Do mandatory pre-emption rights apply to the sale of real estate assets in this country?
‘Community bodies’ representing local communities in Scotland have a statutory right to apply to the Scottish Ministers to register an interest to buy real estate. The process is subject to rigorous scrutiny by the Scottish Ministers, and applicants must be able to show that the acquisition is in the public interest and that the real estate will be used for the benefit of the local community for ‘sustainable’ purposes (such as provision of facilities for educational, sports, and other recreational activities). If successful the community body then has a right to buy the real estate at market value when the owner decides to sell. This statutory right (which was introduced under Part 2 of the Land Reform (Scotland) Act 2003) originally applied to rural areas only, but was extended to urban areas on 15 April 2016.
An additional community right to buy was brought into force on 27 June 2018. The ‘Right to Buy Abandoned, Neglected or Detrimental Land’ allows a community body to apply to the Scottish Ministers for consent to purchase (at market value) land deemed by the Scottish Ministers to be ‘eligible’. This right to buy is not a pre-emptive right, and can potentially be used even when the owner of the land in question does not wish to sell. Land will be ‘eligible’ for the Right to Buy Abandoned, Neglected or Detrimental Land if, in the opinion of the Scottish Ministers, it is ‘wholly or mainly abandoned or neglected’ or ‘the use or management of the land is such that it results in or causes harm, directly or indirectly, to the environmental wellbeing of a relevant community’. When a community body applies to exercise this right to buy, the Scottish Ministers must carry out a full assessment of the application and consult with various parties (including the landowner) before deciding whether to allow the purchase to proceed. Before issuing consent, the Scottish Ministers must be satisfied that the community body's plans for the land are in the public interest, and compatible with furthering the achievement of sustainable development in relation to the land.
On 26 April 2020, a further right to buy, called the ‘Right to Buy Land to Further Sustainable Development’ was brought into effect. This allows community bodies to apply to the Scottish Ministers for consent to purchase (at market value) land in their community to ‘further sustainable development’. (Official guidance describes ‘sustainable development’ as ‘an integrated long-term approach to economic, social and environmental issues’.) The Land Reform (Scotland) Act 2016 sets out four ‘sustainable development’ conditions on which the Scottish Ministers must be satisfied before giving consent to a community body wishing to exercise this right to buy. These are:
Once an application is made by a community body for consent to exercise this right to buy, the Scottish Ministers must carry out a full assessment of the application and consult with various parties (including the landowner) before deciding whether to issue consent for the purchase to proceed.
Tenants under certain types of agricultural tenancies can apply to register an interest over the agricultural land allowing them to buy that land if it becomes available for sale.
The owner of real estate is free to grant pre-emption rights to any third party. The seller would then need to offer that third party the option of buying the property ahead of any other potential buyer.