Anyone with even a passing interest in Scotland's land will be aware that Land Reform has been very much on the agenda over the past few years. The Land Reform (Scotland) Act 2016 was pa ssed by the Scottish Parliament in March of this year and, while many of the provisions of the Act are not yet in force, when they do become operative, they could have implications for many of Scotland's farmers whether they are owner occupiers or tenants.
The Land Reform Bill enjoyed a hurried passage through the Scottish Parliament which was largely due to the Scottish Government's desire to legislate before the 2016 parliamentary elections.
The Act comprises 10 pa rts with parts one to nine covering "general" land reform. The Act provides for the creation of the Scottish Land Commission, which the Government intend to have established by Spring 2017. The Scottish Land Commission's role will be to consider policy in respect of the use of Scotland's land. The existence of the Commission is likely to ensure that land reform remains on the political agenda.
The Act also introduces a new community right to buy which will entitle a community to ask the Government to sanction a purchase of land where that purchase is in the interests of "sustainable development". Much of the detailed provisions as to how this will operate are still to follow. Amongst other provisions in the Act is the reintroduction of sporting rates across all of Scotland's land which, it is anticipated, will come into force in 2017.
As far as Scotland's farmers are concerned, it is important to be aware that more than half of the Act relates not to land reform but to agricultural holdings. The Scottish Government was criticised on the basis that agricultural holdings legislation shou ld not have been tagged onto a Land Reform Bill. However, the Act has been passed and we now have new agricultural holdings legislation to add to an already complex area of law.
The headline changes within agricultural holdings can be sum marised as follows. A new tenancy is to be created to be known as a Modern Limited Duration Tenancy (MLDT) which will be for 10 years and above.
The gap remains within the legislation which prevents an agricultural lease of between five and 10 years. Therefore, parties are restricted to the traditional grazing lease (which is unchanged by the Act), a Short Limited Duration Tenancy (SLOT) of up to five years and a new MLDT of 10 years and above. A further new type of tenancy, to be known as a Repairing Tenancy, is introduced which is to be of at least 35 years in duration and which will allow many of the fixed equipment obligations to be passed onto the tenant.
One of the most significant changes brought in by the Act is the widening of succession and assignation to a secure agricultural tenancy in terms of which the class of potential assignee or successor is widened significantly.
A relatively late change to the Bill was the introduction of a right of a secure agricultural tenant to relinquish the tenancy but before doing so, the tenant has to give the landlord notice and the landlord has the option to buy out the tenant's interest under the valuation proced ure established in the Act. If the landlord chooses not to buy out the tenant's interest, then the tenant is entitled to transfer the tenancy for value to someone who is either a new entrant or progressing in agriculture. These terms will require to be defined further.
With regard to rent review of an agricultural holding, the rent review process is to change with the basis of the rent to be a 'fair rent' based primarily on 'productive capacity' rather than based on a ma rket rent. How this will operate in practice will only be established when the first rent reviews are carried out once the new rules are in place.
Finally, the Act introduces a three year amnesty for tenant's improvements. This will allow a secure tenant to give notice of improvements wh ich were not previously notified. Once notified, these will be taken into account at the termination of the tenancy.
It is important to note tha t these changes are not yet in force and careful attention will be required in reviewing the final detail of the changes and the timing of their introduction. Need less to say, advice should be taken at the appropriate time.