The Scottish Land Commission (“SLC”) was established in 2017 to review and make recommendations on law and policy relating to ownership, management and use of land in Scotland.

In August 2021, the SLC published a review called “Land for Housing: Towards a Public Interest Led Approach to Development”.

The review looks to provide recommendations to The Scottish Ministers on how the operation of the housing land market can be reformed so “to better serve the people and communities of Scotland in a fair and climate-conscious way”.

Why do the SLC feel this is needed?

The SLC argue that the current model for strategic land promotion in Scotland is driven by the private sector and so works largely to generate value for shareholders rather than benefit society as a whole. They feel that this means that there are not enough homes being built.

In particular, the SLC point towards developers focusing on building larger, high value homes on greenfield sites which mean that rural and regeneration areas within Scotland are often ignored.

They also feel that there is a private sector focus on simply building housing which is attractive to individual purchasers, rather than looking to create better towns and places to live in.

The view of the SLC is that this also leads to inequality and unfairness within the housing market, with many younger people being priced out of purchasing homes.

While acknowledging that private developers at present operate rationally within the bounds of the existing system, the SLC take the view that delivery of land for housing should be primarily a public function with a “socialised approach” to delivery.

As such, their review looks to try and encourage greater involvement from the public sector and for them to take a more collaborative approach with private developers.

What does the SLC propose?

The SLC stress that change will not be achieved overnight and that any transition needs to happen carefully over time.

Their review focuses on five proposals as follows:

1. Establishment of a new recyclable fund which looks to deliver affordable housing by repurposing both publicly-owned property assets within town centres, as well as privately-owned housing stock in remote rural communities which would become “place pioneers”.
     
   The aim is to make land ready for development in areas that would often be ignored by the private sector due to lack of commercial viability. Initial funding would be used to unlock such sites, with any disposal proceeds upon completion then being used to support further developments.
2. Enabling local authorities to designate “Regeneration Partnership Zones” to speed up the redevelopment of land which is in “fragmented” or multiple ownership. Upon designation of an area as an RPZ by the local authority, it is envisaged that a partnership would then be formed between the local authority and a developer partner. Landowners within the RPZ would then have the option to join the partnership (and join in on the returns) or sell land to the partnership. It is argued that this model will help create incentives for landowners to collaborate on development of their land.
3. The introduction of new ways of ensuring that landowners and public authorities can share the long-term uplift in land values. High level options suggested for consideration include enhanced use of infrastructure levies, permitting compulsory purchase of land based on existing as opposed to development use value and public/private land pooling and joint venture arrangements. It is acknowledged by the SLC that this will be tricky to achieve and that further, detailed consultation will be required.
4. The creation of a new public land agency, which would be provided with resources to ensure that sites are brought forward to meet Scotland’s housing requirements. It would be intended that the agency provide support to local authorities in facilitating development on sites that would not generally be suitable for the private sector.
5. Greater transparency requirements imposed upon developers on pricing of land. This would require option agreements and conditional contracts to be disclosed on a public register, which would be updated alongside a regular bulletin on land sale prices.

What impact could the proposals have on development of land?

The SLC is of the view that their proposals reflect a fundamental shift in the way land is brought forward for housing.

However, the success of any of the proposals that are brought into force will depend on how well they are implemented by local authorities and public bodies.

At the moment, local authorities have wide powers to help deliver land for housing and it is arguable that these are not currently exercised to their full potential.

The creation of a new public land agency would also require substantial investment and its success would likely rest on having the appropriate resource to bring in the necessary talent and expertise.

There may well be some scepticism on the extent to which additional public sector involvement will assist in delivery.

The increased transparency recommendations are likely to cause controversy. Developers and landowners will be strongly resistant to public disclosure of private commercial agreements.

However, the review does acknowledge that this recommendation may cause difficulty and that it may even help stifle development. The SLC propose that this would be the final measure to be implemented.

At present, the proposals made by SLC are simply recommendations and it will be interesting to see how things develop.

While it is currently unclear to what extent the recommendations will be acted upon, the review does seem to align with the Scottish Government’s general commitment to provide increased housing stock.

As such, the expectation is that the Scottish Government, having asked for input on these matters from the SLC in its last Programme for Government, will give serious consideration to implementation of all or parts of the paper.

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