Land and the economy

Land plays a central role in Scotland’s economy, but the way it is used and valued is complex and doesn’t always deliver the best outcomes for people or places.

Understanding this complexity and reforming how we manage, invest in and tax land, can help build a fairer, stronger economy for everyone.

Land is a foundation of Scotland’s economy

Every piece of land is unique, and it is finite, so its value is determined by different factors including location or potential for development. When wealth is tied up in land rather than used productively, it can limit growth and widen inequality.

Shaping land markets can improve productivity and wellbeing

Funding, finance and planning systems play a powerful role in where and how land is used, where we invest and who benefits. Public sector leadership and diverse ownership models can help bring underused land back into use, support new development, and ensure economic growth benefits more people and places.

Sustainable growth depends on recognising land’s wider value

Land is not just a space for economic activity, it is natural assets that underpin the whole economy, from food and timber to carbon storage. Viewing land as part of our long-term economic infrastructure helps guide policy and practice that supports both prosperity, wellbeing and resilience.

Scotland faces rising inequality and cost pressures. Land plays a role in both, especially when ownership is very concentrated, or when land is locked up and underused.

More than half of the UK’s wealth is now held in land. This concentration affects who has access to homes, work and investment. When land is treated mainly as a financial asset rather than a productive one, it can lock up capital that might otherwise support innovation, local enterprise or new housing.

These patterns feed into the cost of living as high land and property costs push up house prices and rents, making it harder for people to live near work or services. They can also drive urban sprawl, adding transport costs and increasing pressure on public infrastructure.

Making better use of land through fairer taxation, more transparent ownership and support for community-led development can help spread opportunity, boost productivity and ease cost pressures. By focusing on how land contributes to inequality, Scotland can take practical steps towards a fairer and more resilient economy.

The way land is owned, managed and invested in can either draw wealth out of communities or help it stay and circulate locally.

Community wealth building (CWB) is about making sure that the value generated by land and other local assets benefits local people. It shifts economic power closer to communities by helping them shape, manage or directly own the places where wealth is created.

The rural land market plays a major role in how land is used and who is able to access it. Our Rural Land Market Reporting tracks activity in the market including who is buying land, the motivations behind purchases, and how this affects land use over time.

The reporting helps build a clearer picture of investment trends in estates, forestry and farmland, and how these trends influence local economies and future policy decisions.

The transition to a net zero economy is driving major changes in how land is used in Scotland. Markets linked to carbon, nature restoration and renewables are growing quickly, and this is attracting new buyers as well as influencing decisions by existing landowners and managers.

These changes bring both opportunities and risks. Natural capital investment can support climate goals and nature recovery, but it also raises important questions about who benefits, how decisions are made, and what this means for communities and places.

We have published guidance to support responsible approaches to natural capital investment and to help landowners and investors consider community benefit from the outset.

Tax and fiscal levers play an important role in shaping how land is owned, used, and managed. Based on our previous advice, we believe that the link between land and tax could be strengthened to help Scottish Government deliver on its goals. We are working with the Scottish Government to explore how tax could better support land reform, reduce carbon emissions from land, and contribute to wider economic and social priorities.

Land reform is now explicitly recognised in the Scottish Government’s tax strategy and 2025–26 Budget, reflecting the potential for tax to influence behaviour and help address climate change, regeneration and inequality.

We will provide advice to Scottish Ministers this year, informed by research, stakeholder engagement, and international experience.