Land Reform Policy Group: Identifying the Problems (February 1998)

4. Landlord and Tenant

4.1 Those who live in the country are of course affected by housing tenancy arrangements just as much as those who live in towns. But, in terms of land reform, the focus is on agricultural tenancy arrangements. The existing statutory arrangements for farm letting are contained in the Agricultural Holdings (Scotland) Act 1991. The question is whether the rights of landowners and tenants are still correctly balanced and, in particular, whether there are problems in rural areas arising from the current legislation.

4.2 There are young people keen to start farming who have difficulty doing so. This is partly because of the price of good land and the cost of equipping a modern farm. Many young farmers therefore start by renting land. However, landowners are reluctant to create new tenancies because of the high degree of security afforded to tenants by the 1991 Act. This level of protection obviously suits existing tenants well, but leads to unmet demand, although in recent years increasing use has been made of limited partnerships in place of traditional tenancies.

4.3 In England and Wales, following agreement between bodies representing landlords and tenants, the Agricultural Tenancies Act 1995 introduced a new and more flexible type of farm business tenancy, with more limited security of tenure, but providing greater opportunity for diversified land uses. Early signs are that this is producing more farmland for rent, but it is not yet clear whether new entrants are benefiting or merely existing farmers expanding their businesses. To what extent is the 1991 Act inhibiting access for young would-be farmers, and could the existing system be adapted to create new types of tenancy and to encourage new agricultural tenancies?

4.4 The current arrangements for resolving disputes often appear to be unnecessarily complex and, in particular, arbitrations take too long and are too costly. Clearly, the interests of both landlord and tenant must be adequately protected. But could there be changes to ensure that most disputes can be resolved simply, quickly and cheaply, without escalation into protracted and expensive legal actions?

4.5 The thrust of current agricultural and rural policy is towards maximum diversification. For tenant farmers however the terms of their tenancy agreements can be a significant constraint. For example, leases usually confine the permitted uses to a relatively narrow definition of agriculture, and the tenant must seek specific agreement from the landowner for other activities. If this is deemed to vary the terms of the lease, the tenant might have to accept unwelcome new conditions, or higher rent, in exchange for the right to diversify. The Group believes that it is in the interests of thriving rural communities for tenant farmers to be encouraged to diversify their activities as much as possible, and that it might be helpful to introduce greater flexibility.

4.6 Particular difficulties have sometimes arisen over the use of land for forestry. Firstly, the 1991 Act permits landowners to reoccupy tenanted land for non-agricultural uses, including forestry. Secondly, tenant farmers (and crofters) are discouraged from forestry because legally the trees (unlike other crops) would belong to the landowner not the tenant. Similarly, in certain designated Environmentally Sensitive Areas, tenants have felt constrained from undertaking regeneration of native woodland. In practice, a tenant (under the 1991 Act) or a crofter (under the Crofters (Scotland) Act 1993) wishing to plant trees must seek landlord’s consent and enter into an agreement covering the right to cut and sell timber and for compensation. Such an agreement may be offered only with onerous conditions attached, and this discourages tenants from establishing woodlands. Should there be changes to make it easier for tenants and crofters to plant and harvest trees?

4.7 Similar considerations apply to holdings with land designated, for example, as a Site of Special Scientific Interest (SSSI) or a Scheduled Ancient Monument, where a tenant seeking a management agreement with SNH or Historic Scotland, and the relevant payments, might have difficulty obtaining consent from the landowner. This could arise if the management agreement involved operations falling outside the terms of the lease, or if they did not constitute "good husbandry" of the land for farming. In this situation, landowners might place onerous conditions on consent or remove the designated land from the lease altogether, adopting the management agreement and receiving the payments themselves. Should there be changes to encourage tenant farmers to involve themselves fully in the conservation of the natural and cultural heritage as part of responsible land management?

4.8 The right to take and kill game resides with landowners or their nominees, including sporting tenants. These rights do not pass to agricultural tenants unless provided in the lease. Farm tenants must also avoid operations likely to damage the game on the holding. On the other hand, farm tenants do have rights to shoot rabbits and hares and can take and kill deer causing or likely to cause damage to crops or pasture; and (unless they already possess sporting rights or have obtained agreement to shoot the game) may also claim compensation from their landowners for damage caused by game. Should steps be taken to encourage farm tenants to develop the sporting interest of their holdings as part of broader land use businesses?

4.9 In general, the right to extract and sell minerals is reserved to landowners. As regards opencast coal, the situation is complicated by the short duration and specific location of the work, and planning consent is subject to strict restoration conditions. Although landowners cannot resume land from farm tenants for opencast coal development, they have to pay tenants compensation for loss of agricultural income and for other disturbances. Should greater encouragement be given to small scale mineral developments of all kinds as part of rural enterprises?