New Year News
For many landowners in Scotland, 2015 probably felt like a year spent in the cross-hairs as the Land Reform debate continued apace.
The Land Reform (Scotland) Bill is now making its way through the Scottish Parliament and is expected to become law prior to the Scottish Parliamentary elections in May.
New Year is the time for reflection but also for planning and strategy and history suggests that a proactive approach yields benefits.
Voluntary Registration of Title
Registers of Scotland have been asked by the Scottish Government to complete the country’s land register by 2024 for privately owned land and property and by 2019 for publicly owned titles. At the moment, around 58 per cent of all Scottish properties are on the land register, around 27 per cent of Scotland's land mass.
The Scottish Government’s aim is to hold a complete digital mapping system of the whole of Scotland, showing all ownership and registered rights and interests in the land. This is a laudable ambition and the Land Registration etc. (Scotland) Act presents two options; namely keeper-induced registration or alternatively, voluntary registration.
Keeper-induced registration is unlikely to target rural landholdings and so is there any benefit in pursuing voluntary registration?
If a landowner is considering a sale, a transfer to the next generation, a new standard security, is aware of potential title discrepancies or has an ancient title, voluntary registration may however produce benefits. Of course there is a cost/benefit exercise to be undertaken, but there are strategies that can be adopted to progress in measured stages to gauge the scale of the work required and effectively manage cost.
Working in close liaison with Registers of Scotland, including undertaking some pilot projects and progressing voluntary registration for a number of significant landholdings we have come across many circumstances where voluntary registration is likely to reap dividends in the longer term and we would encourage landowners to be proactive in reviewing their own position.
For example, we encountered a situation recently whilst concluding a sale of a farm where the main access track was included on both our client’s title and their neighbour's title. This was due to an historic error when the two farms were split from the original Estate title, some 30 years earlier. As the neighbour had voluntarily registered their title first, their claim to title of the access was deemed to be more secure. Although this could have been disputed by our client, which might have been successful, the purchaser wanted a quick conclusion and clean purchase. Therefore, our client agreed to pay a substantial sum demanded by the neighbour for the access, rather than risk losing the purchaser. This may have been avoided, had our client voluntarily registered their title first.
CKD Galbraith can offer a robust collaborative methodology for achieving successful registration. As a firm, we have extensive experience and unrivalled local knowledge in rural management issues. This experience gives us a strong understanding of the complex makeup of rural assets, ownership and rights enjoyed by our clients. In addition, the firm has invested in significant technical mapping resource and worked with RoS to develop and improve protocol for effectively displaying mapped rights. The firm is well placed to take the principal coordinating role, working with RoS and the client’s solicitor to assist the client in progressing VR where such is considered appropriate.
As part of the government’s land reform proposals it is intended that shootings and deer forests be brought into line with other ratepayers to raise additional finance to support Scottish Government budgets.
These proposals have generated considerable criticism from rural sectors, voicing concerns that such a move will impact upon local economies, business and communities, however the government’s response is that it has not seen compelling evidence that removing rates exemptions would have such negative effects and considers that doing so would be fair and sustainable.
In December the Rural Affairs, Climate Change and Environment Committee published their Stage 1 report and it appears to be unconvinced by the government’s justification and has requested a thorough, robust and evidence based analysis of the potential impact of ending the sporting rates exemption. However, the constrained timetable would appear to make such detailed analysis impossible.
To be effective, the Bill must pass into law before purdah on 24th March 2016 and therefore the question is whether the political will is such that taxation will happen regardless of the committee’s concerns.
The Scottish Government is also proposing an amendment to the Land Reform Bill which would enable 1991 Act secure tenants the right to assign their tenancies to a new secure tenancy for value. This is a significant departure from the recommendation of the Agricultural Holdings Legislation Review Group’s recommendation that tenants should be given the right to assign their 1991 Act tenancies by converting them to Limited Duration Tenancies. The Scottish Government’s amendment also includes a right of pre-emption for landlords who would be required to pay a premium. This new amendment has significant implications for the tenanted sector and land businesses with 1991 Act tenancies.
We will continue to keep our clients appraised of any developments on these matters as they appear.