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Press Release SAAVA Field Day 8th June 2016


Media Release

9th June 2016

 SAAVA Annual Field Day explores Land Reform Act

Speaking at the Scottish Agricultural Arbiters Valuers Association (SAAVA) Annual Field Day near Kelso, Jeremy Moody, Secretary and Adviser to the Central Association of Agricultural Valuers (CAAV), briefed Scottish valuers on the position for agricultural tenancies under the new Land Reform (Scotland) Act.

“While we now have the Act, much of its practical detail waits on work to be done in the new Parliament before we can know how it will work. There are some two-dozen regulations to be developed, agreed and implemented over the next couple of years.  In particular, the rules for rent review and relinquishment of tenancies will take much work.

“While waiting for these important details, people are naturally jumping to conclusions which may prove to be wrong. There is no rule that says relinquishment will be for a quarter of vacant value.  “Productive capacity” will simply identify the farm’s likely physical output; it will then be for the Land Court to find a rent that is fair in all the circumstances of the case.

“However, one early step in that process will be the amnesty for tenant’s improvements. Both tenants and landlords will find it useful now to gather their information on buildings, drainage and other works to help understand who did them and whether they might be recognised as tenant’s improvements or not.  Very often, the history has become obscure but will need to be proven to help with rent reviews as well as end of tenancy claims.”

More widely, Mr Moody saw a strong policy push from the Government not just to change the law but also to promote better and more imaginative relationships between landlords and tenants.

“The Tenant Farming Commissioner will have a duty to promote better practice on range of issues with Codes and adjudication of complaints. If drafted practically, those Codes could encourage parties to look at issues more widely, see chances to unlock value and use alternative ways to resolve differences between them

“Valuers will have a key role in helping clients, whether tenants or landlords, maximise the potential of their businesses for the health of the rural economy.”

Jeremy Moody also advised valuers to take account of new tax changes: “While the rate of Capital Gains Tax (CGT) has been cut, the old higher rate remains for houses. That calls for more care in considering reliefs.  If a dwelling does not count as a principal place of residence or, less usually, qualify for a business relief, it will face that tax.  This will be a factor in some negotiations between landlord and tenant, as over payments for surrender or relinquishment, especially where a tenant has elected for another home as his principal residence.

“The new higher rate of LBTT for additional dwellings will affect deals over other houses, unless they are part of a larger mixed property.

However, a forthcoming relief from Inheritance Tax could prove a useful alternative to claiming the house is a “farmhouse”: “A couple who leave such a house to a descendant could by 2020 have £350,000 of relief.   While needing advice and not suiting all, the way the relief will work could encourage some families to move land down the generations or feel free to let land rather than hope the house might still be a farmhouse on death.”

Mr Moody concluded: “These changes, the future ways to get value from tenancies with their tax implications and the new Scottish rules on inheritance of land, including farm tenancies, make it more important for families to plan ahead, manage succession and have good wills to protect their value and secure their future.”

For further press information contact Katie at O’Leary PR 0131 526 3190