A majority of Highland estates that changed hands last year were sold in secret, and nearly half went to absentee owners rushing to buy rural land for environmental reasons, a report has revealed.
The Scottish Land Commission, an official body set up to reform land ownership, has warned these trends are threatening attempts to diversify land ownership, improve the rural economy and increase transparency and accountability.
An investigation it commissioned implies the Scottish land market is at risk of overheating, with the demand from corporations, charities and the privately wealthy for prime Highland estates greatly outstripping supply.
A study by Scotland’s Rural College and two major estate agencies – Savills and Strutt & Parker – has for the first time analysed land sales in Scotland over the past two years involving Highland sporting estates, commercial forests and farms.
It found that prices for sporting estates jumped by 88% in 2021 compared with 2020, even though the number of properties sold was similar to the five-year average. Two sold for more than £20m. And despite the global pandemic, the amount spent last year rose by 119% compared with 2020.
Nearly two-thirds of last year’s sales were carried out privately, without the land going on the open market, with a third of the total going to overseas buyers. Those “off market” sales meant land was changing hands secretly without allowing local people to put in bids, the commission warned.
Hamish Trench, the commission’s chief executive, said these trends could make it “significantly harder” for local communities, cooperatives and social enterprises to buy land, stifling efforts to promote rural economic diversity.
That greatly increased the case for new public interest tests to be introduced on large land sales, and for rules to prevent private land sales excluding local communities, he added.
“The way the land market functions is important to Scotland’s ambitions such as net zero, nature restoration, repopulation and community empowerment,” Trench said. “Being able to participate in the market shapes not just who owns Scotland’s land, but who is able to make decisions and who benefits from land and its economic, social and environmental value.”
Businesses and investors are now paying premium prices for rural estates, commercial forests and farms to offset carbon emissions and sell green investments as they attempt to meet the challenges set by governments and scientists to address climate heating.
At the same time, the very wealthy are still buying Highland estates for lifestyle reasons but are now investing much more in woodland, rewilding and peatland restoration rather than focusing on deer stalking, salmon and grouse as before.
A recent study by Community Land Scotland, which campaigns for land reform, found that many forestry projects are subsidised by government grants to promote reforestation and regeneration, while also allowing owners to sell carbon credits based on the CO2 the forests absorb.
That has meant farm prices in Scotland jumped by 31% last year, compared with 6% at UK level, the land commission report said. The value of poor-quality grazing land and hill farms ideal for forestry rose by 60% last year.
The commission’s findings will intensify pressure on the Scottish government to introduce a public interest test and potentially limit the amount of land one individual or entity can own.
As part of the Scottish National party’s cooperation deal with the Scottish Greens it plans to introduce a new land reform bill in late 2023, but it remains unclear what ministers intend to do.
The government has also promised to double the £10m-a-year Scottish Land Fund, which distributes grants for community buyouts, to £20m by 2026. That fund was already heavily oversubscribed before last year’s sudden surge in land prices, and had to turn applicants away.
In 2019, the commission found that about 1,125 owners, including public bodies and charities, owned 70% of Scotland’s rural land, totalling 4.1m hectares (10m acres). That includes 87 owners who hold 1.7m hectares, including some that own vast landholdings of over 80,000 hectares spreading over multiple properties.
The Scottish government said it recognised the case for land reform. The commission’s report supported “the approach we are taking to ensure that the investment in our natural capital is conducted in a responsible manner, in keeping with our land reform objectives and the need to ensure a just transition to net zero.”
Calum MacLeod, the policy director of Community Land Scotland, said the government’s timetable lacked urgency. It could take several years for legislation to come into force.
“Scotland urgently needs land reform legislation regulating ‘off-market’ estate sales, applying public interest tests on significant land transfers and current landholdings, and making it easier to use existing community rights to buy land to be enacted well before the end of 2023,” he said.
