The Land Reform (Scotland) Bill is significant new legislation passed by the Scottish Parliament in late 2025. It represents the latest and most substantial step in long-running Scottish Government efforts to modernise land ownership, improve transparency, and empower communities throughout Scotland’s rural and urban landscapes. The Bill seeks to tackle historically concentrated land ownership patterns and ensure that land use better aligns with wider public interest outcomes for Scottish society.
Reported in The Guardian, Greens and other campaigners have framed it as correcting historical inequities in land distribution that have left large estates and limited access to land in the hands of very few owners.
Core Components of the Bill
1. Transparency and Accountability
- The Bill introduces new requirements for Land Management Plans for large landholdings (defined as land over a certain size), including public accessibility and engagement with local communities.
- These plans are intended to improve information about how land is used and managed, enhancing public and community understanding of land ownership across Scotland.
- The requirement to prepare and publicise these plans supports one of the Scottish Government’s central aims of increasing transparency in land ownership structures*.
2. Community Engagement and Rights
- Communities will have prior notification of land sales above a specified size (previously 3,000 hectares but amended to 1,000 hectares during parliamentary stages).
- Local community bodies are given an opportunity to register interest and potentially bid to purchase land before that land is sold to others.
- The Bill continues and strengthens Community Right to Buy provisions, building on existing mechanisms designed to improve community participation in land ownership**.
3. Powers to Break Up Large Landholdings
- Scottish Ministers are granted powers to ask for land to be divided into smaller parcels (“lotting”) when holdings over the threshold size are being sold.
- This is aimed at increasing diversity in land ownership by enabling communities, smallholders, and other purchasers to acquire parts of what would otherwise be sold as one large estate***.
4. Rights and Protections for Tenants and Small Landholders
- The Bill provides updated protections and rights for tenant farmers and small landholders, including fairer compensation arrangements if a tenancy is ended.
- A pre-emptive right to buy is established for small landholders to help them secure the land they farm and encourage investment and sustainability in rural economies****.
5. Institutional and Regulatory Measures
- A new Land and Communities Commissioner post is created to oversee implementation of core provisions and report on compliance and effectiveness.
- Ministers will also launch further consultations and regulations regarding dispute resolution, tenant farming issues, and other detailed rules required to operationalise the Bill’s provisions**.
Impact of the Land Reform (Scotland) Bill on Insurance
The Land Reform (Scotland) Bill introduces substantial changes to how land is managed, sold and regulated in Scotland. While the primary focus of the legislation is on land ownership, community engagement, transparency, and transfer controls, these changes also give rise to potential implications for the insurance market, underwriting risk and the operation of insurance cover for landowners, tenants and intermediaries.
There is no direct statutory insurance requirement in the Bill itself, but the Bill may indirectly affect insurance risk, cost and availability in several areas.
1. Impacts on Property and Liability Insurance Cover
A. Increased Regulatory Complexity and Risk
The Bill will require landowners of large holdings (over 1000 hectares) to prepare public Land Management Plans and comply with new reporting and engagement duties. These plans and new transparency obligations may:
- Expose commercial and legal risks where landowners have to disclose long-term intentions and operational detail that could affect perceived risk for insurers.
- Increase liability exposure where non-compliance with Land Management Plan obligations triggers enforcement action, including fines of up to £40,000. Insurers may factor this into risk assessments for directors and officers liability cover, statutory liability policies and other commercial covers*****. It is worth knowing that Rural Protect covers any enforcement or regulatory action.
B. Market Complexity and Underwriting Uncertainty
Insurers may regard the regulatory environment as more complex, given:
- New obligations on sale and transfer of land holdings, including a requirement for ministerial notification and potential mandatory “lotting” of property before sale. These interventions may delay transactions, affect title certainty and extend timelines for claims or reinstatement obligations under existing insurance policies.
- The broad scope of what constitutes a “large landholding” (including contiguous or connected parcels) may increase the number of properties subject to the legislation, complicating title and risk assessments for insurers.
This could make underwriting decisions more cautious for:
- Property insurance covering estate buildings, farm structures and commercial assets.
- Liability covers associated with land-based operations (farm liability, public liability for walkways and access points under the Outdoor Access Code).
2. Land Sales, Transfer Delays and Insurance Requirements
A. Transaction Risk and Contractual Insurance Conditions
The Bill’s provisions for pre-notification of sales and community first-right-to-buy opportunities could delay property transactions. This introduces:
- Longer interim periods between binding agreements and completion.
- Potential gaps in required insurance cover continuity (e.g., buildings and liability insurance tied to ownership and occupancy).
Lenders and solicitors routinely require evidence of insurance cover when property changes hands. If the sale process is delayed or disrupted by the Bill’s procedures, this could:
- Expose buyers or lenders to unintended uninsured risk if coverage lapses before completion.
- Lead to premium increases where insurers perceive extended exposure during protracted sale processes.
3. Broader Commercial Insurance Considerations
A. Impacts on Investment-Linked Land Uses
Stakeholders have expressed concern that the Bill could deter investment in rural land and rural businesses, particularly where required:
- Compulsory engagement plans, bureaucratic reporting, and lotting requirements introduce layers of administrative risk and potential delay for development projects, including renewable energy, housing and commercial ventures connected with land******.
Insurers consider investment viability and forward planning in project and construction insurance products. Extended regulatory requirements could:
- Increase the perceived project risk profile, potentially leading insurers to apply higher premiums.
- Cause cover restrictions or exclusions where timelines are uncertain.
B. Tenant Farming and Small Landholder Risks
Changes proposed in the Bill, especially around compensation and tenancy rights, may influence:
- The financial stability of small businesses (tenants and small landholders).
- The creditworthiness and economic viability of these enterprises.
Where tenant farming and smallholding businesses face uncertain rights, insurers may classify these risks as higher exposure sectors, affecting business interruption cover and specialist farm insurance.
4. Property Market and Valuation Uncertainty
The debates around the Bill indicate that:
- Many buyers, sellers, investors and advisers believe that the legislation introduces uncertainty into the land market due to scope, thresholds, definitions and implementation timelines*******.
Insurance underwriters typically price risk in part against market stability and clarity. If the property market is perceived as unstable or unpredictable:
- Premiums for land-linked covers may increase to reflect the potential for claims associated with legal disputes, coverage disputes or regulatory compliance failures.
- Insurers may restrict capacity for certain types of risk or require more detailed documentation and compliance evidence before offering cover.
Key Takeaway for Insurance Brokers
Insurance brokers advising clients affected by the Land Reform (Scotland) Bill should:
- Closely monitor secondary regulations and implementation timelines, as many technical details that could affect risk underwriting will emerge after the Bill becomes law.
- Consider reviewing policy terms, exclusions and disclosure requirements for clients with significant land assets or involvement in land transactions.
- Engage with legal and property advisers to enhance due diligence processes, particularly where large landholdings and rural assets are involved.
- Communicate with underwriters early to assess how evolving regulatory exposures will be reflected in policy pricing and conditions.
Sources:
* Land Reform (Scotland) Bill – Business and Regulatory Impact Assessment
*** Land Reform Bill – gov.scot
***** Land Reform (Scotland) Bill: Key Changes and Compliance Steps
****** Land Reform Bill must be workable and proportionate, warns Scottish Land & Estates | Scottish Land & Estates ******* Insights | Land Reform Bill | Rural | Galbraith
