The Community Right to Buy is a pre-emptive right to buy land throughout Scotland which was created under Part 2 of the Land Reform (Scotland) Act 2003 ("the Act").
This means that community bodies can register an interest in any land, such as churches, pubs, estates, empty shops, woodland, fields and more. They are also able to register their pre-emptive right to buy over other rights, such as salmon fishing rights and certain mineral rights.
Once an interest is registered, it lasts for five years and requires to be re-registered thereafter for the right to remain valid.
One of the most common misconceptions is that a landowner can be forced to sell to a community body when they don't want to sell to anyone. That is not the case. In the event that a landowner does decides to sell, the community body is given first option to purchase any land against which they have a right to buy registered. It is not designed as a process to be used as a means of blocking developments, or to try to stop a landowner from developing their land.
- Getting a Right to Buy registered is not an easy process for a Community Body. There are a great many criteria which require to be satisfied:
- The community body must be incorporated in one of three forms: company limited by guarantee, Scottish charitable incorporated organisation, or community benefit society.
- It must be registered with Companies House, Office of the Scottish Charities Regulator, or Financial Conduct Authority, as appropriate.
- The company must be compliant with Section 34 of the Act and approved by Scottish Ministers before an application can be submitted.
- The only land in which an interest cannot be registered, called "excluded land", is land which consists of certain rights which are owned separately from the land, for example rights to gather mussels and oysters.
- If a community body submits a late application (i.e. where the land is already on the market or steps have been taken to transfer the land) they are expected to make a stronger public interest case. They must also demonstrate a greater level of community support.
- A registered interest is not meant to preserve the status quo. Applications should show how plans intend to improve the use of the land for the community's benefit. The community body must demonstrate how the registering of the application by Ministers is in the public interest.
SUMMARY OF THE REGISTRATION PROCESS
- A compliant application is received from the community body. This can be before the land is marketed for sale or steps taken to transfer land (a "timeous" application), or after such action (a "late" application). If a late application, the community body has more stringent criteria to satisfy.
- Landowner and creditor in a standard security receive the prohibition notice and a copy of the application.
- The application is entered into the Register of Community Interests in Land.
- The landowner and creditor in a standard security have 21 days to send comments back to Scottish Ministers.
- Any response sent will be forwarded to the community body.
- Community body has 21 days to respond to the comments (except in a "late" application).
- The Scottish Ministers have 63 days from receipt of the application to send notice of their decision to landowner and the community body.
- An appeal can be lodged to Scottish Ministers' decision within 28 days of the decision being made.
- If Scottish Ministers approve a late application, it is deemed that the landowner has given notice of the proposed transfer, meaning that the right to buy has been "activated".
While a registered interest is in place you can still:
- Rent, develop and use the land in whatever way the landowner wishes, whilst ensuring that they fully comply with any relevant law, such as planning legislation.
- While an interest is registered, there is a prohibition on sale of the land. There are exemptions to the prohibition in the Act (section 40(4)) which allows a landowner to transfer land in certain circumstances, e.g. transfer as a gift, or certain transfers between spouses or civil partners.
- If a transfer of land is made which is permitted by section 40(4) of the Act, the Ministers must be informed of the transfer and be provided with the details of the new landowner.
- If the contact details or information relating to a creditor in a standard security change then the Ministers must be informed.
SELLING LAND WITH A REGISTERED INTEREST
- As long as an interest is registered in relation to land, a prohibition to sell to anyone other than to the community body will be in place, although a landowner is permitted to make a transfer of land in certain circumstances (Exempt Transfers - section 40(4)).
- When a landowner does decide to sell the land, the community body and Scottish Ministers must be informed.
- Scottish Ministers will then ask the community body to confirm whether it intends to exercise its right to buy.
- Should the community body decide to exercise its right to buy, provisions and timescales will apply in accordance with the Act. A ballot will be conducted to obtain evidence of community support, and the community body will be expected to submit evidence (e.g. a feasibility study or business plan) in order for Scottish Ministers to consider if the community body should be permitted to proceed with the right to buy.
- The community body is required to pay either:
- the amount agreed between the landowner and the community body;
- if no agreement is reached, then full market value for the land as assessed by an independent valuer; or
- if the value assessed by the valuer is appealed, an amount determined by the Lands Tribunal.
- Parties have eight months (from the community body deciding to exercise its right to buy) to conclude the purchase, although this can be extended by agreement by both parties.
The content of this webpage is for information only and is not intended to be construed as legal advice and should not be treated as a substitute for specific advice. Morton Fraser LLP accepts no responsibility for the content of any third party website to which this webpage refers. Morton Fraser LLP is authorised and regulated by the Financial Conduct Authority.