Land Reform (Scotland) Bill: business and regulatory impact assessment

Purpose and Intended Effect

2.1 Background to the Land Reform Bill 2024

2.1.1 More detailed background to the Land Reform Bill, including an overview of the history of Land Reform legislation in Scotland, can be found in the Policy Memorandum accompanying the Bill^[1]. The content in this BRIA provides a high-level summary.

2.1.2 The Scottish Government defines land reform as “…the ongoing process by which the ownership of land, its distribution and the law which governs it is modified, reformed and modernised.” Land reform has been a continuing legislative priority since devolution.

2.1.3 The proposals put forward in this Bill are intended as targeted and proportionate ways of addressing a number of risks identified by the Land Commission through their work on scale and concentration.

2.1.4 These proposals deliver Programme for Government commitments to improve the transparency of land ownership, further empower communities, and help ensure that large-scale landholdings are delivering in the public interest. These proposals deliver The Bute House Agreement commitment to deliver legal mechanisms to tackle scale and concentration of land ownership.

2.1.5 The Bill introduces the following measures which would apply to owners of large-scale landholdings, grouped into two Parts for the purposes of this BRIA:

Part A measures: Obligations on landowners

• introduction of Ministerial powers to make regulations which will place new obligations on landowners to produce land management plans and to engage with local communities, to support compliance with the principles of the Land Rights and Responsibilities Statement (LRRS).

Part B measures: Requirements prior to transfer

• requirements (“pre-notification requirements”) for community bodies to receive prior notification in certain cases that the owner intends to transfer a large landholding, or part of it, and provide an opportunity for community bodies in the area to purchase land.
• the introduction of a test (“transfer test”) at the point of certain transfers of all or part a large landholding if the land to be transferred is over 1000 hectares, to determine if the owner should be required to transfer the land in smaller parts (lotting).

The Bill establishes a new Commissioner at the Scottish Land Commission to be known as the “Land and Communities Commissioner”, with responsibilities in relation to the new obligations on landowners and the transfer test.

2.1.6 Definition of land in scope

• for Part A measures, the Bill applies to a landholding that is more than 3000 hectares, or a landholding of at least 1000 hectares that accounts for more than 25% of a permanently inhabited island,
• for Part B measures, the Bill applies to a landholding that is more than 1000 hectares.

It should be emphasised that a single ‘landholding’ can for those purposes include land held under more than one title deed, so long as the relevant titles are held by the same person(s), and are geographically contiguous.

2.2 Background to Rural Land Data in Scotland

2.2.1 Rural Scotland accounts for 98% (7.62 million hectares) of the total land mass of Scotland (7.79 million hectares) and 17% of Scotland’s population are resident there^[2]. The majority of rural land in Scotland is privately owned and managed.

2.2.2 According to the latest Scottish Government statistics there were 754 assets in community ownership in 2022 owned by 505 community groups, consisting of 212,000 hectares (472,688 acres)^[3]. This represents around 3% of Scotland’s land (with both the number and total area trending upwards since the establishment of the NPF indicator). Around 12% of Scotland’s land is in public ownership^[4] (primarily land managed by Forestry and Land Scotland) and approximately 2.5% of land is owned by third sector/NGOs such as the National Trust for Scotland and John Muir Trust.

2.2.3 Regardless of ownership structure, the majority of Scotland’s land is classified as agricultural land. As reported in the 2023 June Agricultural Census, the total Scottish agricultural area in 2023 was 5.33 million hectares^[5]. It should be noted, however, that large areas of agricultural land are only lightly farmed. For example, hilly or mountainous areas are mostly used for rough grazing. There were 44,698 agricultural landholdings (a mix of owned and rented) recorded in the latest census, the vast majority of these holdings (over 95%) were less than 500 hectares in size.

2.2.4 Other private landholdings in Scotland may combine agricultural and non-agricultural activities. There is no robust national level data on the value of economic activity on private ‘rural estates’ in Scotland, nor is there an accepted definition of ‘estates’. Hindle et al. 2014^[6] provides an indicative illustration of what the impacts of the sector as a whole may look like across Scotland based on an extensive survey of private estates. The research suggests that the following economic activities are typical of private estates in Scotland:

• In-hand agriculture, tenanted agriculture and crofting
• Forestry and woodland management
• Sporting land uses (hunting, shooting, fishing)
• Conservation management
• Renewable energy developments
• Residential property management and letting
• Tourism and leisure (holiday accommodation and visitor attractions)
• Commercial property
• Minerals and quarrying
• Other activities including food and drink manufacturing

2.2.5 For estates over 1,000 hectares (estates which will be impacted by at least some of the provisions of the Bill), the four most common activities generating business income were provision of residential property, agriculture, sporting activity and forestry.

Land Ownership Data in Scotland

2.2.6 As part of this BRIA and the policy development process, alternative options for hectarage size thresholds were considered and the impact of these thresholds on the magnitude of costs and benefits arising for different groups and sectors were assessed.

2.2.7 Land Register data from RoS contains land which has been transacted across Scotland since 2003 (or earlier depending on county area). Older titles (contained in the Register of Sasines) remain in physical copy only. RoS have developed and released a further dataset – Unlocking Sasines^[7] – which contains indicative ownership extents for titles which exist in Sasines. Data was extracted from the Land Register (as at 14 October 2023) and shared with Scottish Government. Rights in land recorded in the Land Register of Scotland can include ownership of land, ownership of separate legal tenements such as salmon fishing, sporting or mineral rights; as well as servitudes and burdens which grant other rights and responsibilities in the use of land. Land Register title tenures include ownership and long-term tenancies. For the purposes of this analysis, RoS included all tenures, legal tenements and polygons associated with each title. The data therefore is not wholly analogous to the definition of landholding for the purposes of the Bill, but does provide useful context to the likely scale of impact across Scotland’s land.

2.2.8 It is widely recognised that land ownership data is fragmented with data collected across multiple organisations with different remits. This leads to partial coverage and therefore limits the attribution of tenure to individual land parcels and the identification and classification of active land managers and final beneficiaries of land. Land ownership data is held in several sources including Scottish Government Agriculture datasets, Forestry and Land Scotland (FLS), Registers of Scotland (RoS), Local Authorities, from the private sector and other sources. The datasets differ in terms of scope, coverage, granularity, frequency of update, and cost of access.

2.2.9 The analysis in this BRIA utilises detailed modelling which the Scottish Government have commissioned from the James Hutton Institute^[8]. This modelling uses a combination of relevant datasets to give a more robust estimate of the number of landholdings that may be in scope for the different hectarage thresholds considered. We are grateful for the collaboration of the James Hutton Institute (JHI) and for the expert advice provided. In addition to data sourced from the JHI, we have also acquired information from RoS and the SLC which have informed our assessment of the impact of the Pre-Notification and Transfer Test.

2.2.10 The combined RoS data suggest that there are 2958 estates of 500 hectares or more in Scotland, comprising two-thirds (63%) of Scotland’s land. Tables 1 and 2 show the combined titles in the Land Register and Unlocking Sasines dataset broken down by selected hectarage thresholds (absolute numbers and cumulative totals).

*The area totals in these tables are not arithmetic totals of each column, but a calculation of the combined footprint area of titles in each category, with overlaps in rights within and between titles removed.

Source: Registers of Scotland

*The area totals in these tables are not arithmetic totals of each column, but a calculation of the combined footprint area of titles in each category, with overlaps in rights within and between titles removed.

Source: Registers of Scotland

2.2.11 The data from RoS indicates that around 40% (3.09 million hectares) of Scotland’s land is concentrated in 623 land titles. Halving the 3,000 threshold to 1,500 would increase land coverage to around 50% (3.92 million hectares) of Scotland’s land and would more than double the number of titles in scope to 1,339. A threshold of 1,000 ha (as used for the Part B measures in the Bill) would bring in scope 57% (4.4 million hectares) of Scotland’s land and 1,810 land titles.

2.2.12 The data from RoS includes mainland titles and ‘island’ tiles^[9]. 95 titles (out of 623) were located on islands and were above 3,000 hectares^[10]. 228 titles (out of 1,180) were located on islands and were above 1,000 hectares.

2.2.13 While a title will often correspond to the intuitive idea of a ‘landholding,’ this is not always the case. A landowner can register adjacent areas as separate titles at first or subsequent registration. Multiple contiguous land titles may therefore be owned by a single landowner, so using title data alone as a proxy measure for the number of large-scale landholdings is likely to overestimate the actual number of estates that will need to comply with new duties set out in the Bill.

2.2.14 To address this and to support the analysis in this BRIA, the Scottish Government commissioned the James Hutton Institute to make an assessment of the total number of landowners with one or multiple titles, with a combined hectarage above 3,000 ha or 1,000 ha. The analysis combines information sourced from the Who Owns Scotland dataset^[11], Forestry and Land Scotland data and IACS data^[12] which combined cover around 5.5m hectares of Scotland’s land^[13]. The results provide a very similar picture to RoS data in terms of total land coverage (4.90m hectares vs 4.91m hectares).The estimate of the number of landholdings is significantly lower than the estimated number of titles, with 414 above 3,000 hectares and 1,066 above 1,000 hectares (compared to 623 and 1,810 titles respectively using RoS data). This discrepancy is primarily a result of a single owner having multiple titles across a single landholding.

2.2.15 We have used these estimates (table 3) as being the best available for the analysis set out in this BRIA, but stress that they are not definitive due to the challenge of identifying multiple titles in close geographical proximity with single ownership, and other challenges with the data.

Source: James Hutton Institute analysis

2.2.16 Some of the titles that fall within the scope of the large-scale landholding definition are owned by public sector bodies, as well as Charities/NGOs. Internal Scottish Government data, from Land Use Portfolio Office project ‘Delivering Climate Change and Biodiversity Goals on Publicly Owned Land’ provides an estimate of the number of landholdings owned by public bodies above the two thresholds set in the Bill. Further information is provided in para 4.3.33, which discusses the costs and benefits of the bill for Public bodies and the Third Sector.

Source: Scottish Government

Land Transaction Data for the Pre-Notification requirement and Transfer Test

2.2.17 The rural land market in Scotland is relatively small, with very little land transacted every year^[14].

2.2.18 Evidence gathered by the SLC’s latest rural land market report suggests that in recent years (2020, 2021 and 2022), the average number of rural land sales (above 25 hectares) was around 250 transactions per year, with 59% of land being classified as farmland, 31% being classified as forestry and woodlands and 10% being classified as ‘estates’^[15]. Based on this data, the vast majority of rural land transactions would not be affected by the Transfer Test considered in this BRIA as they concern landholdings under 1,000 hectares. Across a 3 year period, 24 transactions (5-12 transactions per year) were for landholdings above 1,000 ha. More detail is provided in the discussion of costs of the Transfer Test to private landowners.

2.2.19 The Pre-Notification requirements will apply to more transactions per year than the Transfer Test, as sales of parts of any large-scale landholding may be subject to the process.

2.2.20 As part of the consultation process for this BRIA, the Scottish Government acquired data from RoS on the number of transfers of part (TP) of titles from ‘parent titles’, where the size of the ‘parent title’ was above a given hectarage threshold (3,000 ha for Option 2, 1,000 ha for Options 3 and 4 considered in this BRIA).

2.2.21 A transfer of part (TP) arises when a deed over part of a registered land either creates a new interest (i.e. grant of a lease), or transfers ownership of a part of the previously registered land to a new proprietor. Transfers of part can be identified in RoS data by filtering for a dedicated TP application type. We were provided data on TP applications registered from 2018 to 2022 for transfers of ownership (grants of long leases were removed from the data, as these would not be subject to a test).

2.2.22 In all cases the ‘parent title’ recorded in these cases includes the footprint (all spatial rights), not just the area of exclusive ownership of the parent title. A large ‘data artifact’ related to a housing development in the central belt which skewed the data was identified and corrected for, but it remains the case that the figures presented are likely to overstate the number of transactions that would be in scope for the Pre-Notification requirements based on the hectarage of the parent landholding.

2.2.23 Table 5 sets out the number of transfers of part from parent titles over 1,000 hectares and those over 3,000 hectares. On average, across the 5 years of data available, around 140 transactions per year were from landholdings over 1,000 hectares and around 84 transactions per year were from landholdings over 3,000 hectares. Each individual transaction could be very small (e.g. croft houses) so this data is not directly comparable to the transaction data set out in paragraph 2.2.18 which excludes transactions of less than 25 hectares. As TPs are a first registration type, the new TP titles may not be mapped yet by RoS and final area information was therefore not available.

Source: Registers of Scotland. Note ‘Over 3,000 ha figures are a sub-set of the ‘Over 1,000 ha figures’.

2.2.24 Off-market sales are considered important in many rural market reports, with Strutt and Parker estimating as many as one in five sales occurred off-market in 2022^[16]. There is some evidence to indicate that off market sales are greater for larger landholdings than smaller ones . According to the 2022 Rural Land Market report produced by the SLC, 45% of estates were advertised off-market in 2020, with this rising to 64% in 2021^[17].

2.2.25 The market for land transactions in Scotland has been described in the SLC Rural Land Market Insights 2023 report^[18]. The most significant theme from land agents was that general environmental, social, and governance (ESG) motivations had become drivers for investment in the estates market. Specifically, the key new drivers were identified as peatland restoration opportunities for carbon emission off-setting, native woodland creation opportunities to capture carbon, and rewilding opportunities for nature restoration.

2.2.26 Uncertainties around land investments were also reported in the SLC Market review, which included: the carbon market; taxation; agricultural support payments, and how these could change in the future.

2.3 Objectives

2.3.1 The Scottish Government is committed to an ongoing programme of land reform, aimed at bringing about “a Scotland with a strong and dynamic relationship between its land and people, where all land contributes to a modern, sustainable and successful country, supports a just transition to net zero, and where rights and responsibilities in relation to land and its natural capital are fully recognised and fulfilled”.

2.3.2 This Bill is intended to help realise this vision by bringing forward legislative requirements in relation to the ongoing management and transfer of large landholdings. These requirements are based on recommendations of the Scottish Land Commission, and are intended to be targeted and proportionate ways of addressing the risks identified by the Land Commission through their research.

2.3.3 The specific objectives set out for the Bill and the duties which meet these objectives are aligned with the following national outcomes:

• Communities – we live in communities that are inclusive, empowered, resilient and safe,
• Environment – we value, enjoy, protect and enhance our environment,
• Economy – we have a globally competitive, entrepreneurial, inclusive and sustainable economy,
• Human Rights – we respect, protect and fulfil human rights and live free from discrimination.

2.4 Rationale for Government Intervention

2.4.1 A summary of measures and their rationale is provided below, with further detail set out in the Policy Memorandum for this Bill.

Description of Land Reform Bill measures and rationale for intervention

2.4.2 Measure: Land management plans, and community engagement obligations

Description: The introduction of Ministerial powers to make regulations which will place new obligations on landowners to produce land management plans and to engage with local communities, to support compliance with the principles of the Land Rights and Responsibilities Statement (LRRS).

Rationale: To further improve the transparency of land ownership and management in Scotland, and to strengthen the rights of communities in rural areas by giving them greater involvement in decisions about the land on which they live and work.

2.4.3 Measure: Pre-notification of intention to sell

Description: Introduction of a requirement for a prior notification of intention to sell large landholdings to offer communities an enhanced opportunity to make a late application under existing community right to buy (CRtB) legislation (for which see the 2003 Act).

Rationale: To improve the sustainable development of communities by increasing opportunities for community bodies to purchase land when it comes up for sale.

2.4.4 Measure: Transfer test

Description: A test at the point of certain transfers of all or part a large landholding if the land to be transferred is over 1000 hectares, to determine if the owner should be required to transfer the land in smaller parts (lotting).

Rationale: To allow Scottish Ministers to consider (before a planned sale) if land being sold in lots could increase the supply of more varied plots of land in a way that might be expected to have a positive impact on the ongoing sustainability of communities in the area.