Controversial legislation on Scottish land ownership has passed into law leaving landowners and policymakers deeply divided on how effective it will be.

The government and its supporters claim it will help create new small landholdings to increase farming opportunities and bring agricultural tenancy law into the 21^st century.

Ministers say the Land Reform (Scotland) Bill grants greater protections for tenant farmers and small landholders and provides fair compensation should they be removed from their holding.

The Bill will give ministers powers to split up landholdings of more than 1,000 hectares when being sold, provided that it is in the public interest to do so.

It also modernises how new small landholdings are created and operate, protecting their rights and helping new entrants and the next generation of farmers to get access to land.

A consultation about the powers of the Tenant Farming Commissioner and alternative options for dispute resolution will also be launched in the coming weeks.

However, critics say it will deter investment and undermine land management which they say is best served by large estate owners with greater resources.

Scottish Financial Enterprise chief executive Sandy Begbie made a late intervention by warning the Rural Affairs Minister Mairi Gougeon that the bill “could have profound and detrimental consequences for the stability and attractiveness of Scotland’s land market.

“This, we believe, would create a significant deterrent to investment in Scotland, contrary to the Scottish Government’s stated goals for economic growth.”

He said it would hit investor confidence and risk future investment across sectors supported by the financial services industry, such as agriculture, forestry, natural capital, and renewables.

Scottish Conservative spokesman for rural affairs, land reform and fishing Tim Eagle said: “This is the latest example of an unworkable and devastating piece of SNP legislation that will severely damage rural Scotland – just like previous Land Reform bills.

“SNP ministers had a perfect opportunity to listen to the concerns of those who drive our economy in rural Scotland throughout this debate, but typically decided they know what’s best.

“There is no doubt, not just in my mind but the minds of experts in the field, that measures imposed by the SNP will have the opposite effect to what they claim, and will damage rural businesses and reduce the land available for rent.”

Scottish Labour voted to support the Bill but labelled it a “missed opportunity” to deliver transformative change to Scotland’s land ownership system.

Labour supported the end of off-market sales and lotting provisions, but criticised the SNP’s “overall lack of ambition”.

Over 400 amendments were brought forward during the final stage of voting on the Bill.

Scottish Labour’s Rural Affairs, Islands and Land Reform spokesperson, Rhoda Grant said: “This was a chance to deliver a landmark piece of legislation and take a clear step towards tackling the inequality in Scotland’s land ownership – but the SNP has squandered that opportunity.

Ms Gougeon defended the legislation, saying: “Tenant farmers and small landholders are vital to the fabric of our rural communities, and these reforms will help them to make a decent living on their holding and make improvements on the land they work on.

“It will allow them to work in a way that promotes sustainable and regenerative agricultural production, and – possibly most importantly – be protected from being removed from their holding without fair compensation. 

“I am happy we are able to progress in consulting on the role of the Tenant Farming Commissioner so quickly and I would encourage all tenant farmers, small landholders and crofters to make their views known.

“Scotland’s concentrated patterns of ownership developed over centuries, with ownership and control of our nation’s land in the hands of the few for too long.

“In future, communities will have advance notice of sales of large land holdings and Ministers will have the powers to pause them to allow the option of a Right to Buy application to be explored.

“This is an important step in our land reform journey and I am grateful to all those who have worked with us through the Parliamentary process.”