The majority of landowners and their agents are now well acquainted with the new land registration regime introduced by the Land Registration (Scotland) Act 2012 but just as they are getting to grips with the processes and timescales involved, it seems that they will in the future need to take account of another Register. The proposed Register of Persons Holding a Controlled Interest in Land requires information to be disclosed in respect of persons (including partnerships, trusts and overseas entities) holding controlled interests in land.
While the new Register is not yet in force, draft regulations have been published by the Scottish Government and the consultation period closed in early November 2018. In practice, the proposals will mean yet another check for lawyers to make at the landowner’s expense.
The proposed Register
Aiming to implement provisions set out in the Land Reform (Scotland) Act 2016, the rationale behind the new Register is increased transparency about who is actually making decisions in relation to Scotland’s land.
The Register will make it easier for anyone (whether that be an individual, community body or other party) to find out who has control over the decision-making process in relation to any particular area of land in cases where it is not easily identifiable from simply looking at the title. Anyone will be able to access the Register.
In terms of the regulations, the party holding title to the land either as the owner or as a tenant under a long lease is known as the “recorded person”, while the party who has a controlling interest over the land is known as the “associate”. Examples of controlling interests include:
- where the recorded person is a limited partner in a partnership who owns or tenants the land with a general partner (the associate) having control over the land
- where the recorded person holds the land as a trustee or on behalf of a trust where the trust or other trustees are deemed to be the associates
- an unincorporated association where the associate is the party responsible for the general control and management of the administration of the body
- an overseas entity where the associate directly or indirectly holds more than 25% of the voting rights.
Practicalities for landowners and tenants
The Register, which is anticipated to become operational in April 2021, will have a particular impact on individuals and bodies in the rural sector where many farming partnerships, estates and trusts hold title to land in a structure which will require additional information to be submitted to the new Register.
The definition of controlling interests also includes situations where there is a contractual or other arrangement in place, so parties may be required to disclose information about unrecorded documents such as option agreements.
It remains to be seen how the new Register will work in practice but in any event both landowners and their solicitors must, at the very least, be mindful of the new Register and its potential impact.
As if this wasn’t enough, the UK Government is to create a Register of Overseas Entities Beneficial Owners which may be operational in 2021. It remains to be seen how this will interact with the Register of Persons Holding a Controlled Interest in Land.
This article featured in the Winter 2018 edition of Land Business Magazine.
