Land Reform (Scotland) Bill briefing

Robert Sutherland of Terra Firma Chambers provides a briefing on the Land Reform (Scotland) Bill.

The Land Reform (Scotland) Bill was published on 23 June 2015. The bill follows on from: (i) the Land Reform Review Group’s report The Land of Scotland and the Common Good, which was published in 2014, and a consultation exercise at the end of 2014 and the beginning of 2015 which had set out a number of land reform proposals; and (ii) the Agricultural Holdings Legislation Review Group’s Final Report which was published in January 2015.

Given the breadth and complexity of the issues under consideration it is no surprise that not all of the proposals from these reports have made their way into the bill. One notable omission from the Land Reform Consultation is the proposal to restrict who can own land or take a long lease over land in Scotland.

However it should be borne in mind that the Scottish government intends this to be the start of an on-going process of change, the ultimate goal being a substantial alteration in the pattern of land ownership in Scotland. With that long term objective in mind the published bill does take forward many of the proposals in the Scottish government’s consultation. This article summarises the main proposals in the bill.

Part 1

This requires the Scottish ministers to prepare a land right and responsibilities statement. Although the consultation contained a draft policy statement, the bill does not. The bill simply says that such a statement should be published within 12 months of that section of the Act coming into force, and requires the statement to be reviewed on a 5 yearly cycle.

Part 2

The bill provides for a Land Reform Commission consisting of five Land Commissioners and a Tenant Farming Commissioner. The Land Commissioners functions include reviewing the impact and effectiveness of any law or policy and to recommend changes to any law or policy. The functions of the Tenant Farming Commissioner include preparing, promoting and investigating alleged breaches of codes of practice on agricultural holdings concerning matters such as negotiating and conducting rent reviews, agreeing and recording tenant’s improvements, determining waygo compensation and the management of sporting leases.

Part 3

Scottish ministers are given the power to make regulations about access to information on persons in control of land by persons affected by that land. The apparent underlying intention is to force disclosure about who has the controlling interest of land which is owned by a company or a trust.

Parts 4 and 5

Part 4 requires the Scottish ministers to issue guidance about engaging communities in relation to land which may affect communities. The long term aim is to encourage collaboration between landowners and communities, but Scottish Ministers are also considering what consequences should follow for landowners who fail to follow the guidance. Part 5 creates a right for community bodies to buy land to further sustainable development. The right to buy will apply to urban as well as rural land, and can include a tenant’s interest in land as well as the ownership of land. ‘Sustainable development’ is not defined in the bill. There are a number of conditions set out in clause 47(2) of the Bill which require to be satisfied before the Scottish Ministers can consent to an application to buy the land. However the potential circumstances under which this right might be exercised are wider than those in the Community Empowerment (Scotland) Bill, which was passed by the Scottish Parliament on 17 June 2015.

Part 6

This ends the exemption for shootings and deer forests from non-domestic rates.

Part 7

Local authorities will allowed to apply to the court to appropriate inalienable common good land. This provision will make it much easier for local authorities to develop existing inalienable common good land (such as public parks) for other statutory purposes (such as the development site for a new school) as they will no longer require to promote a Private Act of the Scottish Parliament.

Part 8

Changes are to be made to the arrangements for the management of deer, with deer panels being given power to encourage and facilitate community engagement in deer management issues, and Scottish Natural Heritage being given power to require the preparation of deer management plans. Fines for failing to comply with a deer control scheme are to be increased from £2,500 to £40,000.

Part 9

This makes provision allowing for reviewing and amending core paths plans.

Part 10

A number of changes to the Agricultural Holdings (Scotland) Acts 1991 and 2003 are set out. The creation of new limited duration tenancies (LDTs) are to be abolished and replaced by ‘modern limited duration tenancies’ (MLDTs). Any new farm tenancy (unless expressly created as a 1991 Act tenancy) for more than 10 years will be a MLDT. Any new farm tenancy expressed to be for a period of more than 5 years but less than 10 years will be a MLDT for 10 years. Where the tenant is a ‘new entrant’ these new tenancies will be permitted to have a break clause allowing for them to be terminated (on restricted grounds) after 5 years. The tenant may only sublet the land only where expressly permitted to do so in the lease. A landlord wanting to terminate the lease at the end of the 10 years will require to go through a double notice procedure. If that does not happen the lease will continue for another 10 years (unless terminated earlier by the agreement of the parties or by the tenant). The Scottish Ministers will be able to make regulations which will allow the tenant of a 1991 Act tenancy to convert it into a MLDT. An existing SLDT that would otherwise be converted to a LDT will instead be converted into a MLDT.

An agricultural tenant will no longer require to register their interest in the holding in order to have a pre-emptive right to buy the land under the 2003 Act. 1991 Act tenants are to be given an absolute right to buy the tenancy subjects from landlords who are in breach of an order from the Land Court or an arbiter’s award to remedy a material breach of the landlords obligations under the lease and this breach substantially and adversely affects the tenant’s ability to farm the holding in accordance with the rules of good husbandry.

The existing rent review provisions in the 1991 Act are to be repealed and replaced with new procedural provisions for landlords and tenants to initiate a rent review process. Similar amendments are made to the 2003 Act for existing LDTs and for MLDTs. The basis upon which rents are to be determined is to be changed from an open market rent to a fair rent having regard to the productive capacity of the holding, the open market rent of any surplus residential accommodation provided by the landlord and the open market rent of any land or fixed equipment not being used for an agricultural purpose. The Bill states that how the productive capacity of the holding is to be determined is to be set out in regulations made by the Scottish Ministers. There is considerable potential for disputes to arise over how the productive capacity of a holding is calculated, as those with experience of using budgets to determine farm rents will be aware. Where the Land Court determines the rent of a 1991 Act tenancy and the rent might be increased by 30% or more, the tenant can apply to the Land Court to phase in the rent over a three year period.

The Bill amends Section 10A of the 1991 Act to allow the tenant to potentially assign the tenancy to a wider class of relatives than currently permitted, and restricts the scope for objecting to an assignation to a near relative. There are also changes made to the scope of person who may succeed to a tenancy on the death of a tenant. These changes will only apply where the tenant is a natural person and not a firm, since only a natural person can have spouse/partner/child etc.

There are ‘amnesty’ provisions for tenants improvements under 1991 Act and 2003 Act tenancies (including MLDT’s), which will potentially allow tenants to claim compensation for improvements at the termination of the tenancy (where that outcome is ‘fair and equitable’) in cases where existing statutory procedures for notification of, or consent for, the improvement had not been followed. Where landlords wish to carry out specified improvements which have not been agreed with or requested by the tenant, they will require to serve a statutory notice on the tenant giving notice of the intended improvement. Tenants will have a right to object and the landlord will have to apply to the Land Court for their consent to the improvement.

Conclusions

The bill is lengthy, consisting of 104 clauses and 5 Schedules. Criticism has been made that the Scottish government was trying to cram too much into a single bill which faces a tight parliamentary timetable. Many of the aspects which are potentially contentious are not contained within the bill itself but are to be the subject of separate regulations by Scottish ministers. The bill and in the subsequent regulations will no doubt be subject to considerable debate, but what is clear is that land reform is going to remain on the political agenda for some time to come, and that this bill is only a prelude to further change. For those wanting more detailed information about the Land Reform (Scotland) Bill, the bill (as published), and the accompanying Explanatory Notes, Policy Memorandum and Delegated Powers Memorandum can all be accessed here.