Single Farm Payment 'not major factor in rent level'

ALTHOUGH experts were taking their time yesterday to study the full implications of the Land Court decision on a rental value of Moonzie Farm, by Cupar, the big news for farm tenants is that the Single Farm Payment should not count as a major factor in deciding the level of rent.

Lord McGhie and his two assistants, John Smith and David Houston, who handled the landmark case between Richard Morrison Low (the landlord) and the executors of the late Thomas H Paterson (the tenants), decided that the Single Farm Payment was "not part of the earnings of the farm".

They decided the appropriate figure to be added to the rent was 9 per acre for the Single Farm Payment, this figure being the equivalent of renting so called "naked acres". In the case of Moonzie, this would only add 3,249 to the annual rent.

This figure is well below the actual Single Farm Payment and many tenants currently facing a review of their rents will see this as setting a precedent.

The decision extends to a 78-page judgment covering a range of important and often contentious issues which have been the source of disagreement since the changes to agricultural legislation in 2003.

The legal team also came down on the side of the tenant in assessing the overall rent with a decision to reduce it from its current level of 22,000 for the 192 hectare unit down to 20,800. This was below the 32,000 asked for by the landlord and above the 10,266 offered by the tenant.

Rental from cottages on the farm which are being let out to non farm workers and are earning a rent were added to the overall rent for the farm.

Reacting to the news of the court's verdict, Scottish Tenant Farmers Association (STFA) chairman Angus McCall said: "Scottish tenants will be delighted that the Paterson family have at last had their rent settled and will now be paying marginally less rent."

McCall said the judgment was bound to affect the rent review cases coming to the Land Court in the coming weeks. He hoped it would encourage early settlement of the 15 disputes now being referred to the court as a result of rent reviews in May.

The STFA has been highlighting the shortfalls of the current system of dispute resolution for some time as well as the pitfalls of using a judicial process to solve what should be a simple disagreement over rent.

In the judgment, the Land Court has pointed out the disproportionate nature of the legal and professional fees incurred in the judicial process compared to the sums of money under dispute.

According to McCall: "It is very likely the cost of this single rent review case could pretty well have re-equipped Moonzie Farm.

"This cannot be good for Scottish agriculture and the future of the tenanted sector. "

Yesterday's verdict is the latest decision emerging from a long-running series of disputes stretching back to 1985 between the tenant and the landlord.