Ann Stewart: Details must be disclosed in new transparent regime

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Persons owning or leasing land or buildings in Scotland are to be subject to a new transparency regime requiring them to disclose the identity, and personal information, of people who have a controlling say in decisions affecting that property.

The Scottish Government’s proposals for a Register of Persons with Controlling Interests in Land – a key part of its land reform agenda – arise from concerns around the difficulties some communities face when their neighbourhood is directly affected by a landowner’s proposals or operations, and identifying whom to engage with to make representations about decisions being made.

The person who holds title (whose identity can be discovered by checking the public property registers) may not, in some arrangements, be the person who has a say in those decisions: the ownership of land and buildings can be held in a variety of structures, such as trusts or partnerships, and in some cases a complex tier of entities.

Such structures can make it extremely difficult to identify the individual making the decisions and it would appear the objective of the proposed Register is getting to a human ultimately calling the shots.

Draft regulations on how the Register will operate have been published for consultation, running until 8 November 2018.

The main duty they impose is on the person who is the registered owner or tenant (under a lease of more than 20 years) of a property. Where, in that ownership or tenancy, there are other people in a position to actually control, direct, or significantly influence the activities of the owner or tenant in relation to the land – for example other trustees in a trust or other partners in a partnership – the owner or tenant must disclose their details to the Register.

A public Register will be set up to hold this information, to which details of the property in question, and the names and other personal details (contact address and month and year of birth, if an individual) of the persons with control – called “associates” in the Regulations, must be submitted.

The disclosure does not necessarily stop there. If the associate is itself an entity subject to this new regime – broadly trusts, partnerships, unincorporated associations, and overseas entities – then individuals within that entity are also associates. A complex multi-tier structure could also, potentially, require multiple entries to the Register.

Failure to make the disclosures to the Register, including failing to submit details, submit any changes in the details, advise the associate about the submission, or to advise of the death of an associate, will be a criminal offence liable to a fine of up to £5,000.

Some individuals and organisations may have legitimate concerns around invasion of privacy or commercial sensitivity. There is to be no general privacy or confidentiality exemption, though the Regulations will protect vulnerable individuals at risk of harm if their personal details were made public.

An associate who is an individual can make a security declaration, supported by appropriate evidence, that the inclusion of their details would put them at risk of, or the threat of, violence, abuse or intimidation.

The proposed Register duties will impact on a wide range of individuals and bodies – from the local sports club to large corporates, and small family partnerships to major pension fund trusts – but there are no records available for the Scottish Government to make a proper estimate of how many properties, or people, are likely to be affected by these requirements.

Bodies already subject to some other transparency regime, including LLPs, limited companies subject to the Persons of Significant Control Regulations, charitable incorporated organisations or public authorities, will be exempt from the requirements under this new Register.

These arrangements are not intended to impact on traditional owner-occupier situations where only one person is registered as legal owner of the property, such as the title to a house occupied by a married couple being in the name of one spouse only.

There is, however, no restriction on the categories of property to which the Regulations apply, so if a home is owned by, say, trustees, it will fall within the ambit of these duties.

The Regulations are a minefield for the unwary or the careless. The Scottish Government must ensure these requirements are well publicised, and help and support is available so offences are not committed inadvertently.

Ann Stewart is a property and real estate adviser with Shepherd and Wedderburn LLP