The Land Reform (Scotland) Act 2003 brought about a statutory right for communities to purchase land in Scotland. Being more of a right of first refusal over land than a right to buy, it lacks teeth: if the landowner never takes any step to sell the affected land, the community's right to buy is never triggered.
Now qualifying community bodies have access to power with perhaps more bite by virtue of the community right to buy abandoned, neglected or detrimental land which came into force on 27 June 2018.
A successful application by a community body will result in an order requiring the land to be sold.
What sort of land could be affected?
Qualifying community bodies can make an application to the Scottish Ministers to purchase "eligible land".
Eligible land is land:
- which is wholly or mainly abandoned or neglected; or
- the use or management of which is such that it results in or causes harm directly or indirectly to the environmental wellbeing of a relevant community – i.e. "detrimental" land.
It includes bridges, inland waters, canals and the foreshore.
Aspects that will be relevant to whether land is abandoned or neglected include the physical condition of the land and any buildings, the length of time the current situation has persisted, and the extent to which there is a risk to public safety. Mitigating factors include whether the land is a nature reserve, or whether it includes a scheduled monument. The current use and management of the land is also relevant – so, if there is in fact an ongoing legitimate use, it will be much less likely that a community application will be granted.
Eligible land does not include:
- Land on which there is a building or other structure which is an individual's home (unless it is occupied under a tenancy) and other associated land (for example, land used for storage of possessions or vehicles used by the occupants of the house).
- Some types of croft land.
- Land which is owned or occupied by the Crown in its capacity as ultimate heir (for example because of a landowner's insolvency, or a landowner who has died with no heirs).
- Land held or used by a Minister of the Crown or government department, and rights to petrol, coal, gold or silver.
The list of exclusions could be expanded in future.
Who can make an application?
Applications can only be made by qualifying community bodies. Generally it must be a charitable or non-profit organisation or company, or a community benefit organisation, in each case with a minimum of 10 members.
The headline point here is that an application cannot be made by an individual with an axe to grind; there needs to be a formal community body behind the move.
How does the community body make the decision as to whether to submit an application?
The community body must hold a ballot of the members of the community within the six months preceding the date of the application. In the ballot, at least half the members of the community must vote, with a majority of those voting supporting the purchase.
How is an application made?
There are certain pieces of information that must be included in any application. For example, the community body must set out the reasons why they consider the purchase to be in the public interest and compatible with furthering the achievement of sustainable development of the land. They must also justify why they consider the land to be abandoned or neglected, or detrimental land.
A copy of the application should also be sent to the landowner and to any creditors holding securities over the land, and be registered with Registers of Scotland.
The restriction period
This begins on the day on which the application is submitted to Registers of Scotland, and ends (generally speaking) when the transfer completes, or when the application is withdrawn or deemed withdrawn, or when the community body's appeal options are exhausted.
During the restriction period, the landowner is prohibited from transferring the land or taking steps with a view to transferring the land (for example, advertising the land for sale). There are exceptions to this rule: for example, the land may be gifted, or transferred between group companies, and a sale may proceed if missives were concluded before the application appeared on the Register.
What do the Scottish Ministers do following receipt of an application?
Upon receipt of an application, Ministers must invite the landowner, any tenant, any creditor, and any other person whom the Ministers consider has an interest in the application to send views on the application within 60 days.
The owner is also invited to provide information on specific issues, such as whether it would be in the public interest for consent to be given by the Scottish Ministers (and, if not, why not), and how the owner will further the sustainable development of the land if it remains the owner. Any landowner who receives such an invitation should take it seriously and ensure that its position is made clear to the Scottish Ministers as soon as possible, and in all events within the 60-day period. Failure to respond may make it more likely that an application will be granted.
How will the Scottish Ministers make their decision?
Ministers must not consent to the application unless they are satisfied that the land is eligible land, and that other fairly stringent criteria are satisfied. This includes a requirement for the community body to have tried (and failed) to acquire the land via voluntary means.
If the application relates to detrimental land, there are some additional requirements to be satisfied, including that the community body has contacted any relevant regulators who might have powers to remedy the harm being caused (although there is no obligation to wait for the regulator to act).
If the Scottish Ministers approve an application, what happens next?
The community body must notify the Scottish Ministers and the landowner of its intention to proceed to buy the land within 21 days of the Scottish Ministers' approval. If this does not happen, the application is deemed to have been withdrawn. In practice, this means that community bodies should ensure they have access to the necessary funds before they proceed with the application to the Scottish Ministers. The community body can still change its mind and withdraw from the purchase at a later date but it may find itself liable for the landowner's costs in that event.
Can the landowner or the community body appeal against the Scottish Ministers' decision?
Yes, they can appeal to the Sheriff Court. In addition, a heritable creditor with a power of sale can appeal against a decision by the Scottish Ministers to consent to a sale, as can a disgruntled member of the community who does not agree with the community's decision to buy the land (which would presumably leave them somewhat unpopular within their community!). Appeals must be lodged within 28 days of the Scottish Ministers' decision and the Sheriff's decision is final.
What compensation is payable to the landowner?
Payment for the value of the land must be made to the landowner no later than six months after the date of the Scottish Ministers' consent (except where there have been delays in the valuation or due to appeals, in which case the deadline is two months from when the valuation is completed or the appeal is determined).
If payment is not made by these deadlines, the community body's application is treated as having been withdrawn.
In addition, a landowner may recover compensation from a community body for loss where a community body fails to proceed with a purchase. Community bodies can apply for grant aid from the Scottish Ministers in certain circumstances to help them pay such compensation.
Any loss caused to a landowner where the application was ultimately refused can be claimed by the landowner from the Scottish Ministers.
How is the valuation of the land established?
The Scottish Ministers should appoint a valuer within seven days of giving consent for a purchase. The valuer acts as an expert and not as an arbiter. Their assessment is to be based on the open market value of the land (with a willing seller and buyer) as at the date when the Scottish Ministers' consent was given. Compensation is also payable for any depreciation in value of the landowner's remaining land, and costs of disturbance to the landowner as a result of the land transfer. The Scottish Ministers cover the expenses of the valuation. The valuer has eight weeks from their appointment to make their decision.
Alternatively, the landowner and the community body can agree a valuation voluntarily.
The landowner and the community body both have a right of appeal to the Lands Tribunal in relation to the valuation. Appeals must be lodged within 21 days of the valuer's decision.
What happens to any existing securities?
Any existing securities are discharged to the extent that they relate to the application land (but remain live in respect of any other land covered by the security). It is worth noting that the community body must pay the creditor(s) under any security the amounts to which they are entitled before making any payment to the landowner. In practice that means the community body will need to obtain a redemption figure via the landowner, or go directly to the lender if the landowner is not co-operative.
Are there controls to stop the legislation being misused by "shell" or "fake" community bodies?
There are saving provisions that prevent a community body changing its governance structure and internal rules after acquiring land through this process, unless they have consent from Scottish Ministers. This prevents a shell body being created for the purposes of the right to buy, only for its constitution to be changed and effectively privatised at a later date. The Scottish Ministers have the power to compulsorily acquire the land if such a change is made in contravention of these rules.
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