Are you RCI-ready? Don’t miss the deadline!

7 February 2024

The government transparency drive around property ownership will soon be backed up by criminal penalties as the “grace period” ends on 1 April 2024. Owners of land and tenants with long leases should make sure they are “RCI-ready” to avoid hefty fines for not disclosing decision-makers who aren’t on the title deeds.

On 1 April 2022 a new public register opened: the Register of Persons Holding a Controlled Interest in Land. This mouthful is usually abbreviated to “RCI”. It is managed by Registers of Scotland, who also run the Land Register.

The RCI is relevant where the Scottish property registers – either the modern Land Register or the older Sasine Register – don’t tell the whole story about who makes decisions about a property. Owners, and tenants with long leases (with a term exceeding 20 years) registered in one of the property registers, must submit an entry to the RCI if there is an “associate” who exercises “significant influence or control” over the owner or tenant whose name appears on the title (“recorded person”), but who is not themselves named on the title.

There is a two-year grace period, so entries are required by 31 March 2024 (watch out for the Easter holiday – in practice that means Thursday 28 March!) From then, recorded persons who don’t register may face fines of up to £5,000.

Who is affected?

The regulations are complex, difficult to follow and full of exceptions (and exceptions to the exceptions!) but the key points are:

Other transparency regimes – these organisations can breathe easy

We already have other regimes for:

UK companies, Limited Liability Partnerships and Limited Partnerships (registered with Companies House)
Building Societies, Friendly Societies and Credit Unions
Charitable Incorporated Associations (CIOs/SCIOs)
Public Authorities subject to Freedom of Information laws, e.g. local authorities, the Scottish Government

If the recorded person is any of these, RCI doesn’t apply. Otherwise, RCI applies in specified scenarios which are set out in legislation. The rules are complex but here are some common examples:

You may need to register in the RCI if your land is held by one of these

Nominees – an individual is the owner/tenant shown on the title deeds or lease (“the title”), but in reality there is an arrangement that they hold the land on behalf of another person or body.
Partnerships – the land or lease is partnership property, but not all partners are on the title. This might be because one partner owns the land, but the partnership accounts show it in the balance sheet; or because when the land was acquired all partners were put on the title, but since then new partners have joined.
Trusts – the land is held by a trust, but not all trustees are on the title. This is likely when a new trustee has been appointed since the land was acquired. RCI also applies if someone has significant influence or control over a trustee. Trusts which have offshore companies as trustees are likely to be caught. But being a trust beneficiary doesn’t make someone an associate.
Unincorporated bodies – this might be a club which owns or leases its premises. The title might only name some of the committee members (e.g. the president and treasurer), but if other office bearers have a say in decisions, they could be associates.
Overseas entities – legal entities (such as companies) established outside the UK. (Note: the Channel Islands and Isle of Man are outside the UK.) A person or body who holds more than 25% of the voting rights (directly or indirectly), can remove a majority of the board members, or can exercise significant influence or control, is an associate.

There is an exemption covering companies whose shares are publicly traded in the EEA and a small number of other countries.

There is also a Register of Overseas Entities (ROE) maintained by Companies House. This is separate and both regimes could apply to the same entity in respect of the same land, or an entity could be exempt from ROE but not from RCI.

Even if the relationship is not exactly like one of these examples, RCI applies if someone who is not on the title has significant influence or control.

Who has to register?

The duty to register applies to recorded persons, not associates. Recorded persons need to check that an associate’s details are correct before submitting them, and must tell associates that their details have been sent to the RCI. The associate must then advise the recorded person of any changes to their details.

If the recorded person doesn’t register, the associate must tell the recorded person that they are an associate and provide their details. Not doing so is punishable by a fine of up to £5,000. But it is still the recorded person’s job to make the RCI entry, not the associate’s.

Security declarations

Transparency has public benefits but can be dangerous for some. If the associate is at risk of violence, abuse or intimidation, they can apply to have their details on the RCI hidden from public view. An example is if a court has made a non-harassment order, or a police officer confirms the person could be in danger from having their details publicised. Evidence of the danger is needed.

What should I do?

This article is a broad summary of a very complex, and often confusing, set of rules. It can be difficult to work out if RCI applies to you. If you think it might but aren’t sure, or if you would like guidance with making your entry, please get in touch with Tim Macdonald or your regular Anderson Strathern contact for advice.

You may also be interested in the following resources:

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