Despite the fact that the measure is unlikely to come into force until next year, guidance for tenants considering relinquishing their tenancies has been published by the Tenant Farming Commissioner, Dr Bob McIntosh.
Widely viewed as one of the more controversial measures in the 2016 Land Reform Act, the legislation was aimed at enabling tenants to realise some of the value in a secure tenancy, should they decide to retire.
It was believed that the inability to do this often meant that elderly tenants with no successors were left with insufficient funds to retire – and so remained in the tenancy until they died.
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It was hoped that the ability to access some of the value of their tenancy would allow such farmers to retire with dignity – and present more opportunities for new entrants and developing farmers to access tenancies and advance their businesses.
The legislation effectively gives the landlord first refusal on regaining vacant possession of the unit if a tenant decides to relinquish his lease under these circumstances, with a statutory process in place for calculating any valuation.
Should the landlord not take the offer up, it is then possible for the tenant to assign the tenancy to a new entrant or someone progressing in farming. However, no statutory process for setting a valuation has been drawn up in these circumstances – and this will be a matter for negotiation between outgoing and incoming tenants.
McIntosh said that, while the Scottish Government had yet to provide a definition of a “new entrant” or “a person who was progressing in farming” and had yet to decide on the form and content of the notice which the tenant must serve on the landlord, the publication would allow tenants and landlords to take a considered view of the options available.
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The move was welcomed by Scottish Tenant Farmers Association chairman Christopher Nicholson, who said the changes would help get new blood into the industry.
“STFA hopes to see an increase in this practice in the future which will allow those coming out of limited duration starter farm leases to find secure tenancy opportunities as the next step in the farming ladder,” he said.
Nicholson said the early release of the guidance was useful as there were already a number of young developing tenants in negotiation with established tenants looking to retire, adding: “We expect that landlords and tenants will work out agreements suitable to all parties without following the exact legal process.”