Retiring tenant farmers shouldn’t expect big rewards

Long-awaited legislation designed to give tenant farmers wishing to retire the opportunity to do so with dignity will finally be introduced at the end of this month.

Five years on from the enactment of Scotland’s land reform bill, the proposed measures on relinquishment and assignation - which create a formal route for allowing a tenant farmer to gain some value from giving up his tenancy – will be formally introduced at the end of this month.

But a leading expert on tenancy issues has warned that raised expectations held by many of those who have been waiting for the opportunity could see them disappointed by the level of rewards.

Speaking as the Central Association of Agricultural Valuers (CAAV) published a briefing document on the innovative piece of legislation, secretary to the organisation, Jeremy Moody, advised anyone proposing to take advantage of the new measures to check out informal channels first.

And he warned that, if the formal route was to be followed, tenants should ensure that they had the time for the hefty information gathering process:

“As there is a fairly strict timetable to be followed once notice has been served, I certainly wouldn’t advise anyone to enter into this during lambing,” warned Moody.

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.

While welcoming the legislation, the Scottish Tenant Farming Association agreed that a negotiated settlement without recourse to the formal process might be a ‘better and easier route’ for some – by using the formal process as a backstop while avoiding the need to follow the detailed statutory process.