Negotiation beats legislation in farm land letting deals

Despite the current unprecedented uncertainties surrounding the future economics of agricultural production, tenants and their landlords shouldn’t become strangers.

And despite the fact that no one could profess to have a handle on how the current volatility in the sector – which had seen the effects of Brexit and Covid change to climate change-driven policy thrown into further disarray by the war in Ukraine - would pan out, factors and land agents heard that the three-yearly rent review discussion shouldn’t be ignored.

Speaking at a meeting of the Scottish Agricultural Arbiters and Valuers Association (SAAVA) earlier this week, legislative expert, Jeremy Moody of the Central Association of Agricultural Valuers reminded the sector that it was important for tenant and landlord’s representatives to continue to meet.

And he said that despite the industry entering unchartered territory, it was important that the three-yearly negotiations continued to provide an opportunity for wider discussions about more than simply haggling over rents.

“It keeps communications open and both parties can talk about family and business lifecycles and how relationship can develop over time.”

Moody said that during the previous period of economic downturn and uncertainty in the sector in the early 2000s there had been almost a decade when rent reviews simply hadn’t taken place.

“And then when review notices were issued many tenants viewed serving of a Section 13 notice prompting the review as a ‘nuclear’ notice - with fears of dire consequences rather than being a request for negotiations to open.”

“So this spell during which proper estate management probably didn’t happen should serve as a warning during the current uncertainties to keep the lines of communication open.”

Giving the national land occupation survey which charts the flow of movement within the tenanted sector, Moody said while there had been a plateauing in the decline of the size of the sector, the continuation of a move towards the lease of bare land rather than that of farms, complete with outbuildings and housing had been clear.

“Only 10 per cent of new lettings included buildings,” he told the meeting,” and no newly let holding of previously unlet land included a dwelling.”

Looking at tenants who wanted to give up their leases, Moody said that discussions had taken place on 77 units over the year with the main driver being retirement.

However, the vast majority had been conducted by negotiation rather than relying on newly-introduced legislation for relinquishment and assignation.

This finding was backed up by the Scottish Land Commission’s Sarah Allen who revealed only two tenants had given notice they wanted to go down the statutory route of asking the Tenant Farming Commissioner to appoint a valuer.

Both of these request had initially failed because insufficient evidence had been presented for the cases to go forward - and while one had later gone to appointment, she said that the panel of valuers had yet to be utilised.