The Scottish Government created the Register of Persons holding a Controlled Interest in Land (RCI) in order to increase transparency of land and property control. Penalties under the regulations come into force on 1 April 2024 and failure to comply could lead to hefty fines.
The Register of Persons holding a Controlled Interest in Land (RCI) was introduced on 1 April 2022 as part of the Scottish Government's strategy for increasing transparency of land and property control in Scotland.
The perceived problem it was created to solve was that while a person could be registered at Registers of Scotland as the "owner" or "tenant" of land, another person could be the one actually making the decisions in relation to the property.
Now, by looking at information in the RCI, it should be obvious when there is someone who controls a piece of property in Scotland, even if they are not the registered proprietor.
How does the RCI work?
Not all ownership of property will be entered in the RCI – it will only apply in cases where the owner (or tenant under a long lease) is not the person controlling what happens to that property.
Accordingly, the RCI is not a register of property, it is a register of persons. Under the RCI, there are two different interests:
- The "recorded person": the person whose name appears on the Land Register as the owner (or tenant under a long lease).
- The "associates" of the recorded person: the people behind the scenes who call the shots on material decisions relating to the land. Working out who exactly is an associate is a complicated process (there is guidance in the legislation) and it will depend on what kind of entity the recorded person is (i.e. whether it is an individual, a trust, a partnership, an unincorporated association, or an overseas entity).
The recorded person needs to record details for both themselves and their associates in the RCI and notify the RCI when either they cease to be a recorded person and/or when their associates cease to be "associates".
For a more detailed note of the scope and applicability of the Regulations, please see our previous article.
Who will be affected by the RCI?
Given the similarities between the information caught by both the Register of Overseas Entities (the ROE) and the RCI, there was a suggestion that the Scottish Government would introduce an exemption from the RCI for those already subject to reporting duties under the ROE.
However, as of yet, no exemption has been introduced and overseas entities in scope must register in the RCI even if they are already registered in the ROE.
Similarly, it was hoped that an exemption might be introduced for unincorporated bodies, such as churches, who own large numbers of properties through different entities across Scotland.
Again, it appears that no exemption or relaxation is to be afforded to such bodies at this stage and when in scope, they will be expected to make submissions in line with other unincorporated bodies.
Recorded persons can make submissions themselves to the RCI, or they can instruct a solicitor to do so for them.
What happens if businesses fail to register?
Failure to make submissions to the RCI on time carries the risk of prosecution with a maximum penalty of £5,000.
When the RCI was originally introduced, a 12 month grace period was granted during which time no penalties would be imposed for failure to comply.
However, as 1 April 2023 approached it became apparent that 12 months was an insufficient timescale for organisations to collate all the information required to make appropriate submissions to the RCI.
Acknowledging the scale of the task, the Scottish Government decided to extend the grace period for making initial submissions until 1 April 2024.
That date is now fast approaching.
If you fall within any of the categories of persons in scope of the RCI and think that you might be affected by the requirements to register, our experienced property team would be happy to advise you and to assist with any required submissions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
