The attempts by South Cowal Community Development Company (SCCDC) to acquire Castle Toward in Argyll have attracted widespread media attention. See reports here and here as examples.

Last week I was sent an email by one of those behind the acquisition. It was entitled HELP!!! and sought my assistance in trying to resolve the current impasse between the community and Argyll and Bute Council. Alas, I have no magic wand and replied to say that, while I had been following the story, I did not know enough of the detail to provide any advice or assistance. Matters might not have proceeded any further but something was niggling at the back of my mind. I decided to find out the factual details behind the case.

Background

SCCDC first applied to register an interest in Castle Toward under Part 2 of the Land Reform (Scotland) Act 2003 (the community right to buy) in January 2011.(1) This application was rejected by Scottish Ministers because it was “late”. In other words, steps were already being taken to market the land and, as stated in the letter, “Ministers have previously stated that being reactive to a proposed sale of land for specific purposes is not a “good” reason for submitting a “late” application (letter here pdf).

In November 2013, SCCDC applied once more to register an interest in Castle Toward. Scottish Ministers approved this application and it was registered on 23 January 2014 (see letter here 1.1Mb pdf). The effect of registration is that the landowner (Argyll & Bute Council in this case) cannot sell the land without the registered community body being notified, expressing its wish to exercise the right to buy (or not) and having that wish granted by Scottish Ministers.

Argyll and Bute Council notified Scottish Ministers that it proposed to sell the property, SCCDC were then informed and indicated that it wished to exercise its right to buy. Scottish Ministers gave their approval on 22 October 2014 (see letter here pdf). Under the Land Reform Act, the community has six months (from the date on which it indicated it wished to exercise the right to buy) within which to complete the acquisition. This period expired on 31 January 2015.

Case Exposes Flaw

At this point I realised that there was more to this story than just the behaviour and actions of Argyll and Bute Council and that it exposed a significant weakness in the legislation. The act is currently being amended in Parliament as part of the Community Empowerment (Scotland) Bill. Due to lack of time, I took a decision not to follow the Bill through Parliament but I now wish that I had taken more interest.

The flaw in the legislation is that, whilst the community body has six months within which to complete the sale, the landowner can withdraw the land from sale at any time and can refuse to sell the land to the community body. In other words, an owner’s intimation that they plan to sell (which triggers the right to buy process) is not an obligation to sell even if the community wants to exercise its right-to-buy and has the money. It’s rather like offering a child a sweetie if they jump through certain hoops then at the end saying “sorry you cant have the sweetie”.

[Update – note Neil King’s comments below. In this case, the valuation placed on the property under the Land Reform Act is £1.75m. SCCDC are not offering that and thus, in law, the Council are entitled not to conclude a sale].

Of course, the owner cannot sell to anyone else so long as there is a registered interest so the scene is set in certain circumstances for a stalemate such as we have at Castle Toward. This is not the first time that this problem has surfaced. From memory, it has occurred on at least one other occasion.

I had presumed that this (and other weaknesses in the legislation) would have been dealt with during the passage of the Community Empowerment Bill. But I’ve had a quick look at it and it seems the only reform is to make the owner liable for the costs of the valuation should the sale not proceed (Section 44). I have contacted others who have taken a close interest in the legislative process and, although this issue has, apparently, been raised, it has not been dealt with.

Thus I suggest that at Stage 2 of the Bill, an amendment is introduced to the following effect .

Where an owner of land, over which there is a registered interest, decides to sell the land and, as a consequence, triggers the community right to buy, the owner shall be obliged to transfer the land within the six-month period on the terms specified in the legislation. Failure to do so shall allow Scottish Ministers to acquire the land using powers of compulsory purchase.

Is that a) feasible and b) politically acceptable?

NOTES

(1) See the Register of Community Interests in Land for details of registered interests.

32 Comments

  1. Yes, there really seems to be a need for this amendment, otherwise you can envisage sweeties being offered one after another and withheld at the last minute, if for no other reason than spite.

  2. Why not ‘title in the land shall cease and it will revert to common’? Title in land in Scotland has generally no moral or merited basis; in this specific instance, Argyle and Bute have done nothing to earn the very substantial capital gain they hope to realise on an asset they acquired, as I understand it, for one pound.

    So just take it off ’em and give it to the community, and if they come whining for compensation, tough.

    • “Argyle [sic] and Bute have done nothing to earn the very substantial capital gain they hope to realise on an asset they acquired, as I understand it, for one pound.”

      Actually they have. The Council pays around £250k a year just keeping the place secure and as it’s been empty since 2009, that’s around a million pounds they’ve spent just keeping the place on their books. No wonder they’re a bit cagey about letting it go for a 25% on that when the DV ‘s told everyone it’s worth a lot more.

  3. William Ferguson

    FFS, just take it off them? Tough? Yeah scope to write that in an act of parliament. Doesn’t help your cause you know. The irony in this case is that it’s publicly owned. Makes a mockery of the logic that public ownership, ‘owned by the people’ is in the best interests of local people. Community ownership completely different. State capitalism perhaps no better that private capitalism? Perhaps the forestry commission estate should be transferred to community ownership?

  4. How about the paddock in which you keep a house cow, Simon, or your vegetable garden: it’s all land?

    • William Ferguson

      Aye, your plots bigger than mine, it’s just not fair. And what exactly is ‘common’. Who runs it, pays for the now common fences, drainage, trees, etc. Why should someone own 10 acres when somebody else only owns 1?

  5. The analogy of offering a child a sweetie if they jump through certain hoops then at the end saying “sorry you cant have the sweetie” only applies if the child has performed the required hoop jumping. In the case of Castle Toward, it has not.

    A community body like SCCDC exercising its rights under the Land Reform Act has to pay a price fixed by a valuer appointed by the SG or the Lands Tribunal on appeal by either party. The SG appointed the District Valuer to carry out the valuation and they produced a figure of £1.75 million. As is their statutory right, SCCDC appealed that to the Lands Tribunal but then dropped that appeal. Therefore, the legal price remains at £1.75m. (Don’t believe Lesley Riddoch when she says in the Scotsman that the Council set the price at £1.75m – that is simply factually not correct.)

    The Council has never (so far as I know but correct me if I’m wrong) threatened to withdraw Castle Toward from sale even if offered £1.75m. The problem is that SCCDC simply can’t afford the independently valued price because it’s been offered only £750k from the Scottish Land Fund which leaves it £1m short. So what they’re now doing is pleading with the Council to sell the castle to them for £750k, namely a 57% discount on the valuation. That’s something the Council is understandably pretty hesitant about doing. In an attempt to break the impasse the Council has offered to lend SCCDC the missing £1m but they have refused this offer.

    In short, the child has refused to jump through the hoops but is still claiming the sweetie.

    It throws into sharp relief the central issue about land reform: if not private owners, who is going to pay for it? Not, it would appear, the Scottish Government!

    • I’m curious about what exactly the community plan to do with the building. I have no objection to them buying it but It has all the symptoms of a money pit. One of the reports above suggests the £1.0M loan would bankrupt the community group. If that is the case how are any renovation and running costs to be met. It seems rather a tall order that this will be achieved from the operational activities planned for the building. If I’m incorrect delighted to hear what alchemy is planned. Is it possible that A & B Council simply fear a failed project ending up back at their doorstep seeking emergency support? The risk of this seems real and isn’t of course because it’s a community group involved. There are similar projects / properties all over Scotland bought by private individuals who, for whatever well meaning reason, exaggerate the income generating potential and under-estimate (often massively) the cost of renovation and maintenance. They usually end up losing their shirt or selling for a big loss if they’re lucky.

    • Thank you for pointing that out. I have updated the text to reflect this important contextual information.

    • Can I add a couple of points?: The SCCDC asked Savills for a RICS ‘red book’ valuation, which came in at £850k, which is the SCCDC’s subsequent offer. I really feel this other valuation is a crucial one that should be noted.

  6. Hmm. Mr King, your argument would seem to take a rather exceptionalist attitude to land. Firstly, ABC hardly acquired an asset, did they? If it has cost £1 million, that doesn’t mean it is worth £1 million. Secondly, even supposing this were a positive value, it was not ‘earned’ by ABC, but rather by local taxpayers, who paid the £1 million *to* ABC. Thirdly, the role of DVs is hardly uncontroversial: while no-one doubts that the community are seeking to acquire the property at under its paper value, the extent of the shortfall is hardly certain in relation to achievable value vs direct liability. (Savills’ valuation is interesting and well-evidenced.) Fourthly, what is actually at issue here, in the wider sense, is the degree to which local taxpayers and the SG can be obliged to fund property speculation and land-banking by Local Authorities. There’s really no argument about the fact that £1.75 million is a speculative value, not a market-value, and ABC have already failed to realise their desired price/type of sale (to considerable cost also borne by local taxpayers.) Naturally, ABC want to recoup the losses to which they (not the ABC community) signed up – but is it realistic for them to seek to do so from a local community (which has already played its part in funding those losses, and will have to continue to do so, with or without access to the property)? I note also that the offer to lend £1 million presupposes inability to pay, which would return the asset to ABC at a tidy profit – this, too, is hardly business-like.

    I invite you to set aside your ideas about land, and imagine this as a loss-making public service run by ABC: would you consider it realistic for them to refuse to tender a service running a £1 million loss, except for a consideration of £1.75 million to be paid by the private bidder?

    Finally, Mr Wightman’s point, above, was explicitly wider than this case, pointing out that landowners (public or private) are currently allowed to run an unlimited attritive process against potential community buyers (inevitably volunteers who stand to make no personal profit from their labour). Is this either fair, or efficient?

    The bottom line, in the CT case, is that the community are offering to acquire a known liability and develop it into a local economic asset, but ABC are demanding a speculative price which has kept – and will keep – the property as a local public liability. Were they a private landowner (covering the actual direct losses – i.e some of the economic loss, though not the social/systemic loss which is always public – of this gamble) that might be somewhat justifiable, or at least routine. Since they are not, the question simply is different, and the balance of actual liability to imaginary future profit different also. CT is not a sweetie, it’s a job of work – at which ABC have demonstrably failed, and for which the community have made the only available business case. What’s the justification for there being a hoop at all?

    And the central issue about land reform is that we all, through local and national taxes, already subsidise its lack. If private owners are not willing to assume the costs of their property-ownership, then they cannot afford to be owners at all.

    • Is there any evidence of the “attritive” process occuring in practice. This case clearly has a disagreement over value but I’m not aware that the property is being offered / pulled out repeatedly. The alternative being mooted of forcing sale once the process starts seems to me to deprive the owner of a property of a necessary right to respond to changed circumstance and withdraw from the process – assuming no contract is concluded.

    • DR, I hardly know where to start in rebutting that comment so I will confine myself to asking you why, if SCCDC are so confident £1.75m is not the true market value, they withdrew their appeal to the Lands Tribunal?

  7. Rather than taking pot shots at easy targets like Highland Titles, I’d be more interested, considering his political ambitions, to know Andy’s views on Argyll & Bute Council’s refusal today to sell Castle Toward to the SCCDC.

    Against the factual background that:-

    1. The independent valuation fixed by the District Valuer under the Land Reform Act was £1.75 million
    2. SCCDC only had funding for £750k (but were willing to offer £850k)
    3. A&BC were willing to give a discount of £1m (£950k) provided SCCDC’s plans were realistically deliverable BUT
    4. there was a serious question mark over their deliverability because the plans were predicated on grant funding which could not be taken for – er! – granted.

    … how would you, Andy, have voted if you had been an A&BC councillor? Preferably rational, reasoned, legally defensible reasons (because I know you think that way) but if you would have just felt as an elected councillor something like “To hell with the legal-shmegal small print, it’s just the right thing to do and hang the consequences!” then say that if it’s what you think. As a councillor, mind.

    • I have no idea. I have not seen their internal legal advice. A Councillor has legal duties to discharge. My understanding of “best value”, state aids & asset transfer suggests that it would have been perfectly in order to approve sale at £850,000.

      • The legal advice is here – http://www.argyll-bute.gov.uk/moderngov/documents/s95032/1112v4CT.pdf

        Having read that, do you still consider it would have been in order for the Council to have, in effect, given £950k to SCCDC when they don’t have, and have no assurance of getting, the funding to deliver the quid pro quo for that grant, namely the boon to the local economy the regeneration of CT would have delivered?

        Bear in mind it’s not the usual “Give us X% funding conditionally upon us securing the remaining (100-X)% elsewhere”. What was being asked of A&BC was “Write us a cheque for X% now anyway in the *hope* we get the remaining (100-X)% elsewhere but if we don’t – which means the project can’t go ahead – we get to keep your money anyway.”

        • Had I been a Councillor I would have been working proactively with the community to come to a solution long before this paper came to Council.

          • Ah, there speaks the man who would be an MSP!

            I think we can all read between the lines of that masterpiece of non-committal evasion that the answer to my question is: “No. But my political aspirations prevent me from admitting that publicly.”

          • No, you can’t read between any lines. If I ever have the time to read the legal document, I may provide a different answer. Right now, I have far more important things to do than indulge you and answer your hypothetical questions.

  8. Oh but I can and I do read between lines. As can everyone else.

    Aspiring MSP Andy Wightman doesn’t have time to brief himself thoroughly on the biggest land reform story of 2015: “far more important things to do” than Castle Toward!

    What are they as a matter of interest? Having a go at easy targets like Highland Titles?

    I imagine the good folk of South Cowal might be disappointed by your priorities.

    • I have a great deal of work on at present and am working 18 hour days. What this involves is none of your business. I don’t understand your sense of entitlement.

  9. My entitlement to what? To probe, to challenge, to ask questions? “To engage in debate with those who take a different view” (where did I read that?)

    I’m glad you’ve got enough work. It is indeed none of my business what it is but I hope it’s paying you a reasonable wage and I’m sorry if it’s keeping you up too late. (Been there, done that.) But this is politics Andy. You have quite literally set yourself up to be asked difficult questions and be challenged on them when you’re obfuscating. Politics is a ghastly business – rather you than me!

    • Your entitlement to set up a hypothetical situation (I am a councillor in argyll and bute), expect me to read a long document and expect me then to provide a considered response.

      • Get a life you two..

      • I don’t think it’s unreasonable Andy to ask a politician (or aspiring politician or even a “campaigner”) hypothetical questions like “You criticise the incumbent but what would *you* do in their place …?”

        As for long documents, that goes with the territory of being a councillor or MSP. I wouldn’t go giving folk the impression that when you become one, you will be expecting not to have to read them!

        • This is my personal blog. I am not seeking votes from anyone here. As for long documents – of course that goes with the territory and I would read them. But my previous answer stands. I would have done things very differently. For example, I would never have forced SCCDC into going down the community right to buy route when there are asset transfer protocols already in place to reach agreed transfers. I would also have advocated exploring different solutions such as joint ventures with private and other public partners. I would also have called for a paper examining the broader economic impacts of the proposal. There are risks and opportunity costs associated with selling it in the open market.

  10. Noted regards your blog, votes, long docs etc. Fair enough.

    Regards CT, though, when you come to read up about it, you’ll find that the steps you proposed have already been done: there is *already* a paper examining the broader economic impacts of the proposal, two in fact – they’re Appendices A & C of the report I linked to above. As a result of these, A&BC concluded that it *would* be justified under the Disposal of Land by Local Authorities (Scotland) Regulations 2010 in selling CT at a discount of £1m on the DV valuation of £1.75m (See para 4.4.2 of the report.) There is *already* a private JV partner (PGL) but even with all that, there’s still a hole in SCCDC’s finances to deliver the rest of the project which could only be filled by interest free grant funding which could not be guaranteed. And as for being “forced” down the CRTB route, the Council didn’t force SCCDC to register. But after they did, A&BC became legally obliged to notify that they wanted it off their hands one way or another and that inevitably triggered the statutory process. But thereafter, the Council bent over backwards to cut SCCDC slack in terms of extending the deadlines and thinking constructively regards discounting the statutory price.