Since becoming law, the Land Reform (Scotland) Act 2016 has introduced a number of changes affecting the rural sector in Scotland and the changes keep coming. In recent months, the new Relinquishment and Assignation procedures for tenants with a Secure Agricultural Tenancy came into force. The most recent development moves away from the tenant farming sector and may have far wider reaching implications.
Section 39 of the Land Reform (Scotland) Act 2016 placed an obligation on the Scottish Ministers to introduce regulations requiring the provision of information on who controls interests in land and for a register to be kept by the Keeper of the Registers of Scotland (“the Keeper”).
In implementation of this Section 39, the Land Reform (Scotland) Act 2016 (Register of Persons Holding a Controlled Interest in Land) Regulations 2021 (“the Regulations”) have been created and will come into force on 1 April 2022, now just under a year away.
The Regulations provide that the Keeper must create a public register known as the Register of Persons holding a Controlled Interest in Land (“the Register”). To date, the Keeper has been responsible for maintaining several public registers, including the Land Register of Scotland and the General Register of Sasines, both of which contain information about the current owners of land and property throughout Scotland. The Register goes one step further and looks behind the owner to see who is actually responsible for making decisions about an area of land or property. Those with a controlling interest may differ from the registered owner.
The Register will distinguish between (a) “the recorded person” who is the owner or tenant and has control over the decision making for the property and (b) an “associate” who is not an owner or tenant but has control over the property. The information to be included about each recorded person or associate includes their name, address, the property the interest is held in and the capacity in which the property is owned or tenanted. In other words, is the person’s interest as an individual, a partner of a firm or as a trustee. The Keeper must ensure the Register is maintained, meaning it may have to be updated on each occasion property or land is sold or transferred.
Perhaps most importantly for prospective recorded persons and associates is the duty to notify the Keeper of a controlled interest. This duty will affect certain partnerships, trusts, unincorporated bodies such as clubs and overseas entities but will not apply to charities, companies and public bodies which are already subject to alternative types of transparency schemes. Failure to comply with the duty without a reasonable excuse is a criminal offence which is punishable by a fine of up to £5,000. The same fine can also be issued if a person makes a false or misleading statement or fails to disclose material information to the Keeper.
Those who are affected should be aware of the new offences created by the Regulations, although there will be a 12 month grace period where the offences do not apply. This should allow time for recorded persons and associates to notify the Keeper of their controlled interest. Registers of Scotland are also likely to undertake a significant campaign to raise awareness of the Register and the requirement to apply before the Regulations come into force. To avoid fines after the initial grace period, those who could be considered recorded persons and associates will be heavily encouraged to notify the Keeper of their interest.
The aim of the Register is to increase transparency about who makes decisions in relation to land and property in Scotland. This will make it easier for people to ascertain who has control in cases where it may not have been easy to determine previously. It is time for land owners and those with controlled interests to embrace the change or pay the price.
For further information and advice in relation to any aspect of the register, please contact a member of the Land and Rural Business Team.