Consultation Paper: Land Reform in a Net Zero Nation

Land Reform in a Net Zero Nation: Consultation Paper ¹ : is the most recent and relevant in determining the intentions of the current Scottish Government vis-à-vis land reform. It consists of proposals, justification for those proposals, and questions; where readers have the opportunity to contribute their ideas and opinions to the legislation forming process. The questions are well thought out, and provide ample scope for both criticism of proposals and the introduction of new ideas to the legislative process. 

Definition of a large-scale landholding

The proposals are intended to catch only landholdings that are large-scale. The proposed definition of a large-scale landholding is one which fulfils any one the following criteria:

1. Exceeds 3000 ha
2. Area exceeds more than a fixed percentage of a data zone, adjacent data zone or local authority ward and is designated as an Accessible Rural Area or Remote Rural Area according to the Scottish Urban/rural Classification Scheme. 
3. Area accounts for more than a set proportion of the landmass of a permanently inhabited island. 

The most impactful of these measures is probably the data-zone test. On average a council ward has around 15,500 occupants ² but a data zone has only 784 inhabitants ³; data zones are  relatively small divisions of rural land. There are 6976 data zones in total, Scotland has a land mass of 8,023,947 ha, so a typical size of a data zone is only 1150 ha. With the ring-fenced nature of many landholdings this data zone requirement is likely to catch many holdings considerably less than 3000 ha in size. 

A public interest test

A public interest test is to be applied in the case of sale of large-scale landholdings. 

It is intended that the public interest test be applied to both the buyer and the seller. How the test is applied to the buyer is clear enough; the transaction is flagged if the new acquisition puts the buyer in a position of excessive power not in the public interest. 

On how the test should also be applied to the seller however, the author of the paper seems somewhat addled. It makes sense that if the seller was selling a piece of land large enough to put the buyer in a position of power that is not in the public interest, then this would be flagged by a test applied to the buyer. 

What really must be meant by the test on the seller is that before there is even a prospective buyer, if the holding being sold is large enough to constitute a threat to the public interest all by itself, then it should be either split in to lots for sale, and/or be offered to community bodies in the area. 

It is suggested that any breaches of the Land Rights and Responsibilities Statement, as well as an examination of any previous efforts of the seller to diversify ownership, use a land management plan, and engage with the local community, should be taken into account when carrying out the public interest test. 

There is talk of the public interest test placing specific conditions upon the buyer; for example, peatland restoration. As these requests upon landowners inevitably become more onerous, it may complicate the execution of transactions significantly, and make the acquisition of land far less attractive. It must be remembered that many landholdings in Scotland, particularly in the Highlands, are not financially viable enterprises by themselves, and already require considerable investment of time and outside money to maintain and run. 

And who is to enforce the public interest test; with the potential for such subjectivity. 

It is important to note that in determining what makes a landholding large-scale, and which transactions are sufficiently against the public interest, the devil will be in the detail. This detail will determine how the new legislation squares off against the ECHR. If legislators and those who interpret the public interest test are too ambitious this could result in a great number of distinct and varied cases in court. 

Compulsory land management plans and the LRRS

Part 5 of the consultation paper proposes that compliance with the Land Rights and Responsibilities Statement (LRRS)⁴, as well as a set of protocols set out by the Scottish Land Commission ⁵  should become compulsory for large-scale landowners. Compliance with relevant codes of practice ⁶ issued by the Scottish Land Commission would also become mandatory for these landowners. 

Land management plans would become compulsory for large-scale landowners. The aim is that these land management plans improve transparency about land holdings and the intentions of landowners. The land management plans are intended to follow a template⁷, the current version appears quite manageable or perhaps under-developed. 

Certain consequences are proposed for large-scale landowners who do not comply with the documentation. These include non-compliance having an impact on the outcome of public interest tests relating to the sale or acquisition of land involving the relevant landowner. 

In addition there is the intention to develop ideas relating to the withdrawal of public funding, including land-based subsidy, for those who do not comply with the LRRS and create compulsory land management plans. This is mentioned alongside the intention to require recipients of Scottish Government land-based subsidies to be registered and liable to pay tax in the UK or EU. An additional requirement suggested for the receipt of land-based public funds is that landholdings be registered in the Land Register for Scotland.

Community Right to Buy 

At the moment qualifying community bodies which register their interest in a piece of land must be notified when the land comes up for sale. This is known as the Part 2 pre-emptive right to buy, as it is included in Part 2 of the Land Reform (Scotland) Act 2003.  

The new proposal on community body pre-emption is that in the case of sale the landowner should notify any qualifying community bodies whether they have registered their interest or not. This would require a register of such community bodies to be drawn up. 

It should be anticipated that the value of large estates is so great (a typical farm costs in excess of £1m) that communities in dilutely populated areas are unlikely to be able to buy out large tracts of land. What is instead a more realistic, and much more advantageous consequence of community right of pre-emption is that communities could buy small plots of land, perhaps on the fringes of towns and villages, that the open land market or off-market sales would not otherwise allow them access to. Such smaller plots could be used for amenity in a wide variety of ways. 

Legislators should however remain guarded against circumstances where a quorum acquire land for the community and use it for development that is quite typical and financially lucrative. A field day for developers could be a consequence of the demand for housing and the land fragmentation that may result from the right of communities to nibble at large land sales.

Land Use Tenancy

Part 9 of the Consultation Paper proposes a new type of agricultural tenancy; the Land use Tenancy. 

What the consultation paper does not propose: 

The proposed law does not attempt to dispossess existing landowners of their landholdings, although the aspects of the legislation that force landholdings to be split into lots could make landholdings less attractive to potential buyers, and negatively impact the overall value land is sold at. Changes to the market brought about by reforming legislation could decrease the attractiveness and value of land in general. It is important to note we are talking about transactions not transfers in the wider sense, that is, the reform only acts on the sale of land, there is no mention of a public interest test being made in the case of a transfer such as inheritance or the gifting of land. 

References: 

1. Minister for Environment and Land Reform. Land reform in a net zero nation: Consultation paper. https://www.gov.scot/publications/land-reform-net-zero-nation-consultation-paper/documents/. Updated 2022.

2. Office for National Statistics. Detailed information on the administrative structure within scotland. https://www.ons.gov.uk/methodology/geography/ukgeographies/administrativegeography/scotland. Updated n.d.

3. National Records of Scotland. Mid-2020 small area
population estimates, scotland. https://www.nrscotland.gov.uk/files/statistics/population-estimates/sape-20/sape-20-publication.pdf. Updated 2021.

4. Scottish Government. Scottish land rights and responsibilities statement. https://www.gov.scot/binaries/content/documents/govscot/publications/advice-and-guidance/2017/09/scottish-land-rights-responsibilities-statement/documents/00525166-pdf/00525166-pdf/govscot%3Adocument/00525166.pdf. Updated 2016.

5. Scottish Land Commission. Land rights and responsibilities protocols. https://www.landcommission.gov.scot/our-work/good-practice/land-rights-and-responsibilities-protocols. Updated 2022.

6. Scottish Land Commission. Codes of practice. https://www.landcommission.gov.scot/our-work/tenant-farming/codes-of-practice. Updated 2022.

7. Scottish Land Commission. Good practice guidance: Providing information on who owns land in scotland . https://www.landcommission.gov.scot/downloads/5e99a6262f615_TEMPLATES%20Land%20Use%20and%20Management30.03.20.pdf.

Bibliography:

Newman, C. 2017, , Foreign Buyers Are Snapping Up Scotland’s Estates. Available: https://www.nationalgeographic.co.uk/environment-and-conservation/2017/11/foreign-buyers-are-snapping-up-scotlands-estates.

Fetherston-Dilke, E. 2019, , Practical thoughts on pre-emption rights. Available: https://www.farrer.co.uk/news-and-insights/practical-thoughts-on-pre-emption-rights/.