Key land reform tenant farming measures will inflict ‘grievous blow’ on sector

Press Release

The Land Reform (Scotland) Bill provided an ideal opportunity for the Scottish Government to introduce better balance into the statutory regime for farm tenancies but instead key provisions governing the leasing of agricultural land will inflict a ‘grievous blow for generations’ on the tenant farming sector.

Scottish Land & Estates, which represents rural land businesses across Scotland, today publicised its formal written evidence to the Scottish Parliament’s Net Zero, Energy and Transport Committee in response to the Bill.

Revealing the organisation’s evidence relating to the leasing of agricultural land, Stephen Young, Director of Policy, Scottish Land & Estates, said: “We share the Scottish Government’s stated vision of a vibrant tenanted sector where that means there is a diversity of routes for people to enter and exit the sector, with landlords confident to let or to enter into agreements with people who will actively farm the land for the long term.”

SLE said there was a range of agricultural proposals contained in the Bill which they could support in principle including:-

• Creation of land management tenancies.

• Consolidation of the law and giving parity of rights for small landholders.

• Retaining the requirement for tenants to register their interest in exercising their pre-emptive right to buy.

However, SLE said the potentially positive elements of the agricultural section of the Land Reform Bill are being wholly undermined and amount to a ‘disaster in the making for the tenanted sector’ which will have far-reaching consequences for tenant farmers in the future.

The Bill includes a new capital payment as well as the existing compensation in the event of resumption of land within both old-style secure tenancies the newer fixed duration tenancies introduced in 2003.

Stephen Young said: “We are happy to support measures that will promote a thriving future for the tenanted sector but the Bill seems to be more about increasing the rights of 1991 Act tenants rather than creating vibrancy and confidence. Sadly, there are provisions in the that will inflict a grievous blow for generations and are frankly a disaster in the making that will crush already damaged confidence in letting land.”

SLE states in evidence: “We would urge the Committee to recommend a complete re-think on the resumption provisions at Stage 2.

“We cannot state it more clearly that the resumption provisions are in direct conflict with the stated policy intent of helping tenants plan with certainty and promoting a thriving tenanted farming sector. They constitute, in our view, a disproportionate response to the perceived problem of fair compensation for resumption when there are other less damaging ways to achieve that outcome.

“The provisions relating to resumption will further strengthen the statutory cocoon in which the government has wrapped the existing group of 1991 Act tenants, at the expense of other tenants and aspiring tenants. It signifies the start of the retrospective tinkering with the fixed term tenancies created by the 2003 Act which were hailed as being ‘safe’ from this kind of interference and were to be the recommended leasing vehicle for landowners to use.

“It is either disingenuous or inexplicably naive for Ministers to state that these changes will somehow help the tenanted sector to thrive, when in fact they will do the complete opposite.

“Re-letting or offering new tenancies is going to be deemed too risky for owners. The people who have entered into fixed term tenancies since 2003 in good faith will now understandably feel betrayed.

Jackie McCreery, legal adviser to Scottish Land & Estates, said: “No one in the sector would reasonably argue that a tenant should not be compensated fairly if a part of the land in their tenancy is resumed. They may well have costs such as moving gates, fencing, professional fees for rental of alternative land and they may have to reorganise some aspects of their operation. However, the Bill goes much further than is proportionate to achieve the objective of fair compensation by attaching a new head of payment to reflect the purported capital value of the lease. This is not really compensation at all. Compensation is designed to put the tenant in the same position as they were before the resumption insofar as money can do that. Requiring a landlord to pay a percentage of the capital value of the land is completely different.

“Where public policy has, piece by piece, reduced a landowner’s rights and destroyed their confidence to let land, to a point that government begins to use references to compulsory purchase or compulsory sale as an answer, this cannot be truly in the public interest, nor best value for public funds. Steps can be taken now to introduce balance and create a more positive environment to incentivise the desired activity rather than back one party into a corner and then introduce punitive measures to deal with the entirely foreseeable defensive reactions.”

SLE states in its evidence: “If any measure significantly benefits one group of participants in the sector at the expense of another, then this is unlikely to be the optimum situation for the good of the sector in the long term. There are no ‘sides’ in this debate. The use of land for farming/food production as well as biodiversity and climate change mitigation are priorities for land in Scotland. Both owners and farmers are needed if these objectives are to be realised so the statutory framework should work and be fair for all participants.

“We would urge the Bill’s parliamentary committee to take evidence from some of the next generation of farmers to hear their experiences and to grasp this opportunity to give them a more hopeful future where they and their potential landlords can plan their respective businesses with certainty for the future, on a basis where both achieve positive outcomes from managing their different interests in the land.” 

SLE also raised concerns over changes to payment of compensation for improvements on tenant farms. While a standard procedure for valuing compensation due at the end of a tenancy is laudable in theory, the timescales set out are not practical and a prescribed rate of interest being applied on outstanding compensation running from the end date of the tenancy is wholly unfair where the sum due may not actually have been agreed by that date and could run into ten or even hundreds of thousands of pounds.

Scottish Land & Estates full evidence can be read here.