Clause 75 - Crofting community right to buy

Finance Bill – in a Public Bill Committee at 3:00 pm on 10th June 2003.

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Question proposed, That the clause stand part of the Bill.

Photo of Ann McKechin Ann McKechin Labour, Glasgow Maryhill

I should like to raise a matter that I have already raised with my right hon. Friend. The exemption under the Land Reform (Scotland) Act 2003 is very welcome. The Scottish Parliament has carried out a widespread programme of land law reform in Scotland and, as a property lawyer in Scotland, 2001 was a good year for me to change career because I would have required comprehensive re-education in many areas of law.

The exemption covers crofting communities who exercise their right under the Land Reform (Scotland) Act 2003 to purchase their land from the owner in certain circumstances. Given the value of the land concerned, that is an important exemption because the value is likely to be in the highest band. Why has the exemption not been extended to include purchases under part 2 of the Land Reform (Scotland) Act 2003, which confers a similar right on bodies representing rural communities to buy land with which the community has a connection? The right is different in that an interest must be registered, and the right to buy is exercised when the land is marketed or sold by the proprietor. That is likely to involve people with little finance who must raise it from the public sector or charity and funds are difficult to obtain. The additional burden of stamp duty, usually at the highest rate of 4 per cent., on top of the purchase price, could act as a barrier to communities that want to exercise their right to buy land in those circumstances.

There seems little reason why a distinction should be made between crofting and rural communities when it is clear that the intention of the legal reform is to allow communities the right to purchase property and to develop it as they see fit. They are the people who occupy the land and use it, and I hope that on Report my right hon. Friend will consider extending the valuable exemption to transactions covered under part 2 of the Land Reform (Scotland) Act 2003.

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

I am grateful to my hon. Friend the Member for Glasgow, Maryhill (Ann McKechin) for her interest in this and other clauses with a Scottish dimension, and for the expertise and care with which she has addressed the issues. I have given careful consideration to what she said and to the representations made by the Law Society of Scotland.

The purpose of the clause is to remove an anomaly in the application of stamp duty land tax charges that could act as a barrier to the use of the crofting community's right to buy. It is a group right, and similar problems occur—as described when we discussed the previous clause—with the right to enfranchise, because there is only one transaction on behalf of a number of individuals. That means that the total consideration is likely to be high and may attract a stamp duty charge at the higher rates. That in turn means that people can be put off exercising their right.

The clause seeks to address the problem by determining the rate at which to charge stamp duty land tax on a lower calculated value than the actual consideration. In many cases, that will reduce the amount of stamp duty due and bring it more in line with the stamp duty that would have been due had each share in the transaction been bought separately.

That should make the crofting community right to buy more attractive.

I was asked why we have not introduced relief for the Scottish community right to buy. The matter was raised in advance of my hon. Friend's contribution in correspondence from the Law Society of Scotland. I should make it clear that the relief for the crofting community right to buy was introduced with the specific purpose of removing that barrier for crofters who wish to buy their crofts under the terms of that right. The type of purchases made under the community right to buy do not encounter the same problems, and similar relief to that provided in the Bill for the crofting community right to buy would not be appropriate.

I am aware that some—the Law Society of Scotland is among them—have an interest in extending the clause to the community right to buy, but such an extension would not be appropriate. It is important to recognise and to respect the distinction between the community right to buy and the crofting community right to buy. Under the crofting community right to buy, a crofter purchases their croft in conjunction with other crofters and buys a number of separate pieces of land in one large transaction. As I have indicated, in many cases the transaction will be charged at a higher rate, from which many disadvantages flow.

The community right to buy is different: community bodies can register an interest in a piece of land and when it is available for sale have the right to purchase it. The right is mostly used to purchase one piece of land rather than separate pieces of land, which is the particular characteristic of the crofting community right to buy, and the same problem does not therefore occur. The stamp duty land tax charge on community right-to-buy purchases is fair and appropriate. It will not be unduly burdensome because of the numbers of pieces of land acquired. The same relief should not therefore be available.

With that explanation, I hope that my hon. Friend will feel that the issue has been considered, that we have taken into account the particular circumstances in relation to both the community right to buy and the crofting community right to buy, and that we have reached a just and equitable result.

Question put and agreed to.

Clause 75 ordered to stand part of the Bill.