New farm tenancy rules need careful look say valuers

Tenant farmers who decide to take advantage of the recently introduced legislation on relinquishment and assignation need to take the ‘information hungry’ requirements of the process seriously.

That was the message given out at the annual meeting of the Scottish Agricultural Arbiters and Valuers Association (SAAVA) yesterday by industry experts.

Speaking at the online event, policy specialist Jeremy Moody of the Central Association of Agricultural Valuers (CAAV) advised those considering taking advantage of the new measures that they should ensure that they factored in the time required to draw together the substantial amount of information required for process.

“A lot of information on the tenancy is necessary to carry out the required valuations and there is a fairly strict timetable to be followed once notice has been served.

“So I wouldn’t advise anyone to enter into this during busy times of year,” warned Moody.

And he advised anyone taking the approach to consider timing for issues such as organising a displenishing sale, moving house, any multi-annual commitments such as environmental schemes and any tax implications – as well as the possibility that the landlord might already be dealing with other applications.

The new legislation effectively allows the tenant to give his/her lease up by offering the landlord first refusal on buying it back - and failing that can offer it on the open market to a new entrant or progressing farmer.

Moody said that if the landlord accepted the relinquishment of the tenancy – either to farm the unit in-hand, re-let or sell with vacant possession – a valuer would be appointed by the Scottish Tenant Farm Commissioner to calculate what the level of payment should be.

But he warned that, as the calculation had to be based on when the landlord could expect to get the tenancy back under normal circumstances, the payments to older tenants were likely to be smaller than those to younger tenants.

He also warned that while the tenant had the right to ‘sell’ the tenancy on at value if the landlord didn’t take the offer up, what was likely to be achievable through the market was unknown.

“The market for assignation is yet to be found,” he said, “And the definition of a new entrant or progressing farmer limits the number of bidders.”

Moody said that while the value on every farm would be different, it would be sensible for a tenant to enter into discussions with their landlord with a view to seeing if an amicable solution could be found outside the formal process, which he said could, for instance, reach a settlement which might include lifetime rental of the farmhouse.

Standing on for the Tenant Farm Commissioner (TFC), Bob McIntosh, head of tenant farming with the Scottish Land Commission, Sarah Allen warned that while the TFC was responsible for appointing a valuer, applications which did not include the required information would be turned down.

“So it is very important that tenants take the issue very seriously and include all the information which needs to be included when serving notice,” he said.