A new register to increase transparency of land ownership in Scotland is set to be introduced from next year.
The Scottish Government will introduce a new register of land ownership in April 2022 but awareness of its purpose, detail and implications among existing owners of land and property appears to be low.
As those failing to comply with the new regulations will face criminal sanctions punishable by a financial penalty it is important that all those who may be affected by the new rules are aware of their obligations.
The Register of Persons Holding a Controlled Interest in Land (RCI) comes into effect on 1 April next year. Registration is not triggered by a purchase, sale or lease of land and property, but it places an obligation on those affected to supply the relevant information to the RCI from 1 April next year.
The purpose of the new register is to provide transparency about land ownership. It seeks to achieve this by showing who actually makes and controls the decisions of owners or tenants of land, where public registers may not provide this information.
The Keeper of the Registers of Scotland will establish and maintain this public register.
Is the RCI a case of overkill when the burden of compliance and costly penalties for non-compliance is set against the intended benefits? Only time will tell if it achieves its aims, but in the meantime, I would urge the wider advisory community of the need to highlight it to relevant clients.
It’s important to note that responsibility lies with the owner/tenant (known as the recorded person) and/or anyone who exercises significant influence or control (known as the associate) of land, to provide the relevant information to the RCI within specified timescales.
The recorded person is the owner or tenant (for more than 20 years) of land and property. This includes individuals, partnerships, trusts, unincorporated bodies, and overseas entities. Key exceptions are limited companies registered in the UK. Interestingly, this is because all UK-registered limited companies are required to provide details of any persons with significant control in their listing at Companies House.
A useful example when considering the RCI would be the following: If land was purchased many years ago by a partnership in the name of the original partners and other parties/offspring were subsequently assumed as partners and trustees in the business that holds title to the property, they would not be named on the Land Register. The RCI will capture that sort of information and its purpose, through increased transparency, is to make it easier for third parties to contact the right people who make decisions about the property. For example, if a third party wants to lease a property, it may make it easier to find the correct person to approach and simplify the transactional process.
Those with landownership structures where the actual person/s with significant influence or control over the landholding are not named on the property’s title deeds will be forced to act. With the advent of this transparent way of life, their details will be in the public domain. However, there is provision for an associate to request that their personal information not be disclosed, through a security declaration, if disclosure would put them at risk of violence, abuse or intimidation.
Failure to comply could end up with criminal sanctions and a hefty fine – a harsh penalty indeed and one which can be avoided given appropriate professional advice. I suspect we could ultimately see plenty of inadvertent breaches given the lack of promotion undertaken so far and short timescales involved. However, ignorance has never been a good defence for non-compliance in any matter. That said, given the complexity of the regulations and short timescale to implementation of the RCI, the Scottish Government has included a transitional period of 12 months before sanctions are enforced and the day to avoid costly errors is therefore 1 April 2023.
For those who think they may be affected by the RCI professional advice is a must. We may have weightier things on our minds at the moment, but these changes are looming, and action may be required.
Bill Meldrum is Head of Commercial Property and a Partner within our Property Group. If this blog has raised any questions or you would like to discuss any other commercial or rural property matter, please complete the enquiry form or call on 0131 225 1200.
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