Cautious approach advised as new assignation legislation comes into force

New legislation on the relinquishment and assignation of farm tenancies comes into effect this week in Scotland with the aim of giving tenant farmers the opportunity to realise some of the value of their tenancies and retire with a capital payment.

Lynette Steel of the TFA.
Lynette Steel of the TFA.

However specialists involved in the sector have advised those wishing to take advantage of the new rules to adopt a cautious approach – and investigate the possibilities of reaching an agreement with their landlord before taking the formal legislative route.

And despite a belief that there has been a backlog of tenants awaiting the enactment which would gives the tenant the right to offer the tenancy back to their landlord for a sum to be agreed by an officially appointed valuer, or failing that to ‘sell ‘ it onto a new entrant or a ‘progressing’ farmer, the actual number likely to take advantage of the changes to Scottish law which were first proposed in the 2016 Land Reform (Scotland) Act remains uncertain.

Sign up to our daily newsletter

The i newsletter cut through the noise

However, south of the border, a survey carried out by the Tenant Farmers Association (TFA) found that there was considerable interest amongst English tenant farmers in the UK Government’s proposals to offer a Lump Sum Payment Exit scheme which would allow tenants to retire with a payment based on their previous support payments.

The Lump Sum Scheme is one of a suite of schemes being introduced by Defra as part of the post Brexit Agricultural Transition Plan.

The scheme would allow farmers to receive a lump sum payment in place of the direct payments that they would have been entitled to receive during the remainder of the agricultural transition (2021-2027) through the Basic Payment Scheme (BPS).

Lynette Steel of the English TFA said: “The survey captured the opinions of 360 tenant farmers. Three-quarters of those responding said they were seriously interested in the proposed scheme, demonstrating a strong appetite for the scheme amongst tenant farmers.”

She added that along with proposals for new entrants, the exit scheme could results in a marked increase in land mobility south of the border.

“This would not only allow new entrants into the industry but would provide more opportunities for those looking to progress within the industry onto bigger and better units,” said Steel.

The TFA survey found that half of those interested in the scheme rented their land on traditional, Agricultural Holdings Act tenancies with security of tenure.

“Not surprisingly, over three quarters of respondents said the value of the retirement package would be the biggest factor they would need to consider before taking part in the scheme,” said Steel.

Other key factors were readiness to retire and whether succession rights would be affected by participating: “On a practical level, negotiating exits from farm tenancies is often a lengthy and complicated process. Therefore, given the short time frame DEFRA has outlined for the delivery of the scheme, we really need to see full scheme details by this autumn at the latest,” concluded Steel.