Among the recommendations of the LRRG are that more effort should be made to complete the Land Register and that patterns of rural landownership should be mapped and better understood. In response to publication of the report, the Scottish Government announced that it had asked the Registers of Scotland to complete the coverage of privately-owned land in the Land Register within 10 years and public land within 5 years.

The Registers of Scotland has launched a consultation on how it might meet this aspiration using the existing statutory powers contained in the Land Registration (Scotland) Act 2012 which comes into force in December this year.

Currently 26% of land in Scotland is registered in the Land Register (see map below) with the remainder being still registered in the older Register of Sasines. (1) Currently as land changes ownership, it moves onto the Land Register. The Land Registration (Scotland) Act 2012 introduces new triggers and the LRRG recommended that there be further ones.

This  blog examines the wisdom and desirability of the ten-year target and whether alternative means might be more useful in fulfilling the recommendations of the LRRG and the aspirations of Scottish Ministers.

The Registers

It is important to understand the difference between the Register of Sasines and the Land Register.

The Register of Sasines is a register of deeds – bits of paper that record legal agreements to sell land, to raise a standard security over land, to lease land etc. It was established in 1617. The Keeper’s responsibilities are to record such deeds so as to provide a means by which the interests they represent can be legally enforced and defended.

Being a register of deeds means that in order to find out who owns a parcel of land, these deeds have to be read and interpreted. This can be a laborious process. There are usually no plans associated with the deeds. If there are, they can often be a black & white copy of a plan showing the “lands delineated in pink”.

In 1979, this register was replaced  by the Land Register which provides a state-guaranteed title together with a definitive map. The Keeper undertakes a once-and-for-all search to determine the title to land. She then issues a land certificate containing details of ownership and a detailed plan based on Ordnance Survey mapping (see example here of Stirling Castle – title & plan). She also provides a state guarantee of the title and is liable to indemnify the owner if any mistakes subsequently come to light. A Land Certificate is is the gold-standard in defining and defending property rights. Given the choice, everyone would want one.

But Scotland’s landownership history is complicated and to generate a Land Certificate involves a painstaking check over all the prior deeds to establish what land exactly is contained within the title, what was sold in the past, what rights might be held by others over the land (such as servitudes for access to other land) and the precise boundaries of the land. This is often straightforward in property developed in the recent past but for land the forms part of very old estates or larger holdings that have a complex history of land transactions, it is time-consuming work. This is why, in many cases it can take years to generate a title.

The other fact to appreciate is that the Registers of Scotland is an Executive Agency of the Scottish Government and is self-funding. It receives no public funds from Parliament and, instead, finances its operations entirely from the fees paid to record deeds and titles and, to a lesser extend from search fees and consultancy work.

Is ten years realistic?

So would it be possible to complete the Land Register within 10 years?

My initial reaction to the Scottish Government’s aspiration was skepticism. Land registration is a complex and time-consuming business. Some titles take up to 5 years to be generated (although it can be expedited when, for example, PetroChina wanted to invest in the Grangemouth oil refinery). The Keeper has to check through the history of a property and make sense of sometimes ambiguous information. She has the discretion to withhold indemnity over all or part of a title and, where this happens, the owner must wait for ten years until their ownership is free from challenge.

Over the years I have seen titles that are incorrect. One of the most blatant involved an owner of several hundred hectares of land whose title included a house and garden owned by the parents of one of my childhood friends. This took much time and effort to sort out. Moreover, land registration has been used to claim land that is not owned by the vendor. I myself have advised that a small access strip be incorporated in a title hoping that the Keeper would not notice. She didn’t.

The biggest challenge to a rapid (and ten years is rapid) completion of the Land Register is financial. For over 30 years, the Registers of Scotland has been self-financing. If it were to complete the register within ten years, resources would have to be found. The consultation document is not very transparent about the workload and financial consequences.

Until recently, I was doubtful about the wisdom and practicalities of this target but had an open mind. Reading the consultation document does not convince me that this task is possible. But it was hearing of changes to how the Keeper intends to handle future applications for land registration that has not only confirmed my doubts but convinced me that we are about to embark on a reckless and dangerous path and that the target poses huge risks.

The Keeper’s Memo

In a memo issued to staff in early July, the Keeper announced that;

1) The Keeper will no longer check prescriptive title and will rely instead upon the certification on the registration form that the deed is valid. There will therefore be no search in the Sasine Register and the Keeper will not require sight of links in title to support an application. By certifying the deed is valid the solicitor is assumed to have carried out the relevant checks

2) The Keeper will not check for outstanding securities.

3) Only the deeds lodged with the application will be used and the Keeper will not examine any other deeds.

4) The Keeper will not use her own records to determine whether a deed should be included in the application or not.

In other words, the basic principles of Land Registration under the 1979 and 2012 Act are to be tossed aside and titles will be issued based on the information provided by solicitors. I have seen too many instances of land-grabbing and shady deals by solicitors to have any confidence whatsoever, that the Register will have any integrity if these reforms are implemented. There is nothing now to stop rogue solicitors and their clients abusing the system. Even well-intentioned and honest applications will now be compromised. Even now, many applications contain errors made in good faith. (2)

If there are no independent checks made on applications by the Keeper by looking behind the scenes then there is a significant possibility that anyone, whether a practicing solicitor or not, will be able to concoct a fraudulent application that is never checked. Once the title is registered it will appear to be as valid as any other. This may confer additional rights the applicant never should have had (which may or may not be the detriment of another land owner) and may sit as a ticking time bomb for some future land owner.

The changes appear to be in response to the Scottish Government’s request to meet the ten year target.

One of the biggest threats this poses is to owners of land that border that which is the subject of an application. The process of land registration has always favoured those titles are recorded first. Under the existing regime, owners of neighbouring properties are not consulted about the boundaries claimed by applicants. It is not hard to envisage those with most to gain (large-scale landowners and owners of the most valuable land) taking advantage of the new arrangements to appropriate useful bits of land from homeowners, local authorities, common good funds and others landowners. They will be completely in the dark about such claims and may very well find themselves many years from now having had their interests compromised.

My understanding is that senior staff in the Registers of Scotland have doubts as to whether these changes are consistent with the 2012 Act

Conclusion

It is my view a fundamental and highly dubious change is now in train which should not be made solely to secure a political goal of completing the Land Register within ten years. Indeed it should not be made at all.

I have proposals that would maintain the integrity of the Land Register, assist with the process of land registration AND ensure free public access to good quality information about who owns Scotland. This will be the subject of another blog in the near future.

Meanwhile, it looks like Murdo Fraser’s Economy, Energy and tourism Committee might be well advised to investigate this matter.

NOTES

(1) This equates to 58% of all property titles. The extent of land is less because most titles are small urban sites rather than large rural estates.

(2) See paras 160 onward from the Stage One Report of the Economy, Energy and Tourism Committee.

 


In 1965, Educational Films of Scotland made fascinating film narrated by Scottish actor Moultrie Kelsall about the history of Grangemouth from 1750 to modern times (1965). Among the highlights of the film is the focus on the role of Grangemouth Town Council as a local, democratic enabler of economic development. In Kelsall’s words,

I think that Grangemouth has been very well served by a succession of hard-working, and enterprising, forward looking Town Councils.”

Take the time to watch the film. Click on the image below or here.

Today, Grangemouth is in the news in relation to the future of the petrochemical plant and oil refinery. The plant operator, Ineos owns the petrochemical plant and is a co-owner of the oil refinery with PetroChina Company Limited.

To facilitate this investment with Petrochina, the Registers of Scotland, agreed to admit a voluntary registration of the  land in the land register. As reported in the Law Society of Scotland’s journal, the Keeper of the Registers was keen to highlight how registration can enhance the confidence of an investor by providing a state-guaranteed title.

Grangemouth Oil Refinery

Deborah Lovell, a partner in Anderson Strathern LLP’s Commercial Real Estate team, commented on their voluntary registration of Grangemouth Refinery.

“The voluntary registration process was used recently on behalf of our client, INEOS, for their landholding comprising their oil refinery and petrochemicals facility at Grangemouth and terminal at Finnart, all held on the historic General Register of Sasines. The registration of the land was key to a number of strategic deals involving transfers of the landholding, the reorganisation of the client’s funding arrangements, and the involvement of a new foreign investor. The benefit of the voluntary registration for our clients included speed and certainty for all parties, which was of major assistance in enabling the parties to achieve their goals.”

The Ineos site is registered under two titles (for links see below).

The petrochemical plant is registered in STG29375 and is owned by Ineos Chemicals Grangemouth Ltd. which is a company 100% owned by Ineos Europe Holdings Ltd. which is a company 100% owned by Ineos Jersey Ltd.

The oil refinery is registered in STG64980 and is owned by Ineos Manufacturing Scotland Ltd. which is a company 100% owned by Petroineos Manufacturing Scotland Ltd. which is a company 100% owned by Ineos Refining Li Ltd., a joint venture company between PetroChina Company Ltd. and Ineos Investments (Jersey) Ltd. This join venture company is not registered in the UK but probably in China and the “Li” in the name is probably a reference to Chinese Vice Premier Li Keqiang who, with Nick Clegg, witnessed the deal in 2011.

Curiously, the salmon fishing rights in the River Carron and 1486 hectares of the Firth of Forth are owned by BP Exploration Operating Company Limited under title STG27415.

Grangemouth Town Council was abolished at midnight on 15 May 1975 by the Local Government (Scotland Act) 1973 which received Royal Assent 40 years ago on 25 October 1973.

I hope someone returns to Grangemouth and makes a follow-up film to Moutrie Kelsall’s 1965 account. From indigenous local endeavours by Scottish businesses and municipal enterprise, we are now in a world of local government which is not local and does not govern and a world of global footloose private equity firms based in tax havens.

This is all about power.

TITLES

STG29375 (1.5Mb pdf)
STG29375 (plan) (2.9Mb pdf)
STG64980
STG64980 (plan) (3Mb pdf)
STG27415
STG27415 (plan) (6.9Mb plan)

 

Yesterday in the UK Parliament, the Prime Minister confirmed that he would co-operate with the Scottish Affairs Select Committee to establish “who owns and controls the great landed estates in Scotland, in order that they can minimise both tax avoidance and subsidy milking.”

In a debate following a statement on the recent European Council meeting called to discuss energy policy and tax evasion, Ian Davidson MP, the Chair of the Scottish Affair Committee raised the topic of transparency in landownership in Scotland (Column 1254 Hansard)

The Prime Minister: My hon. Friend makes an important point. The draft Bill that we produced also had huge amounts of pre-legislative scrutiny. We have to recognise that there will always be civil liberties concerns about this issue, so we should look at how we can start moving the debate on, recognising that there is a block of telephony covered by fixed and mobile telephony that is dealt with. As we move to more internet-based telephony, how are we going to help the police deal with that? We may have to take this in short steps, so that we can take the House with us and listen to concerns about civil liberties, but I am convinced that we have to take some steps, otherwise we will not be doing our job.

Mr Ian Davidson (Glasgow South West) (Lab/Co-op): I welcome the statement from the European Council and the Government, which says that proper information on “who really owns and controls each and every company” will be provided. Will the Government co-operate with the Scottish Affairs Committee in establishing who owns and controls the great landed estates in Scotland, in order that they can minimise both tax avoidance and subsidy milking?

The Prime Minister: That is the intention of this move. Having all countries sign up to an action plan for putting together registers of beneficial ownership by companies and the rest of it will help tax authorities to make sure that people are paying tax appropriately. That is a debate that we are leading at the G8 and in the European Union, and that should apply—we hope—to every country.

This is a topic I raised with the Scottish Government in my evidence to the Land Registration Bill last year in which I argued that we should simply make it incompetent to register a title in the name of any corporate entity incorporated in a tax haven. This was rejected by Fergus Ewing on the basis that it would deter inward investment.

Given that the Land Reform Policy Group has decided to rename itself the Community Ownership Review Group, lets hope that David Cameron and Ian Davidson might be able to advance matters.