Reform of 'archaic' land ownership crucial to Scotland's economic future, claims new report

Calls for tighter threshold around public interest tests for large land sales

Widespread reform to Scotland’s “archaic and dysfunctional” model of land ownership and governance is crucial to tackling some of the nation’s most pressing challenges, such as the housing crisis, and rising inequality, according to a new report.

A study by Future Economy Scotland has called for sweeping changes to be incorporated in the highly anticipated Land Reform Bill to help “bring Scotland into the 21st century,” such as the introduction of a public interest test whenever large-scale landholdings are sold or transferred, and a requirement that only those registered in Scotland or UK for tax purposes are able to own land.

The array of recommendations drawn up by the think tank includes replacing council tax and non-domestic rates with a green Land Value Tax that would raise revenues and diminish the incentive to buy land and property for “speculative” purposes. It has also urged ministers to strengthen existing community right to buy powers to enable communities to purchase land at below market value under circumstances that meet a “clear public interest threshold.”

The promise of a Land Reform Bill was central to the Bute House Agreement between the SNP and the Scottish Greens. It had been due to be introduced by the end of 2023, but rural affairs secretary, Mairi Gougeon, confirmed earlier this month there would be a “slight delay” given the number of responses to the bill’s consultation. Ms Gougeon has stressed that ministers want to ensure that “land brings tangible benefits to communities everywhere,” but Community Land Scotland has warned that it risks having “no meaningful impact.”

Now, Future Economy Scotland has proposed a way forward it believes would not only address the diversification of land ownership, but help Scotland transition towards a more sustainable and just economic model. Land, its report points out, should be viewed as Scotland’s “most important economic asset,” and one central to ministers’ vision of a wellbeing economy.

Its proposals around a public interest test around the sale or transfer of major landholdings goes further than the 3,000 hectare threshold put forward by ministers, which covers just 0.02 per cent of titles. Instead, it wants a 500 hectare threshold, with ministers also granted discretionary powers to apply a public interest case to landholdings of any size in “exceptional” cases.

The new report, ‘Land Reform for a Democratic, Sustainable and Just Scotland’, also argues that limiting land ownership to those registered in Scotland or the UK for tax purposes would ensure that tax revenue benefits stay in the UK, and clamp down on the scourge of absentee land ownership.

The Scottish Government's Land Reform Bill is set to be introduced in early 2024. Picture: Katharine Hay/The Scotsman

Laurie Macfarlane, co-director of Future Economy Scotland, said: “Scotland’s extreme concentration of land ownership is almost unique among advanced economies. The lack of any legal restrictions on who can own land, or how much they can own, also places Scotland as an outlier internationally.

“There remains an urgent lack of transparency around land ownership and our research shows that an archaic and dysfunctional land market lies at the root of many of Scotland’s most pressing challenges – including the housing crisis, rising inequality, low productivity and climate breakdown. Changing the way that land is owned and governed is essential if we are to create a more democratic, sustainable and just economy.”