Gregor Duthie: Still time to comply with new RCI property transparency checks
Gilson Gray legal director Gregor Duthie shares his thoughts on the Register of Controlling Interests in Land and what it means for overseas investors and trusts that hold Scottish property.
Greater transparency over the ownership of property in Scotland – and the UK, for that matter – has been an ongoing theme of legislative changes over the past decade. This is particularly true as more property is purchased by international investors, with figures from Knight Frank showing that in 2022 overseas buyers accounted for 52% of investment volumes in Scottish commercial property.
Earlier this year saw the end of the transition period for the Register of Overseas Entities, which means that any individual or organisation buying, selling, or transferring property has to register with Companies House and identify their beneficial owners. Those who failed to register before the January 31st deadline risked incurring a daily default fine of £2,500 – a penalty that applies to any new purchasers of property in the UK too if they are already established overseas.
In Scotland, a second piece of legislation, the Register of Controlling Interests in Land (RCI), is also now in force. Created with similar intentions to the Register of Overseas Entities – removing much of the historical opaqueness around ownership of land and property – this piece of legislation is much broader. It is also important to note that being on the Register does not exempt you from the RCI.
Any person who has an interest in a property, but whose ownership is not documented on the Land Register, must be identified on the RCI. These rules will apply not only to UK-based individuals but, for example, trusts where it is not clear who has control or instances where the trustees have changed over time and the Land Register is no longer accurate.
So, for example, there will be plenty of cases where a local community building or club is owned by a trust or charity. The title may say the property is owned by a director of the organisation or a trustee who has long since retired, but the document was never updated and is therefore no longer accurate. At the same time, it also applies to any international ownership through companies or trusts, where structures may be more complex. Even if the international company is already registered in the Register of Overseas Entities at Companies House, it must also register in the RCI for now – although the hope is that requirement may be removed at some point in the future.
There is still time for any land or property owners who missed the initial roll-out – the deadline for registration has been extended by to April 1st, 2024. If anyone fails to register by the new date criminal penalties may apply to the owners, tenants, and their associates in the form of a fine of up to £5,000. The duty to comply is on these parties – they must provide notice that an individual or organisation has a controlling interest, or they will be liable for any fine.
All of these public policy initiatives are driving towards a fully operational map-based Land Register system, which any member of the public can access. Each property on the map would have its warranty or indemnity attached and the owner will be easily identifiable, with a strong degree of accuracy. With that information, the idea is that vacant or unused land and buildings might be more easily brought back into beneficial use.
That may still be some way off. In the meantime, property and landowners should register with the RCI ahead of the extended deadline while there is still plenty of time to do so and carefully consider how to prepare themselves for even greater transparency over property ownership in the future.