Who Owns Scotland? – Scottish government launches consultation on Register of Controlling Interests

For some time there have been political concerns that entities such as companies and trusts could be used to hide the identities of people actually in control of land in Scotland, making it difficult for communities and public bodies to engage with landowners.

So Section 39 of the Land Reform (Scotland) Act 2016 gives the Scottish Government the power to introduce regulations to increase the transparency of land ownership in Scotland, by providing for the disclosure and registration of any controlling interests in land, i.e. a person with influence over the land other than the legal owner as noted in the title deeds.

The Government issued its consultation paper on the proposed regulations on 9 September. As well as inviting responses to a number of specific questions on the ambit and content of the regulations, the paper gives an indication of the Government’s present thinking on certain matters.

What is a Controlling Interest?

It is stressed throughout the paper that the regulations are designed to complement the recent changes to the Companies Act introduced by the UK Government – which oblige UK companies to hold a register of people with significant control – and that the new regulations to be introduced by the Scottish Government must not encroach into non-devolved matters. For these reasons, the paper indicates that it is likely that the new regulations will be linked to decision-making power rather than financial benefit.

What type of land will be covered?

It is proposed that the regulations will apply to both rural and urban land, and irrespective of whether it is built on or not. The regulations will capture both properties registered in the modern map-based Land Register and those still registered in the older deeds-based Register of Sasines. Further, the paper asks for views on whether unregistered leasehold interests should also be covered if the interest is of sufficient value, although no comment is made on what the threshold for value might be.

Where will the information be held?

The paper recognises that a new register is likely to be required given that a significant portion of Scotland’s land mass is still registered in the Register of Sasines and so integrating the register into the Land Register would not be enough. The Keeper of the Registers of Scotland (who looks after, amongst other things, the Land Register and Register of Sasines) would be made responsible for maintaining the new register, and views are requested on how this new register can be kept up to date given changes in the controlling interest can occur without a change in the legal ownership of the land.

Who is responsible?

An obligation on the legal owner of land to take reasonable steps to ascertain whether there is a qualifying controlling interest in the land is proposed in the paper. It may be that this obligation is enforced at the point of land registration when the land is, for example, sold (possibly by way of a further declaration on the registration application form?).

Various options are put forward for the consequences of non-compliance; one suggested option is that the application for land registration would be rejected where the information is not provided, but it appears that the Government are still undecided on which option is best. Interestingly, there is also a request for views on whether intermediaries such as solicitors should be obliged to comply with the regulations.

Comment:

The proposed register could undoubtedly be very useful in a number of land-related situations, e.g. to the individual that wants the trees on adjoining land trimmed to restore their light or to the local authority that needs to enforce a dangerous buildings notice. However, there are still important questions around enforcement and maintenance of the register to be addressed, as well as concerns around privacy.

The consultation paper can be viewed in full online. Responses can be submitted online. The deadline for responses is 5pm on 5 December 2016.