Right to buy land to further sustainable development
Community right to buy is now a well-established feature of property law in Scotland. New regulations which came into force on 26 April 2020 have expanded the existing rights, to include a right to buy land “for the purpose of furthering sustainable development”.
The original form of community right to buy (which of course remains available) involves a community group registering an interest in land; and that then means that if the owner ever wants to sell it, the owner must first give the community group an opportunity to buy it. That can translate into a waiting game; if the existing owner wants to retain ownership on a long-term basis, there is no ability for the community group to force the issue.
Other community rights - the right to buy abandoned, neglected or detrimental land; and the right to call on a public body for sale of the land to the community under a community asset transfer - are more proactive, in the sense that they give the community group the ability to push for acquisition of the land even where the owner has no intention of putting the land on the market.
This new right – the right to buy land for the purposes of furthering sustainable development - falls into that second category; and that means that it could open up some interesting possibilities, depending on how it is applied.
Community groups who have proposals for developing land for projects that will support their local economy will be keen to know what this means for them. Are they entitled to use this right? What sort of development would qualify? How do they go about doing it? This blog seeks to answer some of these questions.
Almost any land is eligible to be bought under this new right. In fact, the statutory provisions list the exceptions rather than defining what land is included. Land can be rural or urban; rights of ownership or various tenancies can be bought; and provisions are made for the purchase of salmon fishing and mineral rights.
Excluded are: land where someone lives or land pertaining to their home (such as land used for storage, keeping pets or access), and land owned by a Minister of the Crown or a government department.
What bodies qualify?
The legislation provides for two categories of body which can exercise this right: community bodies, and third parties nominated by community bodies. Companies limited by guarantee, Scottish Charitable Incorporated Organisations (“SCIOs”) and community benefit societies (“BenComs”) can exercise this new right to buy, provided that the articles of association, constitution or rules of the body (as appropriate) satisfy the eligibility criteria set out in the legislation.
Further, any community body satisfying certain eligibility criteria may nominate a third party purchaser to exercise the right to buy. Effectively, this means that other legal structures – such as limited liability partnerships or companies limited by shares – can exercise the right.
This reference to a nominated third party purchaser also suggests that it might be possible for a community body to engage with a private sector partner, to take forward a joint project – and on the basis that the property would be purchased through a joint venture company or limited liability partnership.
Private sector landowners often see community empowerment in a negative light, as something that encroaches on traditional landowners’ rights – but actually there can be opportunities there for the private sector, providing they fully take on board the need to demonstrate substantial community benefit (see below).
This aspect of the community empowerment agenda is something that I, and my colleagues in the team, have been keen to promote, as it can make all the difference between a community project which fails through insufficient financial viability and one which succeeds, bringing multiple benefits to the local community.
Although the ability to partner with the private sector is something that can be relevant to the other community empowerment rights too, it is helpful that the right to buy land for the purposes of sustainable development is worded in a way which could facilitate that sort of approach.
It should be noted that the “community” to which the body relates must, in this context, be a geographical community. Communities of interest (such as religious or cultural communities) do not qualify (unlike in the case of community asset transfer).
For what purposes?
As the name suggests, this right exists for the purpose of furthering sustainable development. Certain conditions have to be met to show that the transfer of land meets these purposes. These are that:
- the transfer is likely to further the achievement of sustainable development in relation to the land;
- it is in the public interest;
- it is likely to result in significant benefit to the relevant community, and is the only or most practicable way of achieving that benefit; and
- not granting consent to the transfer of the land is likely to result in harm to the relevant community.
The Scottish Ministers have to be satisfied that all of these conditions are met before they consent to an application to buy land under this right.
“Sustainable development” is not actually defined in the legislation. People usually think of it in terms of economic, environmental or social sustainability, but the most commonly accepted definition is that it is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. The standards for meeting the above criteria are also unclear. However, given some of the statutory tests (particularly the references to the only or most practicable way of achieving the benefit; and the need to demonstrate actual harm to the community if consent is not granted) – as well as the level of information and detail which is required in the application process - we would expect that a very strong case would need to be made.
The other relevant factor here is human rights considerations – issues such as lack of access to land are increasingly being analysed in terms of human rights (and that forms the backdrop to many of the Scottish Government’s initiatives regarding reform in the context of land ownership and use), and against that sits the more traditional view that any encroachment on private ownership must be seen as an infringement of human rights.
This right to buy may only be exercised with the consent of the Scottish Ministers, issued in response to a written application by a community body. The Scottish Ministers have set out in recent regulations the form that this application must take.
It is an extensive form, and a lot of information is required – including an explanation as to how the community body proposes to use, develop and manage the land, and an explanation as to how the transfer of land is likely to result in significant benefit to members of the community.
On the face of it, this is a very broad power available to community bodies. Almost any non-domestic land owned by almost anyone could be bought for the (fairly vague and general) purpose of “sustainable development”.
There is great potential for this to be used for the benefit of local communities; and there is potentially greater scope with this particular community empowerment right, in taking projects forward on a joint venture or partnership basis.
However, the key limiting factors lie in the specific tests outlined above; and it remains to be seen how bold or otherwise Scottish Ministers will wish to be, in determining whether those tests are met in any given case.
If you are interested in making use of this new right or any other community empowerment rights – or if you are supporting a community group, as a public or private sector partner, with a project of this kind - we would love to help with the constitutional and regulatory aspects of this.
Whether we can answer any preliminary questions you have or provide ongoing support, we would very much welcome hearing from you.
26th October 2020
UK Supreme Court judgment concerning charities restricting their public benefit to one group.
30th September 2020
The Regulations extend the period for companies, SCIOs and other corporate bodies to hold their AGM.
2nd July 2020
Insight into how the Act will affect third sector organisations.