The Scottish Government

Introduction/Background

Legislation governing agricultural holdings in Scotland and the relationship between landlords and tenants has been regulated by a series of Acts of Parliament since the 19th century.

Prior to the 2003 Act, the only forms of formal farm tenancies permitted within the legislation were either: a seasonal let of less than one year, or a secure heritable tenancy. These tenancy arrangements remained very much unchanged over the years.

Prior to the 2003 Act, through the use of partnership law (Limited Partnership Act 1907), landlords developed the Limited Partnership tenancy model to gain greater flexibility. In practice, this meant that the partnership was the tenant and held the lease to the agricultural holding, with the actual tenant becoming the general partner of the limited partnership. This enabled a fixed term lease, with termination of the partnership by the Limited Partner prior to the end of the lease term dissolving the partnership and effectively the tenancy.

Current agricultural holdings legislation

The Agricultural Holdings (Scotland) Act 2003 and the earlier Agricultural Holdings (Scotland) Act 1991, together provide the basis for a modern framework for the tenanted sector in Scotland.

Broadly, the legislation provides for four types of formal farm tenancies:

• a Secure "1991 Act" tenancy;
• a grazing or mowing lease for not more 364 days;
• a Short Limited Duration Tenancy (SLDT) of up to five years duration; and
• a Limited Duration Tenancy (LDT) for a minimum period of fifteen years.

The present minimum and maximum terms of tenancy arrangements in the legislation arose from an arrangement between the key stakeholder bodies while the current agricultural holdings legislation was going through Parliament in 2003. Allowing sufficient time for tenants to invest in their businesses.

The current agricultural holdings legislation also provides:

• a presumption in favour of diversification of a tenant's activities for a non-agricultural purpose;
• a pre-emptive right, for a Secure "1991 Act" tenant, to buy their agricultural holding when it is offered for sale provided they have registered an interest in the Register of Community Interests in Land; and
• the resolution of disputes between landlords and tenants by referral to the Scottish Land Court replacing statutory arbitration (voluntary arbitration between landlords and tenants is still an option).

A simple to read booklet on the legislation, prepared by the Tenant Farming Forum is available through this link TFF Guide to the 2003 Act

Farm Tenancy Statistics

The Annual June agricultural census provides the following information.

Figures from Annual Census - some have more than one tenancy

Legislation covering Agricultural Holdings in Scotland

Primary legislation

Agricultural Holdings (Scotland) Act 1991

Agricultural Holdings (Scotland) Act 2003

Agricultural Holdings (Scotland) Act 2003 - Explanatory Notes

Secondary legislation

The Agricultural Holdings (Right to Buy Modifications) (Scotland) Regulations 2004

(others to come)

USEFUL LINKS

Pre-emptive right to buy their holding for secure tenant farmers under 1991 Act

With the introduction of the 2003 Act, secure (1991 Act) tenant farmers have a pre-emptive right to buy their holding when the landlord decides to sell. They must first register that right through application to the Registers of Scotland who maintain a register of tenants who have recorded their interest in buying the land they rent. As at 30 June 2008, 953 tenant farmers had registered a pre-emptive right to buy their holding. If you would like further information please use the following website link to the Agricultural Tenants Register - www.ros.gov.uk

Guidance on multiple valuations where Pre-emptive right to buy is being exercised was issued by the Scottish Government on 14 March 2007 and this is available through the following link - Guidance on multiple valuations

Resolution of disputes through the Scottish Land Court

With the introduction of the 2003 Act, statutory arbitration no longer exists as an option. Therefore, in circumstances, where there are disputes between landlords and tenants that cannot be resolved amicably, either party individually or both parties jointly can now apply to the Scottish Land Court for the resolution of any dispute. The Land Court can be contacted at the following address: The Scottish Land Court, George House, 126 George Street, EDINBURGH EH2 4HH. Alternatively, you may wish to use the Land Court's website link www.scottish-land-court.org.uk

Voluntary arbitration remains a valuable option and more information on this can be obtained from the Rural Arbitration and Valuation Nomination Committee (RAVNC). Information on the committee's activities can be accessed using the following links:

Scottish Agricultural Arbiters and Valuers Association (SAAVA) - www.saava.org.uk

Royal Institute of Chartered Surveyors, Scotland (RICS, Scotland) www. rics.org/ scotland

Tenant Farming Forum

The Tenant Farming Forum is an industry led body which arose out of work during the passage of the Agricultural Holdings (Scotland) Act in 2003. It comprises key sector bodies and is independently chaired by Professor Jeff Maxwell.

Forum membership comprises 2 representatives from each of the following organisations: Scottish Tenant Farmers Association (STFA), National Farmers Union of Scotland (NFUS), Scottish Rural Property and Business Association (SRPBA); Scottish Estates Business Group (SEBG), Scottish Young Farmers Association (SYFA) and Royal Institute of Chartered Surveyors (RICS). Representatives are senior figures in their organisations. In addittion, Scottish Government officials and a representative of the Law Commission for Scotland attend Forum meetings as observers.

The Forum's own Statement of Purpose sets out that the Forum exists to help promote a healthy farm tenanted sector in Scotland. Forum representatives actively promote the TFF objectives within their own organisations. The Forum promotes constructive dialogue in an area long known for antipathy and distrust, ensuring there is a good source of simple factual information available on agricultural tenancy and letting issues. As the key body effectively representing all sides of the tenant farming sector, its collective views and recommendations should carry considerable weight. A positive, independent, functioning Forum for the agricultural tenancy sector is a powerful tool for interacting with the sector.

The Forum maintains an independent web-site providing authorative guidance on complex tenancy and legislative matters. If you would like further information on the Forum, their web-site can be accessed using the following link - www.tenantfarmingforum.org.uk