Silverburn: sold on the right to buy

Land reform and community engagement in land in Scotland are frequently in the news at the moment. Land is seen by the Government as an asset that should benefit the many and not the few. Rights for communities, agricultural tenants and crofters to buy land were introduced by the Land Reform (Scotland) Act 2003 and the Agricultural Holdings (Scotland) Act 2003, with a Government target of 1,000,000 acres in community ownership by 2020. However, these rights to buy were not as widely used as the Government hoped and only half a million acres of land are currently in community ownership.

An evaluation of the community right to buy was carried out by Ipsos MORI and the results were published by the Government on 12 October 2015. This revealed that as at November 2014, only 174 applications had been made to register a community right to buy and only 22 purchases had been completed. The evaluation identified various hurdles which communities encountered when trying to exercise the right to buy.

To help address some of the issues and to help meet the 2020 target, the Government passed the Community Empowerment (Scotland) Act 2015 and the Land Reform (Scotland) Act 2016, amending the existing community rights to buy and introducing two new rights to buy:

• the right to buy abandoned, neglected and detrimental land under the 2015 Act; and
• the right to buy land for sustainable development under the 2016 Act.

Significantly, both of the new rights to buy do not require a willing seller.

The 2015 Act aims to simplify the community right to buy by making it apply to all land in Scotland rather than just rural areas, by simplifying the application process and by making it easier for communities to make late applications. This last point is particularly important, as it is often only when a “For Sale” sign goes up that the community realises that there is an opportunity to buy.

Silverburn Community Ltd (SCL) is one of the few communities which did successfully exercise the right to buy. Silverburn is a small village situated about nine miles south of Edinburgh. SCL acquired a former water storage tank in the middle of the village and converted it into an attractive village hall in 2005-06. The hall is used regularly for a wide variety of activities including exercise classes, children’s parties and community coffee mornings. It has reduced the social isolation of the older members of the community and allows the younger members to keep fit.

We thought it would be useful to explain how SCL overcame some of the obstacles to exercising the right to buy, and see how the new procedures which came into force on 15 April 2016 will help other communities looking to bring land into community ownership.

Seizing the opportunity

There used to be a hall in Silverburn belonging to the Women’s Rural Institute, which was occasionally used by the community. The hall fell into disrepair and was demolished in 2002. When the community spotted that the former water storage tank (a substantial brick building), adjacent to the site of the old village hall, was being put up for auction, we realised we had an opportunity to use the community right to buy to acquire the site and create a new community space. As the site was already being marketed for sale, we had to use the special procedure for late applications which involved giving good reasons why our community body had not made an application before the site was marketed for sale.

The community body

Before the application could be made, we had to create the community body. The first step was identifying the community. This had to be done by postcode unit. There are now more options for identifying the community, including by electoral ward, community council area, postcode area, island, settlement and/or locality of the community in question.

The greater flexibility now available for identifying a community could prove to be an advantage. SCL had to be a company limited by guarantee with no fewer than 20 members, the majority of whom had to be members of the community (this was quite a challenge for a small community).

There is now a choice of legal entity for the community body:

• a company limited by guarantee; or
• a Scottish charitable incorporated organisation (SCIO); or
• a community benefit society (CBS).

The formation of a SCIO is less onerous than a company limited by guarantee, as it is set up entirely with the Office of the Scottish Charities Regulator (OSCR) whilst registering for charitable status and does not involve the Registrar of Companies. A SCIO reports solely to OSCR by means of an annual return and simplified accounts.

CBSs are the equivalent of the old industrial and provident societies and must register with the Financial Conduct Authority as well as OSCR if they wish to obtain charitable status. They are very scarce as yet, and their reporting requirements are less straightforward than for SCIOs.

The community body now requires no fewer than 10 members and only three-quarters of those members must be members of the community in question. This would mean that interested outsiders with useful experience could be members of the community body.

One of the barriers for communities exercising the right to buy identified in the impact evaluation is the need for professional advice, which can be a significant cost to the community body. We were extremely fortunate in Silverburn that we had residents with all the necessary professional and technical skills. We had an accountant who could set up the company, a lawyer who could carry out the conveyancing work, architects who drew up the plans for the hall and did all the costings and specifications, engineers, surveyors and residents who were willing to take on all of the paperwork necessary for putting together the application, consulting with other residents and submitting lengthy applications for funding.

Once SCL had been formed, we submitted the late application for a community right to buy to the Scottish ministers.

Showing support

As our application was considered a “late application”, we had to demonstrate a greater level of support within our community for the right to buy proposal than was required for a normal application. We also had to show that the right to buy was strongly in the public interest. In a small community it was easy to mobilise the residents to show such a high level of support.

The procedure for late applications has been amended, with a community body submitting a late application now required to satisfy clear additional criteria beyond those which would normally apply before their application will be accepted by ministers.

Sustainable development

In our application we had to show that our proposals were compatible with furthering the achievement of sustainable development. The plan to convert the former water storage tank into a village hall met the development criteria, and we addressed sustainability by looking at the social, environmental and economic benefits of the proposal.

Running the ballot

We had to show the consent of the community by carrying out a ballot of the members of the community. The ballot was carried out by Midlothian Council on behalf of SCL. It was a time-consuming process for SCL to identify the names and addresses of all the people eligible to vote in the ballot and provide this to the council.

The new legislation provides for the Scottish ministers to appoint a balloter who is independent and has knowledge and experience of conducting ballots. Ministers will meet the cost of the ballot. This will make the process much easier for community bodies.

Valuation process

The district valuer carried out the valuation of the land and this remains the process under the new regulations, although the period within which the valuation must be carried out has been extended from six to eight weeks. This provides time for a counter-representation stage, which allows the parties to make representations to the valuer.

Funding and completion of sale

Obtaining the funding is probably the hardest part of the process for the community body. SCL was fortunate to receive funding from a variety of sources including the Big Lottery, Leader +, and Aggregates Levy as well as funding from community members and a donation from the neighbouring estate. Members had been involved in previous funding applications for the Carlops village hall so were aware of some of the issues when completing funding applications, but pulling all the applications together to ensure that the funds were available was a difficult process given the tight timescale for completion.

The conveyancing process once the price is agreed or determined is similar to any other property transaction. The community body submits a formal offer to purchase to the owner. The legislation sets out criteria for determining the date of entry, and the offer “may include such other reasonable conditions as are necessary or expedient to secure the efficient progress and completion of the transfer”. Missives are concluded in the normal way.

The timescale for completing the purchase has been extended from six to eight months (with provisions for further extension where the price assessed by the district valuer is the subject of an appeal). This will give community bodies more time to pursue funding applications and co-ordinate sources of funding for completion.

Efforts rewarded

Used in the right circumstances, the community right to buy can bring real benefit to communities. Even with the recent changes to the procedure intended to simplify the process, communities need to be prepared for the huge amount of work that will be involved. We feel the results justified the tremendous effort in Silverburn and we hope that other communities are able to benefit from the community right to buy.