right to buy, such as transfers on death or as part of a divorce settlement. Those transfers not exempted would be delayed by at least a month until Scottish ministers decide whether the community body's application is successful and then, if given the go-ahead, the community body would be granted first opportunity to buy the property. Any transfer completed before the right to buy process is completed would be of no effect.

Significantly, the procedure would affect sales of any land or building that forms part of a large holding, so would, for example, apply where a field or house is being sold. As well as a delay to the sales process, the publicity requirements mean that all such transfers will become public knowledge, even in circumstances where no community body indicates an interest.

A lotting decision would have to be made by Scottish ministers before a single or composite large holding could be transferred. ‘Lotting’ involves the larger area being split into smaller lots for marketing and selling. Sellers often do this voluntarily to attract more buyers and potentially achieve a higher aggregate sale price.

Scottish ministers will only be entitled to require transferring the lots to separate and unconnected parties if it is more likely to result in the land being used in ways to make the community more sustainable than if all of the land were transferred to one person. As with right to buy, there will be exemptions but if none apply, no transfers of the land will be permitted until a decision on lotting is made. Any lotting decision can be appealed and when in place will last five years, subject to an annual review, which can be requested by the landowner.

Recognising that the aggregate sale price may end up lower as a consequence of the lotting decision, Scottish ministers are entitled to purchase lots to offset the impact, and an owner will be entitled to compensation for any costs and losses incurred as a result. The Bill will clearly have significant practical implications for Scotland’s rural land sales. Much of the detail will be in regulations and the Bill may yet change as it passes through the legislative process.

Graeme Leith is a Partner in rural business and natural capital, Brodies LLP