All questions

Real estate ownership

i Planning

Virtually all development of land and buildings requires planning permission; this includes any 'carrying out of building, engineering, mining or other operations in, on, over or under the land, or the making of any material change in the use of buildings or other land'.

Applications for planning permission are made to the local authority (of which there are 32 in Scotland) responsible for the area within which the property development is to take place. The local authority has wide discretion to accept or reject applications, albeit the decision-making process stands to be informed by the planning legislation and guidance issued by the Scottish government. The local authority is responsible for creating local development plans to set out acceptable development and how places within the local area should change in the future. Any development will need to be in conformity with these provisions if planning permission stands to be granted.

Applicants can, under certain circumstances, appeal planning applications that are refused (or granted with unacceptable conditions attached to them) to either a local review body or the Scottish government.

ii Environment

The environmental impact of the use of property is an increasingly prominent concern of the legislature.

Contaminated land

Local authorities are the primary regulator of the contaminated land regime along with the Scottish Environmental Protection Agency. Local authorities are obliged to inspect land to identify areas of contamination and ensure it is appropriately remediated. Generally, responsibility for remediation rests with the polluter; however, where the polluter cannot be found or identified, responsibility passes to the current owner or occupier of the land.

The question of who should bear the risk of contamination of land is invariably addressed in property contracts. Where the risk is theoretical, parties tend to agree that the buyer takes on that risk. However, where the land is known to be contaminated, any adoption of risk by the buyer will involve an adjustment in the price.


The energy efficiency of buildings is another environmental issue of increasing prominence. Sellers and landlords have been required to provide energy performance certificates (EPCs) for their buildings since 2009, and from 2016, sellers and landlords of certain non-domestic properties need to produce an action plan with the owner having 3.5 years to carry out works identified in the action plan to improve energy efficiency and reduce carbon emissions. Alternatively, the owner can currently defer such works but must report annually on the operational energy ratings of the building and exhibit a Display Energy Certificate. Penalties exist for failure to comply. Responsibility for carrying out works needs to be considered for any sale or new lease.

Currently, there is no prohibition against leasing or selling properties with low EPC ratings; however, this is being considered.

iii TaxVAT

A supply of land will generally be exempt from VAT; however, there are three exceptions where VAT is chargeable at the standard rate being: (1) the sale of a commercial property less than three years old or partially complete; (2) certain classes of commercial property including hotel and holiday accommodation; and (3) where the owner or landlord has exercised its option to tax in respect of its interest in the property.


Land and building transaction tax (LBTT) replaced stamp duty land tax (SDLT) with effect from 1 April 2015. LBTT is a tax charged on any relevant land transaction, being the acquisition of a 'chargeable interest'. Chargeable interests include a real right or other interest in or over land in Scotland, or the benefit of an obligation, restriction or condition affecting the value of any such right or interest. Certain interests are exempt from LBTT such as security interests and licences to occupy land.

As with SDLT, there are several tax reliefs applicable to LBTT including sale and leaseback relief; reconstruction relief; acquisition relief; group relief; and charity relief.

Under the LBTT regime, tenants of non-residential leases will be required to review the tax paid every three years to take account of any changes in rental level or variations to the lease. Tenants are required also to make an additional LBTT return when the lease is assigned or terminated.


Non-domestic rates (NDR) are a tax on the occupation of non-domestic property. The tax is calculated on the rateable value determined for the property. Rateable values are subject to review, presently every five years, with the last review effective from 1 April 2017. There is a right to appeal against the rateable values allocated to properties. Certain reliefs are available to small businesses, charities, properties located in rural areas, and empty properties for up to six months depending on the type of building. Listed buildings and properties with a rateable value under £1,700 do not pay NDR.

iv Finance and security

Lenders looking for security over heritable property require a Standard Security to be granted in their favour by the owner of the property. The Standard Security must be registered in the LRS and, if granted by a company, it must also be registered at Companies House within 21 days of its creation.

Standard Securities are governed by the Conveyancing and Feudal Reform (Scotland) Act 1970 which imposes various obligations on the owner including the duty to maintain the property and restrictions on lettings and altering the property.