Community right to buy review: consultation

4. Potential improvements to Community Right to Buy

We set out below a list of potential improvements and associated consultation questions.

4.1 Combining the existing rights to buy

There are currently four separate rights to buy that community groups can access, depending on the type of land, the condition of that land, and whether it is a compulsory purchase or not. It is not always clear which of these four rights is the best option for a community group, and the procedural requirements for each are not identical.

In the interests of simplifying the right to buy process for applicants we are considering whether the four rights should be merged into two, one compulsory, and one non-compulsory. If we did this, we would ensure that the specific rights in the Crofting Community Right to Buy, which protect other rights afforded to crofters, are protected in the same way as at present.

At the moment, the three compulsory rights require different levels of information from the applicant community group, which reflects the differing level of “interference” in the owner’s legal rights.

Under the Crofting Community Right to Buy, amongst other things it is required:

• that it is in the public interest that the right to buy be exercised
• that the exercise of the right is compatible with furthering the achievement of sustainable development

The Community Right to Buy Abandoned, Neglected or Detrimental Land requires, amongst other things:

• that it is in the public interest that the right to buy be exercised
• that the exercise of the right is compatible with furthering the achievement of sustainable development
• that the achievement of sustainable development in relation to the land would be unlikely to be furthered by the owner of the land continuing to be its owner
• that the exercise by the community body of this right to buy is compatible with removing, or substantially removing, the harm to the environmental wellbeing of the relevant community,
• that the community body has, before the application is submitted, made a request to
  • a relevant regulator (if any), or
  • where there is more than one relevant regulator, to all such regulators, to take action in relation to the land in exercise of its (or their) relevant regulatory functions that could, or might reasonably be expected to, remedy or mitigate the harm, and
• regardless of whether or not a relevant regulator is taking, or has taken, action in exercise of its relevant regulatory functions in relation to the land) that the harm is unlikely to be removed, or substantially removed, by the owner of the land continuing to be its owner.

These four additional requirements are because this right to buy is about addressing issues with the condition of the land, that are not being addressed by the owner—but which potentially could be.

The Right to Buy Land to Further Sustainable Development (Part 5) requires, amongst other things:

• that it is in the public interest that the right to buy be exercised
• that the exercise of the right is compatible with furthering the achievement of sustainable development
• that the transfer of land
  • is likely to result in significant benefit to the relevant community to which the application relates, and
  • is the only practicable, or the most practicable, way of achieving that significant benefit, and
• that not granting consent to the transfer of land is likely to result in harm to that community.

These two additional requirements reflect the fact that this compulsory right is not about the condition of the land, but about the benefits that the transfer of the land could bring, balanced with the harm that could be caused if it is not.

If these three compulsory rights are combined, a consolidated set of requirements for the merged right will need to be proportionate to the full range of potential interference in the owner’s rights. In addition, any protection of crofter’s rights currently in Part 3 would be retained. For example, in the other compulsory rights, there is a ballot of the community to determine if they are in favour of the application. Under Part 3, not only do the community have to be in favour, but the majority of crofters in the community also have to be in favour.

1. Do you think that the three existing compulsory rights should be merged? If so, given that each of the existing ones provide a different level of rights to communities, in what way should they be merged?

2. Should the newly merged compulsory rights be based on the condition of the land or on the owner's use of the land? For example, the existing Part 3A rights are based on the condition of the land, whereas Part 5 rights are based on how it is being used

4.2 Community Body Structures

There are several requirements that community groups must meet, before being eligible (‘compliant’) to submit an application under any of the community rights to buy, including:

• They must define a geographic community
• They must have no fewer than 10 members
• Three quarters (75%) of the members must be resident in the community and eligible to vote in a local election in the area. These are known as Ordinary Members
• Those Ordinary Members must be in control of the company

These requirements were introduced to ensure that the community body is controlled by those who live in the area, and not those from elsewhere who might seek to influence what is done with the assets. That policy objective has not changed, but some community groups have struggled to meet the 75% Ordinary Member threshold. Scottish Government is therefore proposing that the threshold be lowered to anything over 50%

3. Do you support the Scottish Government recommendation that the residence and voting eligibility requirement is reduced to being anything over 50% of the community? What ratio of ordinary members should be required of a community body to ensure that control of community-owned assets remains with local members of the community?

The rights require that a minimum of 10% of the ordinary members of a community group are in attendance at general meetings of community groups, to ensure a representative local voice in decision making. Scottish Government’s policy objective remains unchanged, but we are considering whether 10% is sufficient to ensure this objective

4. Should the ratio of members required to attend be amended from the current 10%? If so, what proportion do you think would still ensure that the local community is fairly represented at general meetings of the company?

4.3 Petitions and Ballots

Several stages of the right to buy process require evidence of community support, which is essential for a community project to succeed. For the non-compulsory registration right (Part 2), the evidence required is in the form of a petition. For the compulsory rights, or when the non-compulsory right is triggered, the evidence required takes the form of a ballot of the whole community.

Currently, for timeous applications, a petition is required to show that at least 10% of the members of the community are in favour of the application for a right to buy. For late applications, legislation requires that a ‘significantly greater’ proportion of members in favour is required (which is currently set in practice at 15%).

A ballot requires that 50% of the community register a vote, and that 50% of those votes registered are in favour. In essence, this requires a demonstration that 25% of the community are in favour of acquiring the asset.

We have received feedback that these voting thresholds can be difficult for community groups to provide and should be reduced. It is critical that applications are supported by the community, but we are considering whether any of these thresholds could be reduced while still demonstrating sufficient community support.

5a. Could some of these levels of community support and turnout required be reduced while still providing sufficient evidence that the proposals have community support? If so, which ones?

5b. Should the demonstration of support in a ballot be solely based on the percentage of the community in support (i.e. with no separate minimum turnout requirement)—so for example a 25% threshold could be met by a 50% turnout and 50% support—or a 25% turnout and 100% support?

5c. If a ballot were based solely on the percentage of community support, with no minimum turnout, should the percentage of those against the proposals be considered, instead of just those in favour?

4.4 Late Applications

Currently, a community right to buy application that is received after an owner has taken steps to transfer the asset is considered to be a late application. At the moment, these steps are not defined but are left to the owner to state what they are and when they were taken. Scottish Ministers will then decide whether or not they are relevant steps to transfer. Late applications cannot be accepted if missives have already been signed. For late applications, community groups are expected to provide evidence that they have undertaken relevant work or steps towards a right to buy application prior to the owner taking steps to transfer ownership of the asset.

Once a late application is received, the owner must suspend all transfer actions until Scottish Ministers have decided on the application. If the application is approved, the owner must sell to the community body, and if it is rejected, they can continue with the original transfer.

At no point is this a compulsory right to buy, since at any time the owner may indicate that they no longer wish to sell the asset, even if the right to buy application is approved. In that case, the registration of a right to buy remains (for 5 years). Should the owner sell in the future, it would be triggered as a timeous application.

Up to 1 April 2025, of the 268 applications received since 2003, 62 of these have been late applications. We have approved 26 of those late applications. In the first five years after 2003, we received 106 applications, of which 23 were late (16 of these were approved). In the last five years, we have received 24 applications, of which 3 were late (none were approved).

There are many possible reasons why the percentage of late applications, and their success rates, might have dropped over the years. Various stakeholders have, however, noted that the property market has changed significantly since 2003. Stakeholders have told us that some properties are being sold without being marketed, communities are not being informed of sales, and rights to buy have been extended into urban areas, with a very different property market, without any changes being made to the Late Application process. We are therefore considering whether the late application process should be updated to reflect market changes. The Land Reform Bill, that is currently in progress in the Scottish Parliament, is also seeking to make changes to allow communities to be informed of planned sales of land.

6. What level of community support should be required for a late application to be accepted? The legislation requires it to be “significantly greater” than the 10% required for a timeous application. In practice, this has been taken to be 15%.

7. Should late applications only be accepted from community groups that can demonstrate that they are compliant with the Right to Buy provisions, prior to the owner taking steps to transfer (and should we define what is considered to be a step to transfer)?

8. Should late applications still require a community group to demonstrate that they had taken steps towards acquiring the land before the owner has taken steps to dispose of it? Further details will be developed on what those steps should be as part of the review.

9. Should it be a requirement of a late application that a detailed business plan for the asset be included, and should we define how much detail is required?

10. If a late application is approved, should the owner be prohibited from removing the asset from sale (given that they were already in the process of selling it)?

4.5 Third-Party Purchasers

The Right to Buy Land to Further Sustainable Development includes the option for community groups to nominate a third-party purchaser to exercise the right to buy (if granted). The policy objective here was to help address the issue of communities not having the expertise to take forward a project (such as affordable housing) themselves, but which (for example) a housing association would be able to deliver on their behalf.

There is no requirement for that third-party purchaser to adhere to any type of structure, to have any form of agreement in place with the community group, nor any business case for future of the asset.

11. Should third party purchasers remain an option under the compulsory rights to buy?

12. If third party purchasers remain an option, should requirements be placed on the structure of the third party purchaser for it to be eligible, for example in line with the compliance requirements placed on community group applicants?

13. Should the third-party purchaser be required to have an agreement in place with the community body that shows the future relationship between the two and any business plan in place for the asset, as part of the application?

4.6 Option Agreements

Option agreements are legal agreements that are in place between the owner of the asset that is subject to an application under a right to buy and third-party.

If such an agreement is in place, any application under right to buy must be declined as the legal agreement cannot be interfered with. The existence of such option agreements is not a matter of public record and so is not readily known by community groups in advance of making an application.

14. Should the existence of option agreements (although not their details) be something that an asset owner must make known to community groups that have applied for a right to buy the asset?

15. Rather than automatically requiring that an application is declined, should an application for a right to buy proceed through assessment, and then, if approved, take second place to the option agreement, meaning that if the option is not taken up, then the community body right to buy will apply?

16. Should there be a limitation on the types of option agreement that cause an application to be declined? For example, should they only be relevant if not between members of the same family, or companies within the same group?

4.7 Appeals

After the Ministerial decision is taken under the rights to buy, interested parties have the right to appeal that decision in accordance with section 61 of the Land Reform (Scotland) Act 2003. Appeals are usually from the community group in the case of a rejection and usually from the asset owner in the case of an approval.

Interested parties have a period of 28 days from the date of the decision to submit such an appeal. Appeals are heard by the local Sheriff Court. Once the Sheriff has come to a decision, that decision is final.

17. Should the period allowed to submit an appeal be extended to allow both parties to make a more informed decision on whether to appeal? If so, how long should it be, given that the asset is free to be sold if the application is rejected?

4.8 Registration

Once a non-compulsory (Part 2) application has been approved, it places a prohibition on the owner for a period of five years, preventing them from transferring that asset without the right to buy being triggered and the community group given the option to purchase the asset at market value. It does not prevent the owner from renting or developing the asset. This is called a registration of interest. After 5 years, if the right to buy has not been triggered, the community must re-apply to retain their registration. It is clearly important to require re-registration to ensure that the community group is still interested and ready to act if the right to buy is triggered, but we are considering whether it would be appropriate to lengthen the period of registration, as the process can be time consuming and complex for some groups. Requiring this less often could be helpful to those groups.

18. Should the registration period be extended from the current five-year period?

4.9 Any other comments

At this point we would like to draw your attention to Annexes A and B of this document which cover issues we propose to take forward via non-legislative means or that are relatively minor, as well as issues we do not propose to take forward at present. If you would like to comment on these matters or if you feel that the review raises issues that you do not feel have been covered elsewhere in this consultation, then we invite you to comment below. Please ensure that your comments remain focussed on the review and the topic of community right to buy.

19. Do you wish to make any other comments in relation to the matters raised by this consultation and which you feel have not been covered by any of the earlier questions?