Jeremy's Blog 22nd March 2024: Scottish Land Reform - The Next Steps
This article by Jeremy Moody first appeared in the CAAV e-Briefing of 21st March 2024
Scotland’s latest Land Reform Bill has now been published. Most of it concerns a series of agricultural tenancy changes and a revised and consolidated Small Landholders regime for perhaps less than 70 tenancies. However, its opening sections 1 to 6 would create a framework to regulate the management of over 400 of the largest rural ownerships and to control the disposal of land by many more with potential effects on Scotland’s land market and farming.
The Policy Memorandum describes land reform as an “ongoing process”. This Bill follows Acts in 2003 and 2016. These provisions reflect work by the Scottish Land Commission, created by the 2016 Act, and are focused on concerns about local dominance of large landownerships, incidentally including those of the Scottish Government and other public bodies. That is the policy agenda to be recognised and is to involve a new Land and Communities Commissioner with expertise in both land management and community empowerment.
The preceding consultation had set out proposals for estates over 3,000 ha (about 7,400 acres and now “large land holdings”) to have formal land management plans, now to meet certain criteria and be developed with community engagement. It also outlined further cross compliance measures under the future agricultural policies to which the earlier suggested exemption for “family farms” might perhaps apply but is not seen here. This is focused on the management of landholdings seen as locally dominant.
The more striking proposal concerns ownerships over 1,000 ha (“large holdings of land”), prohibiting the disposal of land without Ministerial consent with qualified powers for Ministers to make decisions about how land may be lotted, favouring dispersal of ownership but with possible compensation for consequent loss of value. These are only triggered by the prospect of disposal for value but would now be a factor for large farms, both hill and arable as well as for estates, forests, sporting units and other ownerships.
It will make Ministers responsible for these decisions, including how they do or do not result in the green investment that the Cabinet Secretary is also seeking – and, to date, attracted by the scale Scotland can offer. The mechanisms involved have a bias towards community acquisition, including an obligation to consider a reasonable request to lease some or all of an ownership.
One of the many challenges in this package is the possible effects on markets, values and transactions. This may highlight the tension between policy objectives where the aims here bear on efficient markets, productive assets and achieving climate change and other green goals.
Adding friction and cost to transactions, the new administrative processes are likely to be protracted – the Bill even includes provisions for expediting some applications to Ministers. The Land Commission has looked at the operation of SAFER in France, where the bureaucracy makes it difficult for an agent to handle more than a handful of farm sales a year. Depending on the final provisions, perhaps marketing might become a two stage process, first seeking prior Ministerial decisions and any community issues before marketing more widely. Off-market sales might cease.
Once this is in place, values would remain a matter of supply and demand, taking into account any change in market volumes. They may also be influenced by any change in policies by secured lenders, if concerned about the security offered by such holdings. That risks limiting farming finance for purchase or investment, especially if it is feared that the “ongoing process” may, over time, bear on smaller units, possibly affecting values more widely, but perhaps less affecting the ability of community bodies to buy.
The prospect might see markets oscillate in the short term as well as possible precautionary or pre-emptive action by some and others holding fire. Where a land sale is now in mind, this could prompt a flurry of action ahead of commencement which might be at least some months after enactment, as seen before known increases in Stamp Duty. Then, if there is no bridging mechanism, there might be a pause before Ministerial decisions start to come through.
The Bill has only started, awaiting debate with Government and other amendments and then all the necessary regulations, systems and the new Commissioner. We have much to watch.