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Press Release – Tenancy Reform

26/04/18

SCOTTISH FARM TENANCIES – TIME TO THINK SAYS SAAVA

 

The time has come to think afresh about Scottish tenancies says Ian Austin, President of the Scottish Agricultural Arbiters and Valuers Association.

With the immediate challenge of implementing the Land Reform Act’s provisions on rent review and the larger need to prepare Scottish agriculture for Brexit, Government and industry should take stock and see what will work best for the future.

Rent Review – Two years ago the Land Reform (Scotland) Act 2016 paved the way for a rent review system largely based on productivity, finding a “fair rent”. This was intended to provide a simpler, more transparent and faster approach.  Much work has been done, including the valuable study by Savills for the Scottish Government on how parts of the proposal could be implemented.  The discussion of its conclusions has, however, shown that this approach risks being more procedural and complex than the present system.

Ian Austin says:

“We have now reached a point where it would be sensible to take stock of what we have learnt in the last two years and consider whether the proposed approach is actually practical before spending more time and effort on taking it forward.

“An open debate after the 231 page Savills report would be of more value to the sector than just continuing down this road if it is only going to get more complex and less satisfactory while that report points to changes in the 2016 Act. Such a debate would be good public policy and right for the let sector.

“If the conclusion is that we should explore other options then it is better and more productive to find this now than to spend more time on the present project just because it exists.”

New Law for Tenancies – An active tenanted sector is an important part of a flexible business-like farming industry facing the changes likely to be brought on with Brexit, potential changes to support and trading terms. Yet the decline on the Scottish let sector has been accelerating with legal changes simply offering palliative care while the sector shrinks still further.

Ian Austin says:

“While leaving all existing agreements unaltered with their rights and obligations, two strategic reforms by the Scottish Government could unlock a new future for farm businesses in Scotland:

  • first, a new flexible framework for agreements for new lettings, leaving it to owners and farmers to agree the terms on which land is let and taken. The current complex and rigid legislation is getting in the way and so, where it is still used, only the shortest term agreements are offered. Simpler legislation, nearer the freedom of contract applying to other Scottish commercial leases, could unlock more lettings.
  • second a new approach to recognise the importance of owners becoming landlords. If no one wants to be a landlord, there will not be any tenants. Currently, we have a climate in Scotland in which landlords have been more criticised than valued, and so it is no surprise we have fewer of them. Ideally, retiring farmers should be able to see letting their land as an attractive choice, not a risk to be avoided. For example, a clear statement by the Government rejecting a tenant’s right to buy could be an important signal, changing the mood.”

SAAVA also calls on the UK government to follow the Irish Government with an Income Tax relief for arms’ length private lettings of more than five years. Ian Austin says:

“Having seen that encourage positive change in the Republic, we think the UK Government should adopt it here to support positive changes in farming use and business structures.”

“These three measures – simple legislation for new lettings, giving owners the confidence to let and fiscal encouragement could open a new age for Scottish agriculture. Now is the time to be bold and give our farmers the tools to thrive in the years ahead.”