SAAVA, the membership organisation for professional advisors to farmers, landowners and rural businesses, has submitted a 12-‐page submission focusing on the agricultural holdings provisions of the Land Reform Bill to the Rural Affairs, Climate Change and Environment Committee of the Scottish Parliament.
Spelling out the practical considerations of the proposals, SAAVA hopes that its input will help shape a system that both functions well, and offers clear advice to tenants and landlords.
One of its main aims is to reverse the continuing decline in Scotland’s let sector, currently sitting at 23% of Scotland’s agricultural land and just only ahead of Ireland or Finland, in comparable countries. SAAVA’s understanding is that the Bill’s measures, as they currently stand, may not herald the desired revival of the let sector.
One such example in the draft Bill refers to the subject of primary residential accommodation, which is to be excluded from the farm rental calculation. The potential consequence might be that new lettings exclude any residential provision, with the farmhouse either being let on a residential tenancy to the new tenant, or to a third party. Thus a new entrant might have to compete with a residential tenant for what would conventionally have been his farmhouse, or take a letting in the nearest location, which might be somewhat remote from the farm. Either option would increase his costs significantly over having the farmhouse as part of the holding.
One unintended consequence of this might also be that two otherwise identical holdings (one with a house occupied by an agricultural tenant and one without) would have the same rent. Another may be that some established 1991 Act tenants see their farmhouse being excluded from any future rental calculation. It is also not yet clear how joint tenants (such as father and son/daughter, or brothers/sisters) with separate residences on the farm will be treated.
James Dick, SAAVA President said: “In our view, there is a concern that the Bill will provide fewer opportunities for new entrants to take on a farm with a house, or with the house only being available to the tenant if he takes it on a residential let separately from the rest of the unit. It will increase costs for these new entrants, in what is already a difficult time for those starting up. While repair and maintenance obligations for houses are normally higher in agricultural tenancies than in residential tenancies, the cost of carrying out such work would usually not be enough to bring it to the level of a residential rent.”
Another area of concern raised by SAAVA is that rent has to be proposed more than one year and less than two years in advance of its coming into force, as part of the rent notice. It is SAAVA’s view that a proposal more than one year in advance is perhaps not helpful to either party. Recent history demonstrates unpredictable sale and cost volatility that would have made it very difficult for any tenant to give notice to his landlord looking for a decent rent reduction. For example, compared to last year, sheep prices are down 27%, feed barley down 17%, and let alone milk down at least 33%. If the tenant had known this last year, notice of a rent reduction would have been the right thing to do – but there was no way that this would have been possible. Similarly any landlord suggesting a near doubling of the grain price in a rental submission a year in advance might have been accused of not living in the real world, and yet that is effectively what happened between 2010 and 2011.
It would also take no account of exceptional weather or other factors, which could have influenced the level of inputs needed and outputs made.
James concludes: “As a professional body with members representing a number of interested parties, our concern is not to promote particular causes but look at proposals practically and consider what will work and what will not. We are conscious that our members will be advising tenants and landlords in the years following the outcome of changes and therefore will need the position to be clear so that advice can be certain and effective. We share the Scottish Government’s vision to arrive at measures that can be sensibly implemented to successfully promote the health of the industry and will continue to support this process to enable the best outcome for the industry as a whole.”
For further information contact: Judith O’Leary, O’Leary PR, 01383 432608