Agricultural Holdings – modernising the list of compensatable improvements

30.11.18

The Agricultural Holdings (Scotland) Act 1991 (“the 1991 Act”) makes provision for agricultural tenants to claim compensation at waygo (the end of their tenancy) for the value of any improvements made by them to the holding during the term of the tenancy.

Although now contained within the 1991 Act, the list of eligible improvements remains unchanged since the original list created for, and contained within, the Agriculture (Scotland) Act 1948; it is therefore, unsurprisingly, outdated in some respects. In some instances, the list does not include improvements which are readily accepted by landlords and tenants alike to constitute legitimate improvements worthy of compensation.

In accordance with obligations imposed on him in terms of the Land Reform (Scotland) Act 2016 (“the 2016 Act”), the Tenant Farming Commissioner (“TFC”) made recommendations to update the list and the Scottish Government has now brought forward regulations to implement changes –  The Agricultural Holdings (Scotland) Act 1991 (Variation of schedule 5) Order 2019 (“the Order”).

The Order proposes the following variations to Schedule 5 of the 1991 Act:

Improvements for which notice is required

The existing category of “provision or installation of electric light or power (including generating plant, motors, wires and sockets)” will be broadened to “the installation, provision, distribution or storage of electricity, gas, power, heat or light”. The extension means that in addition to e.g. wind turbines for the generation of electricity (generally agreed as being covered by existing provisions), a biomass heating system would in future be covered.

There is another widening from “provision of means of sewage disposal” to ”provision of means of sewage, waste or pollutant disposal, and provision of means of managing water on land”.

In addition, three entirely new categories are added to this section:

  • erection of structures for the management or storage of slurries or manures;
  • provision of means of storing silage; and
  • works to dwellings

The addition of “works to dwellings” seeks to remove doubt as to whether houses are included within the existing category of “erection, alteration or enlargement of buildings”. The TFC report noted that changes to houses were generally accepted as falling within the existing provisions but that it would be useful to clarify matters.

Improvements for which no consent or notice required

Previously restricted to arable land, the removal of tree roots, boulders, stones and other similar obstacles to cultivation is to be extended to also include permanent grass land.

The “application to land of purchased manure and fertiliser” will be replaced with “the application to land of soil improvers, conditioner, digestates, manure or fertiliser, whether organic or inorganic”; this widening seeks to recognise modern farming practises as well as remove the distinction between purchased items vs those produced on-farm, or obtained through exchanges. 

The provisions of the Order will not be retrospective; improvements falling into a new category will only be eligible to claim for if started after the Order comes into force. At the time of writing, the Order is under consideration by the Rural Economy and Connectivity Committee of the Scottish Parliament. They are due to report to Parliament by 14 December, following which the Order needs to be approved by the Parliament before it will come into force. We will keep you up to date if there are changes to be made to the Order.