Part 2 of the Land Reform Bill – Progress to Date
Bob McIntosh
The Land Reform Bill has begun its passage through the parliamentary process and Part 2 of the Bill contains a number of proposals affecting the tenanted sector. The Bill is still at Stage 1 where it is scrutinised by the relevant Parliamentary Committee, in this case the Net Zero, Energy and Transport Committee. The Committee will take evidence from a range of interested organisations and stakeholders and will make recommendations to Parliament on whether the general principles in the Bill should be supported or not. That process is likely to last into next year.
Many of the proposals are relatively uncontentious but some require greater clarity and some will not be supported in their present form by all the key stakeholder organisations. There appears to be support for amending the legislation regulating small landholders to bring them more into line with the rights and opportunities available to tenants with leases regulated by the agricultural holdings legislation and the intentions to introduce a new timetable for waygo negotiations is to be welcomed as it should help to ensure that tenants leaving a holding know their financial settlement by the end of the lease.
As we move into a new agricultural support regime, and with ever increasing emphasis on ‘’sustainable and regenerative agriculture’’, all farmers will have to be prepared to embrace activities supporting the climate change and biodiversity challenges, and diversification is likely to become ever more attractive. To help ensure that tenants are equally able to take advantage of such opportunities, the Bill proposes changes to the rules of good husbandry and some changes to the diversification regulations and to the range of tenant’s improvements eligible for compensation.
Tenants with 91 Act leases who wish to register a pre-emptive right to buy, should the landlord decide to sell the holding, will know that the process of registration is not always straightforward and no progress has been made on earlier proposals that the right should be automatic and not require prior registration so the Scottish Government is proposing to consult on this issue separately and to introduce secondary legislation in the future that will determine the process by which secure tenants register a pre-emptive right to buy.
Rent legislation introduced, but not enacted, in 2016, proposed that the use of rents from comparable holdings should be replaced as the key factor in a rent negotiation by the use of the productive capacity of the holding. The current proposal is to enable both of these factors to be taken into account, with each acting as a sense check on the other and it is to be hoped that this will provide a more balanced approach to determining the rents of agricultural holdings.
Tenants will welcome the proposal to increase the types of game damage that can lead to a claim for compensation. As well as damage to crops, a tenant may be able to claim compensation for damage to trees grown for agricultural, or permitted non-agricultural, purposes, damage to fixed equipment, damage to livestock and damage to habitats. Deer damage is causing some discussion because, under the Deer Act, a tenant can take action against deer on arable and improved pasture so is currently excluded from claiming compensation on these land types. Given that deer may be coming from land that is not in the tenancy nor in the ownership of the landlord, the question of where the responsibility for action rests remains complicated.
Recognition that owners may in future want to lease land out for a variety of purposes (agriculture, forestry, nature conservation, peatland restoration etc) has led to a proposal for a new form of lease for environmental purposes. It appears that this would be in addition to the existing forms of agricultural lease and would, apart from some model clauses, allow landlord and tenant freedom to negotiate and agree the contents of the lease.
The most contentious proposals are those relating to the compensation payable when the landlord is able to legitimately resume land from a tenancy. The proposal to include compensation for the value of the lease, based on the valuation methodology used in Relinquishment and Assignation cases, is felt by some to be fair and by others to be excessive, particularly if applied to fixed duration tenancies where the Relinquishment and Assignation provisions do not apply.
It is likely to be well into next year before the final Bill is passed and, in the meantime, The Tenant Farming Advisory Forum (TFAF) is working closely with Scottish Government officials to ensure that the final Bill has clarity, and in an attempt to find common ground on issues such as resumption compensation.
