An Introduction to the Community Right to Buy

Background Sources

• The Land Reform (Scotland) Act 2003, Part 2 - available at - www.scotland-legislation.hmso.gov.uk/legislation/scotland/acts2003/ 20030002.htm
• Explanatory Notes - available at - www.scotland-legislation.hmso.gov.uk/legislation/scotland/en2003/2003en02.htm
• Community Right to Buy website - www.scotland.gov.uk/Topics/Rural/Land/17063/8277

The website of the Scottish Executive Environment and Rural Affairs Department ("SEERAD") www.scotland.gov.uk/Topics/Rural/Land contains detailed guidance for community bodies, landowners and other interested parties who wish to make use of the Land Reform (Scotland) Act 2003 (“the Act”).

Purpose of the Land Reform Act

The purpose of Part 2 of the Act is to provide opportunities for Community Bodies to register an interest in land and to buy land for the benefit of the local community when that land becomes available to purchase. It enables Community Bodies, formed as Scottish companies limited by guarantee which conform to certain specific minimum requirements (see ‘Constitutional Requirements’ below) to own the land for the local community.

There are specific proposals with regard to the Crofting Community Right to Buy. These are not addressed in this Fact Sheet. Further details are available at - www.scotland.gov.uk/Topics/Rural/Land/17063/8281

Constitutional Requirements

The minimum statutory requirements for a Community Body are that it:

• must be a Scottish company limited by guarantee (see our separate Fact Sheet ‘What is a Guarantee Company?’)
• may be a recognised charity (see our separate Fact Sheet ‘Setting up a Charity’)
• must have a definition of the Community by reference to specific postcode units
• must have a Community population of not more than 10,000
• must include a specific power to exercise the Right to Buy in terms of the Act
• must have, as a majority of its members, those who are:

  resident in the Community; and

  entitled to vote at a local government election in a polling district which includes the Community or part of it

• must provide that it is in the control of the members of the Community
• must have no fewer than 20 members at any time
• must ensure proper arrangements for its financial management and the auditing of its accounts
• must provide that any surplus funds or assets are to be applied for the benefit of the Community
• must provide that, on its winding up, after satisfaction of its liabilities, its property passes to such other community body as may be approved by the Scottish Ministers or, if no other community body is so approved, to such charity as the Scottish Ministers direct.

Prior to submitting an application to register an interest in land (see below), the Community Body must obtain written confirmation under Section 34 (4) of the Act, from SEERAD on behalf of the Scottish Ministers, that they are satisfied that its main purpose is consistent with furthering the achievement of sustainable development (see ‘Sustainable Development’ below).

We have provided a ‘model’ at http://www.hie.co.uk/communityland.htm (a "Memorandum & Articles of Association") of a company limited by guarantee for a Community Body, with companion guidance notes, on the instructions of Highlands and Islands Enterprise (with approval in principle from each of SEERAD, Companies House and IR Charities).

The Community

• A Community should not exceed a population of 10,000.
• It is defined by reference to full postcode units (e.g. PH16 5BU), not postcode areas (e.g. PH16). However, where all the units in a particular postcode area form part of the community boundary, it would be possible to define the area by stating "...comprising all of the postcode units in postcode area PH16 5". Updated details of postcode units is available at the GROS website at www.gro-scotland.gov.uk/grosweb/grosweb.nsf/pages/geoprods.
• Members of the Community should be

  resident; and

  be registered to vote at a local government election;
  at an address within the Community. Scottish Ministers can, in exceptional circumstances, direct that an alternative definition may be used.

• It will be necessary for the Community to demonstrate how it has a connection with the land to be registered.

Community Support

Demonstrating Community support is vital - to register an interest in land, the Community Body must demonstrate that it has the support of at least 10% of the Community.

Sustainable Development

• For background, see www.scotland.gov.uk/Topics/Environment/17108/7365
• Sustainable Development has been described as "development which meets the needs of the present without compromising the ability of future generations to meet their own needs."
• Sustainable Development requires an integrated long-term approach to economic, social and environmental issues.

Any application must demonstrate the extent to which the Community Body’s main purpose is consistent with furthering the achievement of Sustainable Development.

Registrable Land

"Registrable land" is all land excepting:

• an "excluded settlement" (i.e. with a population over 10,000 ); or
• "excluded land" - details are available from SEERAD and at local Agricultural Offices and from the SEERAD website in respect of Excluded Land at: www.scotland.gov.uk/Topics/Rural/Land/17063/8278

Registrable land can include ancillary rights such as salmon fishings and mineral rights. These can be included when a Community Body applies to register an interest in an area of land where such ancillary rights exist.

Registration of Land - the Application

• Once the Community Body has

  been incorporated as a company limited by guarantee

  achieved the necessary community support

  received written confirmation from SEERAD in terms of Section 34 (4) of the Act and

  identified land that is capable of registration it can then apply to register an interest, but only by using the official Application Form. This can be downloaded from www.scotland.gov.uk/Topics/Rural/Land/17063/8279

• The Application Form must be lodged with all supporting documents.
• The application will be considered promptly. It may be accepted, or refused, or further details may be requested.
• One of the reasons for refusal is that an application may not be in the public interest (where, for example, the right to buy is being used by a group in an endeavour to thwart a land owner’s planning application).
• A copy of the Application Form will be sent to the owner(s) of the land and any heritable creditor, who have 21 days to express their views.
• A copy of the owner’s (and/or creditor’s) response will be given to the Community Body, who will have 21 days to express their comments (unless late registration applies in terms of Section 39 of the Act).
• The Keeper of the Registers of Scotland acts as the Keeper of the Register of Community Interests in Land (RCIL). The Register can be viewed at -
  http://rcil.ros.gov.uk which shows all current Community Right to Buy (CRtB) applications.

Effect of Registration

If a Community Body’s application is approved, the Keeper will be directed to register its interest in the land in question in the RCIL. The registration will be valid for 5 years.

Within six months before the end of the 5 year period, the Community Body can apply to renew the application for a further 5 years.

For so long as the registration remains, the owner of the land (and any heritable creditor) is prohibited from transferring or selling the land (unless the transfer is exempt under section 40 (4) of the Act).

Exercising the Community Right to Buy

If the owner of the land informs the Scottish Ministers of an intention to sell the land which has been registered with the Community Body’s interest, the Community Body will be asked to confirm within 30 days that it wishes to proceed to the Right to Buy stage.

If the Community Body wishes to proceed, the Scottish Ministers will appoint an independent valuer to act for them (not the Community Body) to assess the market value of the land.

Once the valuation price is intimated, the Community Body must obtain:

• approval of the Community by ballot (in terms of Sections 51 and 52 of the Act); and
• approval of the Scottish Ministers.

In returning the ballot results to Scottish Ministers in terms of section 52 (3) of the Act, the Community Body must also provide information to demonstrate that it meets the Community Right to Buy criteria in terms of section 51 (3) of the Act.

It is up to each Community Body to arrange its own funding, whether from the Scottish Land Fund and/or other funding sources (whether public or private and whether within or outwith the Community itself).

Conclusion

This Fact Sheet is intended to provide an introductory guide only. The Act is detailed and specific in its terms and it is important to adhere to each step carefully and precisely. Failure to do so may result in the Right to Buy being extinguished. Specific and specialist legal advice can be supplied on a case-by-case basis, whether on behalf of would-be Community Bodies or on behalf of landowners who have been approached informally by the local community or who have received notification of an application to register an interest in some or all of their land.