Land Reform Policy Group: Recommendations for Action

5. Agricultural Holdings Legislation

5.1 Current agricultural holdings legislation provides excellent protection for existing tenants, but at the cost of minimising the opportunity for new tenancies. There is also only limited scope for diversification. Reform is needed to introduce more scope for diversity of agricultural tenancy arrangements; simpler and cheaper arrangements for resolution of disputes between tenant and landlord; and wider opportunities for tenants to diversify.

5.2 The Land Reform Policy Group has identified the following possible agenda for reforming existing agricultural holdings legislation.

Limited duration tenancies

Legislation to amend the Agricultural Holdings (Scotland) Act 1991, in respect of new tenancies only, to provide the option of limited duration tenancies, thus permitting secure leases for a fixed term to be agreed between the parties. In other respects, the tenant would enjoy the same rights and responsibilities accorded to existing secure tenants until the end of the agreed period, similar to short assured housing tenancies. There should also be specific provisions to reduce the restrictions on using short-term lets for less than one year, by replacing the requirement to seek the Secretary of State's approval each year with a requirement that after 5 successive short-term lets involving some or all of the same land to the same farmer, the parties must agree a limited duration lease subject to consent of the Scottish Land Court (SLC).

Simplified arbitration procedures

Legislation to simplify the arbitration procedures, by providing for use of simpler methods, including mediation, to resolve disputes, reducing the volume of detailed evidence needed in the award, permitting hearings to be dispensed with, limiting the way in which the parties may be represented, and restricting the scope for appeal. There should also be stricter controls over the cost of arbitrations and the fair allocation of costs between the parties. The opportunity should also be taken to update and simplify other existing statutory provisions, including valuation of bound sheep stocks, and responsibility for fixed equipment. These changes should be linked to extension of the role of the SLC to cover appointment of arbiters, allowing applications to be made by one party only, giving the SLC an investigative role, and providing for all stated cases to go to the SLC. Stricter time limits should also be introduced for issue of arbiters' findings, providing for ending or transfer to the SLC if cases are unduly prolonged, and introducing provision for the SLC to order immediate removal of the tenant in extreme cases of bad husbandry.

Wider opportunities for diversification

Legislation to introduce a statutory provision into leases to permit wider diversification by farm tenants, with arrangements for resolving disputed cases, providing a right for tenants to seek arbitration or to appeal to the SLC if the landlord refuses consent for diversified activities, and requiring landlord's consent if the effects of the diversification would outlast the lease. There should also be an amendment to the existing provisions for operation of notices to quit, in the interests of good husbandry and sound management of the land, to ensure that it is acceptable for a tenant to operate the farm on a part-time basis. Legislation to provide greater protection for tenants against the operation of contested notices to quit by landlords intending to use the land for non-agricultural purposes. The rules of the Woodland Grant Scheme (WGS), Environmentally Sensitive Areas (ESA) and the Countryside Premium Scheme (CPS) etc should also be amended to make land taken back from a tenant in this way ineligible for scheme payments, as is currently the case for the Farm Woodland Premium Scheme, and the basis of nature conservation management agreements for SSSIs etc should be changed to exclude land taken back from tenants. Legislation to give rights for secure tenants to plant trees, to cut and sell timber, and so to derive income from farm woodlands integrated with their agricultural business. Income would come from the sale of timber (including thinnings) during the period of the lease, and from grants. Trees standing at the end of the lease would revert to the landowner, as for fixed equipment on the farm. Provision should also be made for a clear and fair framework for payment of compensation in respect of afforested land. The statutory rules of good husbandry should also be amended to encourage good conservation practice by tenants, restricting the scope of certificates of 'bad husbandry' to disregard conservation practices, defined by reference to a list of specified or permitted activities, such as those covered by ESA or CPS. In addition, farm tenants' rights to compensation for game damage and in respect of mineral developments should be strengthened.

5.3 Such agricultural holdings legislation would be an important element of land reform.