DRAFT LAND REFORM (SCOTLAND) BILL: Consultation Paper : page 8


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DRAFT LAND REFORM (SCOTLAND) BILL: Consultation Paper

5 OUTCOME OF CONSULTATION ON THE CROFTING COMMUNITY RIGHT TO BUY

Overview of crofting interest concerns

5.1 Supporters of the crofting community right to buy wanted to see:

The existing crofter right to buy (under what is now the Crofters (Scotland) Act 1993) provide the basis for setting the price and for compensation to landlords; and
The existing right of crofting communities who are tenants of Ministers to buy their croft land (under the Transfer of Crofting Estates (Scotland) Act 1997), as providing the basis for determining eligibility of the community body.

Overview of landowning interest concerns

5.2 Representatives of landowning and land management interests, on the other hand wanted, the crofting community right to buy to be as similar to the other community right to buy as possible, particularly as regards eligibility criteria, process, appeals and compensation.

Eligible land

5.3 There were clear differences in view between crofter interests and landowners and land management professionals on what land should be eligible. The former wanted the transfer of sporting rights, salmon fishings and minerals with some arguing that existing sporting tenancies should be extinguished. The latter all took the view that these rights and interests should remain with the landlord and that crofting communities should be permitted to buy no more than the land which individual crofters already have a right to buy.

Outcome: The draft Bill provides that a crofting community body exercising a right to buy will be entitled to buy all tenanted croft land and common grazings. It will also have a right to buy, if it wishes to do so, the mineral rights relating to that land and salmon fishing rights on rivers and lochs bounded by that land even if these interests are owned by persons other than the person who owns the land. In addition there will be a right to buy out the tenant's interest under any lease relating to sporting rights which is binding on it as successor in title to the land. These ancillary rights to buy will persist for 5 years after the right to buy the land has been exercised.

5.4 The Crofting (Scotland) Act 1993 provides limited exemption from the right to buy for the National Trust for Scotland. Most respondents however, thought that all landowners should be treated in the same manner. Two public bodies were willing to see the special position of the National Trust for Scotland preserved, another suggested that community bodies might need protection from breakaway communities and one local authority suggested that croft owner occupiers should have some protection. There was also a suggestion that rather than offer protection to particular categories of landowner it would be better to provide protection for special areas of land such as heritage sites and SSSIs.

Outcome: The draft Bill does not exempt any class of landowner. Ministers believe that all landowning bodies should be treated equally under the new legislation. The draft Bill does, however, define eligible croft land in a way that excludes land which forms part of a croft which was purchased by the croft tenant and is occupied by that former croft tenant or a successor in title. The Bill also provides that the application to exercise a crofting community right to buy may be rejected by Ministers if they deem it to be against the public interest.

5.5 Landowning and land management interests argued that other interests in the land would either need to be preserved or that their loss should be fully compensated. They also emphasised that compensation should be paid for losses incurred as a result of disruption of loan arrangements where the land was security for a loan. Crofting interests were generally prepared to accept preservation of access rights and wayleaves but some public bodies argued that sporting leases should terminate without compensation. One commentator drew attention to the fact that on many crofting estates there were non-crofting tenants and owner occupiers with rights in common grazings.

Outcome: A transfer under the crofting community right to buy provisions will, in general, have the same impacts on the rights of people with an interest in the land to be transferred (other than the landlord) as a normal sale of that land would have. However, as discussed above the right to buy can also be applied in certain circumstances to minerals and salmon fishing leases relating to sporting rights. It also provides for the grant of new rights (e.g. for vehicular access) pertaining to such interests and to the former landowner where that is necessary to protect his/her continuing interests in the land and in adjacent land.

Other land

5.6 There was a clear division on whether it should be permissible to include in the crofting community right to buy non-croft land which might be needed to ensure the effective management of the croft land. Landowners believed it should not be included in the right to buy. Crofting organisations and other bodies supporting the crofting interest believed it should.

Outcome: The draft Bill provides for the possibility of including non-croft land in the land to be transferred at the request of the community body. It provides that, where the landowner opposes this, there must be a clear need for doing so and a presumption against doing so where the need could be met by other means. It limits the amount of such land, which can be included in these circumstances, to 10 hectares or 5% of the land to be transferred, whichever is the greater. And it provides that decisions on the inclusion of additional land without the consent of the landowner will be taken by the Scottish Land Court.

5.7 Landowners and land managers were firmly of the view that, where a right to buy croft land is exercised and results in a deterioration in the value of their remaining property, they should be able to insist that the crofting community body should buy that residual property. Crofting interests were divided. Some opposed this suggestion mainly on the ground of cost, whereas others accepted that it should not be ruled out.

The draft Bill also provides for the inclusion of additional land at the suggestion of the landlord and provides that it may be included against the wishes of the community body where Ministers conclude that the public interest is best served by doing so. It places no limit on the amount of additional land that may be included in such circumstances.

Eligibility criteria for crofting community bodies

5.8 A key issue was how the crofting community should be defined in legislation. Landowning interests preferred consistency with the eligibilitycriteria for the community right to buy in the draft Bill, while some crofting interests preferred consistency with the (much more general) 1997 Act. The other main difference of opinion arose over whether the "community" should be limited to crofters or crofting households, or whether other local residents could also participate.

Outcome: The draft Bill provides that the local community will normally be defined as comprising all who are on the electoral roll for the crofting township(s) relating to the land in question, with Ministerial discretion to amend this definition. This is the best way of focusing primarily but not exclusively on crofters and their families which uses publicly available data.

5.9 Responses generally took the view that the minimum level of support should be set at a high level: 75% was suggested by some, and most others suggested 50%.

Outcome: The draft Bill provides that at least 50% of the local community (as defined at 5.8 above) must vote, and a majority of those voting must support the purchase. Ministers believe that it is right to maintain consistency with the community right to buy in the draft Bill.

5.10 There was general recognition in the responses that provisions dealing with subsequent disposals would be needed, though one respondent was strongly opposed. Similarly, most consultees agreed that provisions would be needed to deal with circumstances when the crofting community body was wound up.

Outcome: The draft Bill makes provision both for subsequent disposal and for the transfer of assets on the winding up of the crofting community body which are consistent with those for the community right to buy.

Process

5.11 Most respondents agreed that formal processes were needed so as to ensure clarity and fairness. Though some crofting interests argued that the process should not be tied down too rigidly in legislation, landowning interests stressed the need for a strict timetable. Most respondents agreed that both the Scottish Executive and the Crofters Commission should play a part in the process, with landowning interests preferring the Scottish Executive to take the lead and crofting interests preferring the Crofters Commission to take the lead.

Outcome: The draft Bill provides for decisions to be taken by Ministers, taking account of consultations with interested parties including the Crofters Commission. Ministers believe that, in order to ensure consistency and cost-effectiveness, the administration should be organised by the Scottish Executive.

5.12 Virtually all respondents agreed that appeal mechanisms were necessary, although opinions were divided as to whether the Scottish Land Court, the Lands Tribunal for Scotland or a new appellate body would be most suitable at various stages.

Outcome: The draft Bill provides, as with the community right to buy, built-in opportunities for appeal at every stage. There is consistency of approach in connection with the structure of the appeal mechanisms. However, the draft Bill proposes that the Scottish Land Court will undertake valuation appeals under the crofting community right to buy, in view of its experience in crofting matters.

5.13 All respondents agreed that a negotiated settlement was likely to prove a better way of reconciling the needs of the crofters with those of the landowner. It was recognised that the existence of a right to buy would encourage sensible negotiation.

Outcome: Ministers will welcome negotiated sales, but the draft Bill does not require any prior attempt to negotiate purchase as a pre-condition of exercising the crofting community right to buy. Ministers believe that such a pre-condition would have no practical effect.

5.14 How best to ensure that the crofting community right to buy is not used to harass landlords? Although some landowning interests argued for a deposit, most respondents took the view that the application process and criteria would be sufficient to deter abuse.

Outcome: The draft Bill does not provide for any financial commitment at the time of application. Ministers believe that the proposed process will be sufficient to deter abuse.

5.15 Consultees were asked whether arrangements were needed to deal with changes of ownership during the crofting community right to buy process. Landowning responses stressed that landlords must be free to proceed even with a right to buy in prospect, and that compensation should be payable for aborted sales.

Outcome: The draft Bill provides that an application will fail if the landlord and a prospective purchaser conclude missives before the application is approved. The legislation does, however, allow further applications for the same land.

5.16 Once the crofting community right to buy is under way, should the landlord be prevented from undertaking spoiling action such as entering into a long sporting lease with a close relative? Landowning interests agreed that, while there should be no restrictions until the application is lodged, thereafter it is reasonable to apply suitable constraints.

Outcome: The draft Bill provides that where a lease relating to sporting rights entered into by the landlord is binding on successors in title the crofting community will have a right to buy out the right of the tenant under that lease, as described at 5.3 above.

5.17 Landowning and land management interests strongly emphasised the need to put arrangements in place to share the cost of maintaining estate facilities which are split by the transfer. They also indicated that the community body must take responsibility for constructing and maintaining any new march fencing required as a result of the transfer. Crofting interests and other parties who responded on this point agreed that the community body should be expected to plan to meet such costs and responsibilities.

Outcome: The draft Bill provides that an application should identify facilities for which responsibility must be shared after transfer and indicate the provision to be made for march fencing. It also provides that where there is no agreement between the landlord and crofting community body on arrangements for managing and financing shared facilities or on provision of march fencing the Scottish Land Court will be asked to determine what these arrangements should be.

5.18 With the exception of one local authority which believed that it should have the responsibility, all respondents agreed that the Scottish Land Court should resolve any access issues which arise as a result of a break up of an estate through the crofting community right to buy.

Outcome: The draft Bill provides that the Scottish Land Court can recommend to Ministers the terms of the transfer of title and conditions regarding access and any other conditions necessary to protect the position of other interests in the land and adjacent and contiguous land including that of the former landlord.

Price

5.19 The issue of price resulted in the greatest diversity of views. While some crofting interests hoped that the price payable could be based on the provisions of the crofters' right to buy, landowning interests looked for full market value to be payable. This view was shared by some crofting interests. Local authority responses suggested that the price should reflect "real value" i.e. a value which would reflect the economic return that could be derived from the land rather than market value. Land management professionals suggested that account needed to be taken of issues such as severance, disturbance and reductions in the value of the remainder of a holding. Landowning interests also expected that there should be an appropriate appeals mechanism. Given the requirements of the European Convention on Human Rights, there is little choice but to adopt an approach which is fair to all concerned and provides a proper appeals mechanism.

Outcome: The draft Bill provides that the price payable will be set by a valuer appointed by Ministers, on a basis consistent with the compulsory purchase code with provision for appeals by all parties against the valuation to be resolved by the Scottish Land Court.

5.20 The Transfer of Crofting Estates (Scotland) Act 1997 provides for the possibility of financial assistance from Government to communities who seek to exercise their right to have the estate on which they live transferred to a trust. Landowning interests argued that there was no justification for support from the taxpayer. Nowadays many communities can look to the Community Land Unit of Highlands and Islands Enterprise for ongoing help and some financial support; and to the new Scottish Land Fund for capital. Crofting interests referred to the importance of these funding sources.

Outcome: The draft Bill does not provide for direct Government financial support. Ministers believe that the other sources referred to above will suffice.

Compensation

5.21 Compensation arrangements must be predictable, robust and compliant with the European Convention on Human Rights. While some crofting interests hoped that there would be no compensation payable beyond the limited remuneration provided for under the existing crofters' right to buy, landowning interests looked for full compensation to be payable, and for an appropriate appeals mechanism. Given the European Convention on Human Rights, there is little choice as to the scale of compensation or as to appeals arrangements.

5.22 There is also the question of legal costs incurred by the landowner. Most respondents agreed that the landowner's full costs should be met. One respondent however suggested an upper limit of £5,000.

Outcome: The draft Bill provides for a process of assessing compensation costs that broadly follows that adopted for the other community right to buy. Subordinate legislation will specify the timetable for submission of claims for compensation, the manner in which loss is to be assessed and the extent of any compensation that is to be paid. The draft Bill also provides for compensation for costs incurred by a landowner if an application is made but not approved.

5.23 There may be a risk that the purchasing community body may not be able to raise enough money to cover the eventual compensation bill. This raises the possibility of either the transfer failing at this stage or unacceptable delay before full compensation is paid. How best can it be ensured that compensation is paid? Landowning interests argued that the crofting community body must prove its ability to pay before proceeding with the purchase. Some crofting interests suggested that Highlands and Islands Enterprise could meet these costs, and others that the Scottish Executive should meet these costs.

Outcome: The draft Bill provides for the costs of compensation to be met by the crofting community body, but gives Ministers a discretionary power exceptionally to contribute some or all of the costs in appropriate circumstances. This will allow Ministers to help out in a few occasions where this is clearly justified and necessary.

5.24 What should be the effect of a crofting community body withdrawing its application prior to completion? As with the other community right to buy, it should be open to the community body to withdraw its application at any point up to the point of purchase. Landowning interests pointed out that the landowner must be compensated for any costs incurred which are directly attributable to the application, though a few representing crofting interests did not accept this to be necessary.

Outcome: The draft Bill provides that the costs of compensation in such cases be met by the crofting community body, but gives Ministers a discretionary power exceptionally to contribute some or all of the costs in appropriate circumstances.

Summary of the proposed legislation:

The existing rights and responsibilities of crofters will not be affected bythis legislation (section 75).
The right to buy will relate to all tenanted croft land and common grazings (section 76).
The right to buy will also extend to salmon fishing rights, mineral rights and sporting rights as an accessory to the land (section 77).
Salmon fishing rights, mineral rights and sporting tenancies may be purchased through the right to buy at the time the eligible croft land is transferred or in the subsequent five year period (section 77).
There will be scope for also including non-croft land where a clear need can be demonstrated (sections 77, 81, 84, 85 and 86).
The body which is entitled to exercise the crofting community right to buy must comply with similar requirements regarding structure and organisation as apply to a body entitled to exercise the community right to buy and must be representative of the crofting community (section 78).
The local community will normally be defined as comprising all who are on the electoral roll for the crofting township(s) where the land is situated, with scope for Ministerial discretion (section 78).
The requirements regarding the structure of a crofting community body must continue to apply for so long as the body retains land acquired through the crofting community right to buy (section 79).
There will be a formal process for considering applications in which Ministers will decide where and how a crofting community right to buy may be exercised (section 80 and section 81).
At least 50% of the local community (as defined above) must vote and a majority of those voting must support exercising the right to buy (section 82).
Decisions on extending a right to buy to include land other than eligible croft land against the wishes of the owner will be made by the Scottish Land Court and will be subject to tight constraints (sections 84 and section 85).
Crofting community bodies may be required to include other land in the area to be purchased if the landowner asks for this to be done and Ministers determine that it would be in the public interest to do so (section 86).
There will be provision for leaseback of sporting rights to the landowner at nominal rental if both parties wish it (section 89).
Other rights to buy will be suspended whilst the crofting community right to buy is being exercised (section 90).
The arrangements for completing the transfer will ensure that the transfer can proceed even if the landowner refuses to co-operate (section 92).
The price will be as set by a valuer appointed by the Ministers, on a basis consistent with the compulsory purchase code (section 94).
Landowners and other interested parties can seek full compensation for all losses and all reasonable costs. Compensation will be payable by the crofting community body except when a crofting community right to buy application is refused, in which case it will be paid by the Scottish Executive (section 95).
The Scottish Executive may make grants to crofting community bodies to help them meet compensation costs (section 96).
There will be arrangements for resolving disputes, over boundaries and services disrupted through the break up of properties, in the Scottish Land Court (section 97).
There will be appeals arrangements consistent with those for the community right to buy (sections 98 and section 99).
There will be a Register of Crofting Community Rights to Buy in order to ensure that information is available to prospective purchasers of land (section 101).
There will be constraints on re-sale of land acquired by the crofting community right to buy consistent with those that apply under the community right to buy (section 103).

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