The Scottish Land Commission recently published the “Natural Capital and Land: Recommendations for a Just Transition” paper setting out a number of recommendations for regulatory changes to be made in response to the growing interest in Scotland’s land market for natural capital purposes.

The paper acknowledges the role Scotland could play in the emerging natural capital markets, and the opportunities for substantial investment arising from that.  Throughout the rural sector, natural capital considerations are playing an increasing role in decisions about land transactions, whether that is in terms of purchasers, price or structuring.

The difficulty which the paper seeks to address is that there is currently a lack of significant regulation in the market, which has caused some concern within the Scottish Government that transactions will lead to unintended consequences outwith the government’s stated land reform goals.

 The paper makes eight recommendations, split into three broad categories:-

• • Market Frameworks
  • Governance and Leadership; and
  • Fiscal and Taxation Policy

The recommendations are quoted from the paper as follows:-

Market Frameworks

Recommendation 1

Addressing the effects of the underlying pattern of concentrated land ownership by the following measures proposed in the Commission’s earlier advice:

• • Introducing a public interest test at the point of large-scale land transactions;
  • An obligation to prepare and engage on a management plan for large land holdings;
  • Strengthening implementation of the Land Rights and Responsibilities Statement through increased statutory weight and a review mechanism to provide a backstop in addressing poor practice.

Recommendation 2

A mandatory requirement for prior notification of intended sales for land holdings above a defined threshold. This should be complemented by good practice guidance to support prior notification where appropriate for other land holdings.

Recommendation 3

Establishment of regular land market reporting that brings together quantitative data with market insight. To do this the Commission will work with Registers of Scotland, RICS and other relevant partners to establish a repeatable methodology, drawing on the lessons from our recent reports

Recommendation 4

Design of the market framework for carbon and other natural capital markets that addresses:

• • Standardisation and transparency in measurement, accreditation and pricing;
  • Buyer verification that will ensure land is not used to offset avoidable emissions;
  • Embedding community benefit requirements as a condition of market participation;
  • Sufficiently independent oversight to monitor compliance and keep risks and benefits under review.

Governance and Leadership

Recommendation 5

Proactive support for collaborative ownership and governance structures for land and investment in natural capital. To do this the Commission proposes:

• • The public estate provides leadership in developing collaborative governance models within the public land holding;
  • The Commission and Crown Estate Scotland collaborate to pilot a facilitation approach to community-led land acquisition that supports aspiring community owners and explores governance options;
  • Re-establishing the Community Land Ownership Leadership Group with a refreshed membership and remit to develop the opportunities for more strategic alignment in financing community and collaborative land acquisition.

Recommendation 6

Giving traction to the Land Use Strategy and the forthcoming just transition plan for agriculture and land by empowering Regional Land Use Partnerships as an accountable means of aligning land use priorities.

Fiscal and Taxation Policy

Recommendation 7

The targeting of public finance for land use is kept under review in order to maximise public value, with particular consideration given to:

• • Using adjustments in eligibility and intervention rates to better target public grants;
  • Increasing the conditionality expected in return for public finance.

Recommendation 8

Consideration is given to the role of taxation as a means of securing public value from emerging financial value associated with carbon and wider natural capital and refer to the specific proposals set out in the Commission’s advice of January 2022 on Taxation and Land Reform.

Particular interest has already been noted in relation to Recommendations 1 and 2 after the Scottish Government indicated that these recommendations would feature in the proposed Land Reform Bill to be brought before the Scottish Parliament before the end of 2023.

A consultation in relation to the proposed Land Reform Bill was launched on 4 July and will close on 25 September.  Murray Beith Murray will continue to monitor the consultation and subsequent progress of any Bill for significant developments.

Murray Beith Murray Rural Property group

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