The existing property registers
· If you own a house or flat or land your right as owner will be registered in either the quaintly named “Register of Sasines” or the newer and more transparently named “Land Register”.
· Similarly, if you are a tenant under a lease for more than 20 years your right as tenant will also generally be registered.
· These registers are public registers commonly referred to as the “property registers”. They may be consulted by anyone who wants to find out who is the owner or tenant of any particular property. The official in charge of the property registers is known (again somewhat quaintly) as the “Keeper”.
The new Register of Controlled Interests in Land
· New regulations have introduced a new register called the “Register of Controlled Interests in Land” (the “RCI”) operational from 1 April 2022. As that label suggests its aim is to identify who controls land.
· One might think that we already know that from the existing property registers on the reasonable assumption that the owner or tenant identified will be in control of their own land. And, of course, in 99 cases out of a 100 (or more) that will be so. The aim of the new register is to pick up on the 1 case in a 100 (or fewer) where the person who controls the land is not the person whose name appears in the property registers.
· For example, it is possible for a person to own property as a nominee or a “bare trustee” for someone else where control of the property would be exercised by that someone else but whose identity was not apparent from the property registers. Hence the introduction of the RCI.
· The Explanatory Document Register of Persons Holding a Controlled Interest in Land: Explanatory Document – gov.scot (www.gov.scot) for the regulations say:
“The overarching purpose of the Regulations is to increase public transparency in relation to individuals who have control over decision-making in relation to land. They are intended to ensure there can no longer be categories of land owner or tenant where, intentionally or otherwise, control of decision-making is obscured.
In conjunction with other transparency regimes, this means that it will be possible to look behind every category of entity in Scotland, including overseas entities and trusts, to see who controls land.”
The Regulations don’t apply where other “transparency regimes” do
· That description of the overarching purpose of the RCI refers to other “transparency regimes”. Such regimes include in particular those applying to UK companies which are already required under company law to identify who has control of them by way of the “Persons with Significant Control” regime. So, that information is already publicly available. The RCI does not require double reporting for entities subject to the “Persons with Significant Control” regime.
· That regime also applies to: Limited Liability Partnerships; Scottish Limited Partnerships; and Scottish ordinary partnerships where (unusually) all the partners are limited companies.
· UK Charitable incorporated organisations also count as being subject to another “transparency regime” and so the RCI regulations don’t apply to them either.
Who will need to give the Keeper of the property registers information?
· In the regulations the person whose name appears in the property registers as owner or tenant is called the “recorded person”. We use that term here too.
· The Regulations will require the recorded person to tell the Keeper about anyone who has control over them by way of the following: (1) a trust; (2) an unincorporated association; (3) a contractual or other arrangement with someone to give that person decision-making control over the property; (4) an ordinary partnership; and (5) an overseas legal entity.
· More information is available on the property registers website: Register of Persons Holding a Controlled Interest in Land – Registers of Scotland (ros.gov.uk)
Other particular points
· The regulations are retrospective. For example, suppose Mrs Bloggs owns a flat and signed a declaration of trust in 2007 saying she held it for the absolute benefit of her daughter. With effect from 1 April 2022 (when the regulations first apply) Mrs Bloggs as the “recorded person” will have a duty to notify the Keeper about her daughter’s interest in the property.
· There are fines for failure to comply but there is a grace period of a year. No penalties will apply unless notice to the Keeper is delayed beyond 1 April 2023. It appears that this grace period of a year will apply not only to pre-1 April 2022 cases but also to new cases within the grace period. Otherwise notification is required within 60 days.
Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Ronald Inglis: email Ronald@mitchells-roberton.co.uk