The extension of the ‘Community Right to Buy’

The Community Right to Buy (‘CRTB’) was first introduced by the Land Reform (Scotland) Act 2003 (the ‘2003 Act’)[1]. It allows a ‘community body’ to register an interest in ‘registerable land’, which gave it a pre-emptive right to buy if the landowner tried to sell the land. The term ‘land’ includes buildings and other structures, land covered with water, and any right or interest in or over land[2]. It should be emphasised that CRTB in its present form does not, with the exception of a special ‘crofting community right to buy’[3],give a ‘community body’ any right to acquire land from a landowner who does not wish to sell, but only to acquire land if the landowner wishes to sell land.

However, when current legislation is fully implemented there will be some circumstances in which community bodies will have the right to acquire land even if the landowner does not agree.   The 2003 Act was a culmination to many years of campaigning by a range of organisations concerned about the pattern and structure of land ownership, particularly in the Highlands, and in rural Scotland more generally. For this reason, it only applied to land outside designated settlements with a population of over 10,000. Effectively, most of urban Scotland was excluded from its scope. However, the Community Empowerment (Scotland) Act 2015 (‘the 2015 Act’) removed that limitation, extending the CRTB throughout Scotland. With some minor exceptions, any land in Scotland is potentially the subject of a CRTB application. The only land which is excluded is ‘land consisting of a separate tenement which is owned separately from the land in respect of which it is exigible’ (although that exclusion does not cover salmon fishings or mineral rights (other than rights to oil, coal, gas, gold or silver)[4].

 

Definition of a ‘community body’

That extension of the geographical scope of the 2003 Act was the principal change to CRTB made by the 2015 Act. It was not the only change, however. Under the original 2003 Act only a company limited by guarantee could qualify as a community body. The 2015 Act extended the definition of community body so that it now also extends to Scottish charitable incorporated organisations (an ‘SCIO’) and a community benefit society[5].

In all cases, the community body also has to meet certain criteria if it is to qualify to make use of the CRTB[6]. These are intended to ensure that the body is a genuine community organisation. They include requirements that it must have not fewer than ten members; that at least three-quarters of the members of the body are members of the community; that members of the body who consist of members of the community have control of the body; and that any surplus funds or assets are to be applied for the benefit of the community[7]. ‘Community’ is defined by reference to a specific geographical area, normally a postcode unit or unit and comprises only the persons resident in that area and entitled to vote, at a local government election, in a polling district which includes that area. The community body may not, therefore, include all members of the local community concerned. Indeed, it is hard to envisage circumstances in which it could except in the case of very small or lightly populated areas. In addition, a body does not qualify as a community body unless the Scottish Ministers have given it written confirmation that they are satisfied that its main purpose is consistent with furthering the achievement of sustainable development.

The application process and the criteria for approval The first step a community body which wishes to make use of the CRTB provisions is to make an application to Scottish Ministers. That has the effect of freezing any transfer of the land (or taking any action ‘with a view to the transfer of the land’) until the application has been disposed of. The Scottish Ministers must decide if the application shall be registered in the Register of Community Interests in Land maintained by the Keeper of the Registers. They have to be satisfied that certain criteria are to be met for an application to be registered[8], namely:

— the proposed acquisition must further the achievement of sustainable development – ‘sustainable development’ is not defined in the relevant legislation;

— a significant number of members of the community body must have a connection with the land and the land is sufficiently near; and

— there must be sufficient level of support within the wider community, as defined above.

The support of 10 per cent of that community is normally sufficient; less than 10 per cent may be if it is in the public interest.

 

The Extension of the ‘Community Right to Buy’

Although an application for registration of a community interest may be made at any time, there are stricter conditions which apply for ‘late applications’. These are principally applications where, at the time that the application was submitted, action has been taken ‘with a view to the transfer of the land’, but missives have not yet been concluded. Where missives have been concluded, or an option to acquire the land has been conferred, the application for registration will be refused. The criteria which are applicable in the case of ‘late applications’ are much stricter than those which normally apply[9]. If the Scottish Ministers accept the application and it is registered, that has a number of effects. Most importantly, for so long as a community interest in land is registered the owner of the land, and any creditor in a standard security having a right to sell the land, is normally prohibited (there are some exceptions) from transferring that land (or any land of which that land forms part); or taking any action with a view to the transfer of that land (or any land of which that land forms part), except in accordance with the relevant legislation. An attempted transfer in breach of the legislative provisions is of no effect. It should be noted that the prohibition is not just on transfer, but also on taking action ‘with a view to transfer of land’. That includes advertisement or otherwise ‘exposing the land for sale’, negotiations, or proceeding further with proposed transfer initiated prior to registration.

 

Making the CRTB effective

As outlined above, the CRTB only gives the community body a ‘pre-emptive’ right to buy. It only comes into practical effect as a right to buy if the owner (or creditor) wants to go ahead with a transfer (which in most cases will be a sale). If the owner or creditor wishes to do that in respect of land in which a community interest is registered, it must intimate that proposed transfer of land to the Scottish Ministers and the relevant community bodies[10]. If the relevant community body wishes to proceed to buy the land, it needs the approval of the community (in a ballot), with a ‘sufficient proportion’ of members of the community voting, by a simple majority, in support of the proposal. There are detailed procedures for the ballot set out in the 2003 Act, including the provision that the expense of a ballot is met by Scottish Ministers[11]. In addition, Scottish Ministers can only consent to that acquisition going ahead if they are satisfied that:

— the community body still satisfies the requirements to be regarded as such;

— the community body’s proposals are still compatible with achieving sustainable development;

— the proposed purchase is in the public interest; and

— there has been no change in circumstances which would have resulted in interest not being registered (if they had applied at the time of registration)[12].

If the proposals receive majority support in the community ballot, and the Scottish Ministers consent, the community body needs to make an offer to buy the land. Its offer must either be at a price agreed between the community body and the owner or, where no such agreement is reached, at a price equal to the value assessed by the appointed valuer or, in the event of an appeal against that valuation, the value determined by that appeal.   Various detailed provisions for the valuation process, including definition of market value, and appeals to the Land Tribunal for Scotland on matters concerning that process are set out in the relevant legislation.

 

Appeals

The 2003 Act provides for an appeal process on certain other matters against the decisions of Scottish Ministers[13]. The owner of the land (or a creditor in standard security with right to sell), or an individual member of the designated community may appeal against a decision by the Scottish Ministers:

— that a community interest in the land is to be entered in the Register; or

— to give consent to the exercise by a community body of its right to buy the land.

A community body may appeal against a decision by the Scottish Ministers:

— that its community interest is not to be entered in the Register; or

— not to give consent to the exercise by a community body of its right to buy the land.

The appeal is made by way of summary application to the sheriff, whose decision is final.

 

Abandoned, neglected, or detrimental land

Although the CRTB does not at present give a community body a compulsory right to acquire land, that situation will soon change. Part 3A of the 2003 Act (which was introduced by the 2015 Act) introduces a specific ‘Community Right to Buy Abandoned, Neglected, or Detrimental Land’ which would allow community bodies to acquire certain types of land. These provisions are due to be fully implemented shortly.

This specific right will apply to land where:

— it is wholly or mainly abandoned or neglected, or

— the use or management of the land is such that it results in or causes harm, directly or indirectly, to the environmental wellbeing of a relevant community[14].

In such cases, the Scottish Ministers will be able to allow a community body to acquire the land if they are satisfied on a number of matters, including that:

— it is in the public interest;

— it is compatible with furthering the achievement of sustainable development in relation to the land;

— 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;

— a significant number of the members of the community to which the application relates have a connection with the land;

— the land is sufficiently near to land with which those members of the community have a connection;

— the community has approved the proposal to exercise the right to buy; and

— the community body has tried but failed to buy the land[15].

The closely defined circumstances in which this new community ‘right to buy abandoned, neglected, or detrimental land’ may mean that it will only be utilised by community bodies in a limited number of cases.

 

The community right to acquire land for sustainable development purposes

This may not be the case, however, with the most recent legislation which aims at promoting community ownership of land. The Land Reform (Scotland) Act 2016 (the ‘2016 Act’) introduces a broader community right to acquire land for the purposes of furthering ‘sustainable development’ even where the landowner does not wish to transfer the land. The Scottish Ministers will be able to consent to a community request if they are satisfied that ‘sustainable development conditions’ are met (along with certain other criteria). The 2016 Act defines these as being met if:

— the transfer of land is likely to further the achievement of sustainable development in relation to the land;

— the transfer of land is in the public interest;

— the transfer of land is likely to result in significant benefit to the ‘relevant community’ (as defined in s 56(11) of the 2016 Act) to which the application relates, and is the only practicable, or the most practicable, way of achieving that significant benefit; and

— not granting consent to the transfer of land is likely to result in harm to that community.

As yet, however, no date has been given for when this new right under the 2016 Act will be brought into effect.

 

Comments

The CRTB legislative framework has come a long way since it was first introduced in the 2003 Act. What has been noticeable about its operation in practice is the relatively few cases where a community interest in acquiring land has required using the full process laid down in the legislation. The register suggests that in many cases a community application has not been proceeded with, and in most cases where a community acquisition has gone ahead, a transfer has ultimately taken place by agreement between the parties. The recent extension of the CRTB to the whole of Scotland also appears to have triggered few applications, although the extent of the interest in the CRTB in urban areas may lead to more coming forward once communities identify specific projects of interest to them. The new provisions allowing compulsory acquisition may also result in more applications coming forward, although the restrictive criteria and complex process required may deter many potential applications.

The most important effect of the 2003, 2015 and 2016 Acts, when fully implemented, may not be in how much they are actually used to the full extent, but in how they might change the tone of negotiations between communities and landowners. The simple existence of the legislation may well encourage landowners to come to agreements with community bodies, with the former knowing that the latter might be able to use the legislation if an agreement is not reached.

Mark Lazarowicz Advocate, Terra Firma Chambers, Edinburgh

(This article was first published in the June 2018 edition of “Scottish Planning & Environmental Law”, at (2018) 187 SPEL 58. Acknowledgments and thanks to IDOX Group for allowing it to be reproduced).

[1] Subsequent references in this article to the 2003 Act are to its currently amended form.

[2] As a result of the provisions of Sched 1 to the Interpretation and Legislative Reform (Scotland) Act 2010.

[3] See 2003 Act, Part 3.

[4] See 2003 Act, s 33.

[5] The Scottish Ministers can also add other categories of body, and make exceptions and amendments in certain specified cases.

[6] Section 34 of the 2003 Act sets out the detailed criteria which organisations have to meet if they wish to qualify as community bodies under the 2003 Act.

[7] There are minor differences between the provisions applying to the different categories of community body, but in broad terms the rules are similar.

[8] See 2003 Act, s 38.

[9] See 2003 Act, s 39. Most of the limited case law on the 2003 Act is concerned with Ministerial refusal to allow late applications. See Holmehill Ltd v The Scottish Ministers, 2006 SLT (Sh Ct) 79 and Coastal Regeneration Alliance Ltd v Scottish Ministers [2016] SC EDIN 60.

[10] See 2003 Act, s 48.

[11] See 2003 Act, s 51 for the details of the provisions regarding ballots.

[12] See 2003 Act, s 51(3).

[13] See 2003 Act, s 61.

[14] See 2003 Act, s 97C.

[15] See 2003 Act, s 97H

 

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