UK & Europe
UK Real Estate Insights
Hot on the heels of the publication of the Pandora Papers, a new Scottish register will be introduced on 1 April 2022 known as the Register of Persons Holding a Controlled Interest in Land (RCI)
The RCI addresses some of the concerns raised by the Pandora Papers by creating transparency via a register of interests of those who have decision making or control of land in Scotland. It is akin to the regime put in place by the People with Significant Control (PSC) register for property in England and Wales and will publicly record the data of such people. The RCI will be maintained by the Keeper of the Registers of Scotland.
The RCI has been brought in by the Land Reform (Scotland) Act 2016 (Register of Persons Holding a Controlled Interest in Land) (Scotland) Regulations 2021, deriving power from the Land Reform (Scotland) Act 2016. This legislation pre-dates the Pandora Papers and highlights how Scottish property law is being shaped.
While there are exemptions, these are narrow and are predominantly aimed at preventing double reporting of information already publicly recorded. Typically, we are likely to see a requirement for disclosure and reporting by overseas entities, trusts (not always registered), family arrangements, verbal occupancy arrangements, contracts for land (this will potentially capture exclusivity agreements, option agreements and rights to purchase), as well as English legal partnerships not governed by the PSC. Commercial interests and commercial sensitivities are not grounds for non-disclosure. The legislation sets out “associates” who are obligated to notify the register, in addition to those who may have a controlling interest. Clarity is still required regarding associates and the Registers of Scotland have indicated further guidance will be issued.
As innocent as this new register may seem, it is backed by penalties of up to £5,000 and criminal action for failure to comply. There will be a grace period to allow compliance between 1 April 2022 and 30 March 2023. Obligations to register should not be underestimated.
It is important to note that this is a register of persons relating to interests in land, not a land register. Therefore, there will not necessarily need to be an underlying property transaction that would trigger notification. For example a change of partners or trustees would trigger notification in the absence of a “property transaction”. Individuals will need to consider whether they have an obligation to comply.
At present we are being informed that there will be a 30 day gap between submission of information and publication to the RCI. The RCI will be online only and initially free to access.
For lenders and other institutions, the RCI may be a solution to the PR issues around lack of transparency. Those with interests in Scottish property should ensure that they have the relevant information available and can comply with the requirements promptly, once they come into force.