New legislation on secure tenancies early next year

New legislation allowing tenant farmers in Scotland to relinquish their secure tenancies to their landlord for value or assign to a new entrant should be on the statute books early next year.

Sarah-Jane Laing, chief executive of Scottish Land & Estates
Sarah-Jane Laing, chief executive of Scottish Land & Estates

The Relinquishment and Assignation provisions have been under consideration since the 2016 Land Reform Act was enacted – and have now begun their journey through the Scottish Parliament, with the expectation that they will be brought into force by the end of February 2021.

Welcoming the move the Scottish Tenant Farmers Association (STFA) said that the aim of the new legislation would be to enable secure tenants to realise the value in their tenancy should they relinquish it. They said the move would allow elderly tenants to retire with some capital - while at the same time potentially creating an opportunity for new entrants to enter farming.

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“The provisions allow an existing tenant to relinquish the tenancy on payment by the landlord of a statutory valuation based on the value of the tenancy and the tenant’s improvements,” said STFA chair Christopher Nicholson who added: “If the landlord does not wish to pay the tenant the statutory valuation, the tenant can assign it for value to a new entrant or to an individual who is progressing in farming.”

Nicholson said it had been a “long haul” to get the promised reforms moving towards being put into practice and he said the move would be greatly welcomed by a number of tenants who had been waiting for the past three years to put their retirement plans into action and make way for the next generation.

“Delays in implementing relinquishment and assignation have been very frustrating for tenants who have felt time is not on their side,” he said.

However Sarah Jane Laing, chief executive of Scottish Land & Estates, said that many arrangements had already been agreed between tenants and landlords: “If a tenant wants to retire or relinquish their tenancy then constructive discussions with their landlord should be the first step,” she said, stating that this option had long been available to tenants.

“There is nothing to stop landlords and tenants coming to a mutually satisfactory agreement ahead of these measures coming into force, and we are pleased that many have already done so. These new provisions provide another route for those who wish to exit the sector.”

Conceding that, in anticipation of the legislation, a number of relinquishments and assignations had been amicably agreed with landlords over the last couple of years, Nicholson said that the principles behind valuing tenancies and even assignations had already been tried and tested.

However both agreed that the Tenant Farming Commissioner would have an important statutory role to play under the new legislation in appointing an independent valuer to place a value on the tenant’s interest in the tenancy as well as his improvements.

“This is an entirely new procedure, and we can expect Bob McIntosh to update current guidelines shortly and establish a panel of trained valuers,” said Nicholson.