Fri 22 Nov 2019

Register of Persons Holding a Controlled Interest in Land

For a variety of different reasons, it can be helpful (or necessary) to know who owns or controls a particular building or piece of land.

However, simply looking at the title deeds or the publically available property registers won't always give a sufficiently clear answer about who ultimately controls the land or building and who makes the decisions in respect of it. Property may, for example, be held in the name of a partnership, trust or a company with a complicated structure - the end result being that it can be very difficult, time consuming and expensive to get to the bottom of who ultimately owns the property and who actually makes the decisions.

In order to address this and increase transparency about who is making decisions in respect of land in Scotland, the Scottish Government prepared draft regulations in June 2018 to create a new register that will detail those persons holding a controlling interest in land and property in Scotland. This new register, to be known as the 'Register of Persons Holding a Controlled Interest in Land' ("Register"), will detail anyone who has a 'controlling interest' in land in Scotland where it is not apparent from other public registers - including where land is held by partnerships, trusts and overseas entities. The Register will be freely searchable by anyone (including members of the public) and aims to make it easier to find out who is controlling and making decisions about areas of land in Scotland. The consultation period on the draft regulations closed in November 2018. The Scottish Government published a report analysing the responses to the public consultation in April 2019.  It is intended that the Register will be in place by April 2021.

If the draft regulations are approved, the introduction of this new Register will see an owner, or a tenant of a lease of more than 20 years, being required to provide details of any other person or persons who are in a position of control or directly or significantly influence the activities of the owner or tenant - such additional persons to be known as 'associates'. Where the associate is an individual, their address and month and year of birth will have to be provided and will be publically available on the Register. If the associate is a company, then the company number and registered address will have to be supplied. If the relevant associate is a trust, partnership, unincorporated association or an overseas entity, then the details of those individuals with control within those bodies will need to be provided.

At the moment, it is proposed that information about associates will not have to be provided if the associate is already subject to other transparency regimes, for example the UK wide register of people with significant control which covers amongst other entities, UK companies. This is to avoid a double reporting requirement. However concerns have been raised that this results in fragmentation of information and some feel that it would be preferable and in the public interest for all associate information to be included in the Register.

It is important to be aware that the Register is separate from the proposed new register of beneficial owners of overseas entities which the UK Government have committed to establish and also have operational by 2021. This UK wide register will apply to overseas legal entities including companies which own land or are tenants of registrable leases in the UK.  As mentioned above, although the current intention is that there should not be double reporting for entities subject to other regimes it remains to be seen how the UK register of overseas entities and the Register will interact.

While increased transparency in respect of landownership in Scotland is to be welcomed, from a practical point of view the Register may have a significant impact on many property owners in Scotland including some rural and agricultural land holdings. For a number of reasons, title to such land is often held in the name of farming partnerships or trusts and where this is the case, the regulations will require further information to be submitted by the owners and tenants of such land. The duty to register associate information will not only arise on a change of ownership but will arise for existing owners and tenants when the regulations come into force. Although there is a proposed grace period of 6 months up to October 2021, failure to comply with the regulations could attract criminal penalties liable on conviction to a fine of up to £5,000. In light of this, once the detail of the regulations has been finalised, it would be prudent for owners and tenants of land in Scotland to consider how they might  be affected by this new Register,  and whether or not  they have a duty to comply with it.

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