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Land reform: part 10 takes shape

14 March 16

Agriculture briefing: stage 2 amendments to the agricultural holdings provisions of the Land Reform (Scotland) Bill have settled some important policy issues

by Adèle Nicol

The Land Reform (Scotland) Bill reached the end of stage 2 of the parliamentary process on 10 February 2016. What follows considers aspects of the stage 2 amendments to part 10 of the bill, on agricultural holdings.

The level of detail left to SSIs was criticised in the stage 1 report of the Delegated Powers & Law Reform Committee (58th report, 2015 (Session 4)). Issues of ECHR incompatibility were raised (see “Where the bill falls short”, Journal, December 2015, 30), and it was observed that provision to make SSIs should not compensate for a lack of settled policy (report, paras 11, 13). Following amendment, the length of part 10 has increased by one half.

MLDT replaces 1991 Act tenancy

A principal objective of the bill is the phasing out of 1991 Act tenancies and 2003 Act limited duration tenancies (“LDTs”), and their replacement with modern limited duration tenancies (“MLDTs”).

A new section provides two methods by which a tenant can dispose of a 1991 Act tenancy for value: relinquishment to the landlord before the ish, or, if the landlord does not accept relinquishment, assignation to a new entrant or progressing farmer. This is popularly known as “assignation for value”.

At the outset, the bill made skeletal provision for conversion of 1991 Act tenancies to MLDTs, which relied on SSIs for its content. That provision has been recast with greater precision as a replacement for s 2 of the 2003 Act (s 2A). Additionally, a new s 2B of the 2003 Act provides for the conversion of limited duration tenancies to MDLTs in similar terms.

Repairing tenancies

A new tenancy, called a “repairing tenancy”, is created. The tenant cannot hold any office, appointment or be in the employment of the landlord. A repairing tenancy has a minimum term of 35 years. The first five years (at least) constitute the “repairing period”, during which time the tenant is exempt from the rules of good husbandry but must render the land capable of being farmed.

Rent review 

The bill as introduced created a “rent agreement date” for 1991 Act tenancy rent reviews, from which rent is fixed and is now (following stage 2) payable. Notably, an amendment has removed the restriction that the rent agreement date must be either Whitsunday or Martinmas.

Various other amendments were made to the provisions on rent review. For 1991 Act tenancies these include: removal of the “effective date”, which was one day after the rent agreement date and the date on which the new rent would be payable; subjecting the making of SSIs to the affirmative procedure (requiring parliamentary scrutiny); and removal of the 14-day grace period after the rent agreement date for referral to the Land Court.

Repairing tenancies are assimilated to LDTs and MLDTs for the provisions on rent review.

Diversification: other use of land

The amendments make two principal changes. First, following receipt of a notice of diversification (for non-agricultural use of land), the landlord can now make only one request for information. Secondly, there are some new and some revised provisions about a landlord’s objection to a notice of diversification. The onus is now on the landlord to seek determination from the Land Court that his or her objection is reasonable. Otherwise, 60 days from the giving of notice of the objection (or longer if extended by the Land Court), it ceases to have effect.

Other amendments

Other amendments include:

  • The reduction of the continuation period for MLDTs from 10 years to seven.
  • Minor expansion, for the sake of consistency, the list of persons to whom 1991 Act tenancies, LDTs and MLDTs can be assigned.
  • Greater restriction on a landlord’s ability to issue an incontestable notice to quit to a 1991 Act tenant in the 10 years following a forced sale to a third party.
  • The increase of the amnesty period for tenant’s improvements from two years to three.
  • An amendment clarifying that consent can be either oral or written in a particular circumstance barring the tenant from giving an amnesty notice (a tenant had obtained the landlord’s consent to a part 1 improvement but carried it out in a substantially different manner).

Stage 3 is expected to commence in mid-March. The last day of Parliament before its dissolution is 23 March. The fate of the bill will soon be sealed.

Adèle Nicol, partner, Anderson Strathern LLP 

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