Alan Cook

Certain categories of property owners in Scotland who do not make the actual decisions about what happens to their land will, from 1 April, be required to enter in a Register of Controlled Interests (RCI) the details of the actual decision-maker. This includes non-UK entities which own property in Scotland.

The purpose of the new register is to improve transparency about land ownership by making information about those who have a controlling interest in land publicly available – those who ultimately make decisions about the management or use of land, even if they are not necessarily registered as the owner of the land.

The transition period between the introduction of the register and full enforcement being imposed is one year, so as of 1 April 2023, landowners or longstanding tenants will become liable for criminal sanctions for non-compliance with the RCI reporting requirements.

Failure on the part of the recorded owner or tenant to comply with the duty to disclose information, or the provision of false or misleading information, will be a criminal offence with the penalty being a fine of up to £5,000.

The Scottish government had previously committed to reviewing the RCI once the UK government finally introduced its long-trailed Register of Overseas Entities (ROE). The ROE has now been introduced as part of the new Economic Crime (Transparency and Enforcement) Act which has recently been passed by the UK Parliament.

In order to avoid any duplication in reporting requirements the Scottish government should look to remove non-UK entities from the scope of the RCI.

It is now incumbent on the Scottish government to undertake that review and make those changes to the RCI, ideally before criminal sanctions for non-compliance with the RCI reporting requirements kick in next year.

The Scottish government is now in a position to cut the regulatory burden on those investing in Scotland by undertaking, in the light of the introduction of the ROE, their previously promised review of the scope of the RCI.

As to the RCI itself, the Scottish government said in an explanatory document published in December 2020 that the introduction of the RCI, together with other transparency regimes, would make it possible to “look behind every category of entity in Scotland, including overseas entities and trusts, to see who controls land”.

The RCI will be maintained by the Registers of Scotland and will be free to access. Affected property owners, or affected tenants under leases of more than 20 years, will have to submit the details of the land, their own details, and the details of those with significant influence or control over the owner or tenant.

More detailed guidance on how to make an entry in the register, and when entries can be made, is expected shortly.

Alan Cook is a partner and property law expert at Pinsent Masons