More haste less speed on farm tenancy legislation

Reform of Scotlands farm tenancy law has dominated the farming press. Picture: Kimberley Powell

My grandfather was a farmer in Angus and I recall him pointing out to me one morning that in my haste to get ready to help on the farm, I had put my boots on the wrong feet. He actually said I had “one boot going to Forfar and one boot going to Brechin” which would have resulted in uncoordinated progress.

Reform of Scotland’s farm tenancy law has dominated the farming press as Holyrood’s rural affairs, climate change & environment committee moved amendments to the Land Reform (Scotland) Bill. The Bill was introduced on 22 June 2015 and Stage 2 of the legislative process completed on 10 February. Stage 3 gives the opportunity for further amendments and parliamentary discussion before the final debate is held and a decision is made to pass or reject the Bill.

Controversially, the committee approved new, but very lengthy and complex, rules to say who can take over traditional agricultural tenancies in Scotland when they end. The rules will change the existing law contained in the Agricultural Holdings (Scotland) Act 1991. The amendments provide a new process for farming tenants to sell or assign their tenancy to create a route out of farming for those who have no spouse, civil partner, child or grandchild to take over the tenancy (a tenant with no near relative successor)

An agricultural tenant with a traditional tenancy who has no near relative successor will be able to exit the tenancy by voluntarily giving it up for a compensation payment from the landlord or, if the landlord doesn’t wish to exercise the option, by assigning the lease to “an individual who is a new entrant to, or who is progressing in, farming”. Unfortunately, the Bill does not define the “individual”.

At present, where there is no near relative successor, the law says the tenancy ends on the tenant’s retirement or death and the holding returns to the landowner subject to an accepted non-near relative successor being allowed a brief period of occupation of the farm. The Bill will give the tenant two opportunities to obtain compensation for giving up the tenancy, first from the landowner under the option to buy and the second from an incoming farmer. Rural affairs minister Richard Lochhead has said the amendment allows tenants to “retire from farming at a time of their choosing with fair compensation for investment” and provides “new routes into farming for those trying to establish themselves”.

Scottish Land & Estates Chairman, David Johnstone, said: “Landlords want to let land on a long-term basis but it is being made as unattractive as possible. It feels very much as though legitimate farming businesses are being legislated against in the name of radical land reform, rather than what is best for agriculture.”

The Scottish Tenant Farmers Association says the RACCE Committee’s backing for the Scottish Government’s amendment to allow assignation to a limited class of non-family members will be “a real boost to what has become a stagnating sector”.

It is difficult for any business to prosper amidst uncertainty and the challenges currently facing the sector, whether delivery of the new Basic Payment Scheme or tenancy reform, require a sure-footed approach. Winnowing the rhetoric, I believe landowners and land agents appreciate the right of tenants to a retirement but find it difficult to understand why the secure 1991 Act tenancy is being conserved rather than give the incoming farmer one of the new modern fixed-term tenancies. Certainly, the amendment is at odds with the recommendations contained in the Report of the Agricultural Holdings Legislation Review Group.

Lastly, it is regrettable that this amendment has been introduced at such a late stage without proper consultation. It will not do the sector any good if the legislation proves unworkable.

• Philip Buchan is a rural property lawyer with Murray Beith Murray, www.murraybeith.co.uk