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The Land Reform (Scotland) Act 2025 has now been passed. It introduces significant changes to the sale of large landholdings, which will now be subject to mandatory lotting decisions by the Scottish Ministers prior to sale.
We previously reported on the proposals of the Land Reform (Scotland) Bill in 2024 as it was passing through the Scottish Parliament, and as it has now received Royal Assent and been passed into law, we can consider the implications the lotting provisions will have for landowners in Scotland.
The core objectives of the Land Reform (Scotland) Act remain unchanged since the Bill was proposed (to increase land ownership transparency, empower communities, and create new opportunities) and, as the Act has now been passed into law, we are able to gain clarity on how the specifics of the Act purport to meet these aims.
Lotting decisions
The Act has imposed a prohibition on transfers of large landholdings until an application has been made to the Scottish Ministers to make a lotting decision, which will determine if the land would lead to more community sustainability in the vicinity if it were to be transferred in smaller lots rather than as a single landholding.
The landholdings affected by the prohibition are any that exceed 1,000 hectares; or an area of land that exceeds 50 hectares and forms part of a larger area exceeding 1,000 hectares where parts of that larger area are being transferred. The Act also establishes that a large landholding can comprise of two or more smaller holdings within 250 metres of each other that are owned by a single landowner or connected landowners (whereby the landowners are both companies in the same group) and form part of a larger landholding which exceeds 1,000 hectares.
The Act outlines that a valid application to the Scottish Minsters to obtain a lotting decision can be made by:
- The owner of the large landholding
- The owner of part of the land where it forms a composite holding
- A creditor in a standard security with the right to sell
A significant difference between the Act in its final form and the Bill is the framing of the test for deciding whether the land is to be lotted.
The Bill previously outlined that lotting would be required where it was determined that division of the land into lots would better serve communities by increasing engagement and sustainability. However, the Act now requires Scottish Ministers to be satisfied that transfers in smaller lots would be more likely to benefit the sustainability of communities than transference as a single landholding.
There are also now provisions made for reports to be obtained from the Land and Communities Commissioner to aid the decision process. The Scottish Ministers are also now under an obligation to ensure that any lotting decision is in the public interest.
Public interest has been defined in the Act as including the desirability of:
- Achieving a more diverse ownership of land, including more community ownership of land
- Furthering sustainable development
- Securing a greater proportion of community owned energy
- Advancing community wealth building
- Ensuring an adequate supply of affordable housing and of workspace for employment
Any decision for land to be transferred in lots must now specify the lots and provide reasons as to why dividing the land into lots is in the public interest, as opposed to a single transfer of the entire landholding.
The Act also introduces a timescale of six months from application in which Scottish Ministers must make a lotting decision. However, the Act imposes no outcome for failure by the Scottish Ministers to comply with this timescale, and as such it is difficult to predict whether landowners will face delays in lotting decisions.
The Act also imposes an obligation on the Scottish Ministers to issue guidance regarding lotting decision-making, including information about the process of making a lotting decision in practice and the circumstances under which a review would be instructed by the Land and Communities Commissioner.
The Act provides landowners and creditors with the statutory right of appeal to the Court of Session against a lotting decision, on the basis that the decision was made on an error of fact or law, or was unreasonable. This appeal must occur within 28 days of the lotting decision being made.
Exemptions
As with the original Bill, the Act gives the Scottish Ministers scope to decide that land need not be transferred in lots if they are satisfied that the owner of the land is either transferring the land to alleviate financial hardships, or that waiting for a lotting decision will cause or worsen financial hardship for the owner. However, this decision would still be made at Ministerial discretion, as the Act does not go so far as to impose automatic exemptions.
Compensation
The original compensation provisions proposed in the Bill have remained largely unchanged.
The Act has further clarified the process around compensatory claims, introducing a clearer framework for dealing with disputes over the amount of compensation payable and instructing Ministers to make further provisions regarding compensation to provide further transparency.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
