Hamish Lean: Agricultural tenancies update



Hamish Lean
Hamish Lean

Bob McIntosh, the Tenant Farming Commissioner, spoke at a conference on agricultural law at the beginning of June and gave a useful update of his activities and a range of issues surrounding agricultural tenancies. Hamish Lean has the details.

He had received 139 inquiries from agricultural landlords and tenants and their agents during the course of 2020 – a marked increase on the previous two years.

The majority were from tenants (47 per cent) or their representatives (27 per cent).

Questions about the tenant’s improvement amnesty predominated but he also received a growing number of inquiries relating to the relinquishment and assignation of secure agricultural tenancies.

He reported that the Land Court has received 71 applications relating to the tenant’s improvement amnesty, although he commented that the vast majority of these are likely to settle by agreement.

Dr McIntosh also gave an update on the relinquishment and assignation of secure agricultural tenancies.

The procedure starts by service of a relinquishment notice by a tenant who must at the same time serve a copy on the Commissioner who then appoints a valuer.

As at the date of the conference, he had received only one copy notice.

However, it is likely to be the case that there are a great many private discussions taking place between landlords and tenants and deals will be done without recourse to the legislation itself.

Dr McIntosh also gave a timing warning to tenants who are thinking about relinquishment to think through the full implications and recommended that they take advice on the potential tax consequences of receiving a lump sum for giving up the tenancy.

The commissioner reported on his pilot mediation service which had come to an end in July 2020.

This had been successful and he would like mediation to become a standard way of resolving disputes in the tenant farming sector.

Among supportive measures to be introduced is a contribution from the Scottish Land Commission of one third of the total cost of the mediation process – payable to the mediators – up to a maximum of £1,000 to provide an incentive for parties to go to mediation.

Dr McIntosh also mentioned that he is receiving a number of approaches relating to conflicts between an agricultural tenant and the landlord or landlord’s sporting tenant in respect of the exercise of sporting rights.

He pointed out that in many cases the situation can be resolved by production of a memorandum of understanding that sets out how the sporting activities will be operated and he has issued a code of practice in respect of the conduct of sporting rights.

However, he predicted that eventually the courts would be faced with having to make a decision about the precise nature and extent of the exercise of sporting activities on a let farm.

The commissioner also looked at likely further changes in the law arising from SNP manifesto commitments including looking at compensation for resumption where tenants receive an incontestable notice to quit over the whole of the let farm because of planning permission having been obtained for a non-agricultural use.

It is likely there will be a further look at a new rental system and the commissioner pointed out that in his view rent should be assessed on the basis of comparable rents from any source, the inherent earning power of the holding and current and expected economic conditions within the sector.

There is a renewed interest in the impact of the tax system and the willingness of landlords to let land.

This follows the experience in Ireland where a significant increase in tax relief on income from let land, with more relief for longer leases, has led to a significant increase on the amount of land let and the productivity of agriculture in general.

Hamish Lean is a partner at Shepherd and Wedderburn