This article was originally published in the Press & Journal on Saturday 13th August 2016.
The new Land Reform (Scotland) Act is taking root and as Ministers and civil servants grapple with the nuts and bolts of the legislation, many eyes will be focused on the implementation of Section 10 of the Act which deals with agricultural holdings.
A package of measures due to be implemented this autumn includes matters such as the Tenant Farming Commissioner, Tenants’ Right to Buy, landlord improvements, diversification and the widening of assignation and succession for 1991 Act tenancies and Limited Duration Tenancies.
There have been warnings that legislation made in haste has a nasty habit of causing problems further down the line. However, the clock was ticking on this Bill and this meant much of the detail has been left to secondary legislation and statutory instruments.
As the Scottish Government gets to grips with tackling the complex issues still to be resolved, it will be interesting to see how much heed is paid to a speech by Lord Gill who, until his retirement last year, was Scotland’s most senior and longest-serving judge and the leading authority on agricultural holdings.
Lord Gill’s assessment of the future of the tenanted sector – given to a recent conference of the Agricultural Law Association – was frank, compelling and raised a number of crucial questions that would be wisely be addressed.
His main theme was that we are all now drowning in a sea of agricultural holdings legislation dating back to 1948 which needs to be consolidated. Perhaps even more of pressing concern to Ministers and civil servants was his assessment of a number of the new provisions.
Lord Gill saluted the Scottish Government’s commitment to halt the decline in tenant farming but also pointed out that security of tenure was behind a ‘chronic distortion’ of the market and a major reason for so few tenancies being available to let.
He also talked about the ‘deterrent’ effect of security of tenure and asked why any rational landlord would create a secure tenancy that would diminish the value of their interest and – in the long term – likely result in the succession of generations of tenants effectively putting the farm beyond the owner’s reach.
As regards rents, he stressed that the rent, while calculated with reference to productive capacity, has to be fair to both parties and in all circumstances. How that requirement will be met will be a key point for Scottish Government to consider as it develops regulations. He also argued that it is ‘entirely possible’ that under the new regime rent levels could increase and the 2016 Act will not necessarily bring about lower rent levels.
Lord Gill highlighted several weaknesses in the legislation and noted the ‘naïve’ discrepancy in the legislation surrounding the phasing of increases or decreases in rent in excess of 30%.
He also drew focus to issues associated with the right allowing secure tenants to assign their tenancy citing the fact that legislation designed to attract younger tenants sets no age limit. Furthermore, he lamented the provision allowing an inexperienced near relative to acquire a tenancy even if he gives up or fails to complete the appropriate training to run the farm.
Like the majority of landlords and tenants, Lord Gill said he would be sorry to see the tenanted sector disappear. Therefore, it is surely in everyone’s interests that difficult questions are dealt with thoroughly, thoughtfully and quickly. It is clear that there are ongoing challenges for the Scottish Government if the tenanted sector is to thrive.
Grierson Dunlop is an agricultural law solicitor, and member of Scottish Land & Estates’ Agricultural Holdings Group.