The new Register of Persons Holding a Controlled interest in Land (RCI) will come into force in Scotland on 1 April 2022.

The purpose of this article is to highlight the key points of the regulations behind the RCI¹ and how they may affect landowners and tenants of registrable leases (being those longer than 20 years) in Scotland.

Increased transparency as to ownership of land

The main aim of the RCI is to increase public transparency in relation to individuals who have control over decision-making in relation to land but crucially who do not appear on the Land Register or Sasine Register.

The idea is that the RCI – which will be held and maintained by the Keeper of the Registers of Scotland - will make it easier for individuals and communities to identify those ultimately responsible for land, making it easier to engage with them about land issues that affect their local communities.

To achieve this, the RCI Regulations apply to owners of land and tenants of registrable leases where there is someone else with significant control or influence over the decision making in relation to that land.

The owner of land or registered tenant is known as the Recorded Person and it is their name that appears on the registered title. The person with significant influence or control is known as the Associate.

Who is affected by the RCI Regulations?

The RCI Regulations identify certain categories of Recorded Person/Associate arrangements which may trigger the RCI regime and these are:

where the owner/tenant is an individual and is acquiring/has acquired the property as a nominee for someone else (the Associate). Or where there is anyone apart from the individual Recorded Person who is able to direct/control/influence what happens with the property (the Associate). This might include an option agreement or conditional missives.

Property held on behalf of a partnership or trust. The key issue to consider here is whether there are any partners or trustees who do not appear on the registered title but who do have influence or control over decisions about the property (the Associate).

Property held on behalf of an unincorporated body, for example a community or sports group.

Where the owner or tenant is a company or other entity established out with the UK. Bear in mind that the UK does not include the Channel Islands or the Isle of Man so companies registered in these locations are treated as overseas entities and the RCI regulations will apply if there is an Associate.

Who is not affected by the RCI Regulations?

There are certain exemptions which mean that even if the arrangement falls within one of the above scenarios, the RCI regime will not be engaged. Significantly, if the Recorded Person is covered by another UK transparency regime then the RCI regulations do not apply. This includes companies and LLPs registered in the UK, both of which are covered by the PSC (Person with Significant Control) regime.

It is hoped that in time, to avoid double reporting, overseas entities registered in the new Register of Overseas Entities being introduced by the Economic Crime (Transparency and Enforcement) Act 2022 will be exempt from the RCI. However we don’t have clarification of that yet and in the meantime the RCI regime is relevant for overseas entities. 

Notification duties

If there is an Associate – meaning that the RCI regime is engaged - then both the Recorded Person and Associate have notification duties.

The Recorded Person has a duty to notify the Keeper about the Associate and to provide specified information about them including:

• the Associate’s name, contact address and date of birth if an individual; or
• the Associate’s name, registered office or equivalent and registered number if an organisation; and
• the date on which the association with the Recorded Person was formed.

Notification must be made within 60 days of the association being formed.

The Recorded Person must then – within 7 days - notify the Associate that the Keeper has been notified.

In turn, the Associate is obliged to respond to requests for information from the Recorded Person, to notify them of any relevant changes and to flag if they do not receive notification within the 67 days of becoming an Associate.

We understand that what will appear on the Register will be the name and contact address.

What happens if the Recorded Person/Associate fail to comply?

Failure to comply is a criminal offence with fines up to £5000 on current scales.

Unlike the new Register of Overseas Entities the RCI regime is not linked to the Conveyancing process. This means that a Land Registration application will be processed even if there should have been at the same time, notification by the applicant to the RCI.

When do the RCI Regulations take effect?

The RCI Register goes live on 1 April 2022 and the notification duties outlined above apply from that date. However, there will be a grace period meaning that the penalties for non-compliance do not apply until 1 April 2023.

It is worth bearing in mind that whilst the regime applies to property and leases registered from 1 April 2022 it also applies retrospectively. For example: land bought in 2018 by A as nominee for B and there have been no changes in the arrangement since then. From 1 April 2022, A is a Recorded Person, B is an Associate and both have RCI notification duties albeit they will not be liable to fines for non- compliance until 1 April 2023.

Next steps

The RCI Regulations are complex, particularly in the detail of the categories of Associates and exceptions. Registers of Scotland have an RCI information page and we will be monitoring this for practical guidance for the public and their advisors.

This article does not constitute legal advice and if you would like us to investigate and advise on how the RCI regulations might affect you, please get in touch.

¹ The Land Reform (Scotland) Act 2016 (Register of Persons Holding a Controlled Interest in Land) Regulations 2021 (the RCI Regulations)