The Land Reform (Scotland) Act 2016 (“the Act”) introduced, among other things, the Amnesty for tenants’ improvements (“the Amnesty”). The Amnesty is a three year period in which an agricultural tenant can seek to agree with their landlord a list of improvements which should be eligible for compensation at the termination of the Lease (waygo) notwithstanding that the correct notification procedures were not followed when the improvement was undertaken.
With now less than a year left to go of the amnesty period, it seems worth a recap on the headline points of what the Amnesty covers.
The statutory provision relates to improvements carried out by the tenant prior to the coming into force of the Amnesty on 13 June 2017.
Strictly speaking, the Amnesty does not apply in respect of improvements carried out by the tenant since that date, though parties might be prepared to include these in an Amnesty Agreement (on which, see further below).
Nature of Improvement – What and by Whom?
The Amnesty affords an opportunity to correct failure to comply with statutory notification procedures, but to be eligible, the improvement must still comply in all other respects with statute.
A list of eligible improvements is provided in Schedule 5 of the Agricultural Holdings (Scotland) Act 1991. In limited circumstances, some improvements from Schedules 3 and 4 may also be eligible too.
The list of improvements contained within Schedule 5 was updated with effect from January 2019 – see our update here for more details. However, the Amnesty only applies in respect of the original improvements listed in Schedule 5 and does not take account of any updates to the Schedule. As on the timing issue, it is open to the parties to make an Amnesty Agreement which includes an item not strictly within the Schedule, but there is no compulsion to do so.
The improvement may have been carried out by a tenant under a 1991 Act Lease or under one of the fixed duration tenancies created by the Agricultural Holdings (Scotland) Act 2003, as amended.
Only improvements carried out during the current tenancy are eligible under the Amnesty. This may permit improvements carried out by previous tenants , where the lease arrangement has in essence remained the same (e.g. where a tenancy has been validly passed down through generations), but where there has been a change in the lease itself, the potential to claim for improvements may be restricted.
The Tenant Farming Commissioner continues to promote the use of Amnesty Agreements, affording an opportunity for landlords and tenants to seek to agree matters between them. An Amnesty Agreement enables landlord and tenant to agree the existence of the improvement and that it will be eligible for compensation at termination. It can also record the relative financial contributions between landlord and tenant in order to assist with compensation calculations in future.
Dialogue between landlords and tenants is warmly encouraged, but difficulties may arise where the parties are unclear as to their legal position. As noted above, whilst it is permissible to agree to improvements that might not necessarily be eligible for one reason or another, landlords and tenants should reflect on their legal position and also take appropriate legal advice on the terms of any agreement reached, to ensure that it complies with all relevant legislation and is valid, to avoid any dispute at lease termination.
The Act sets out a notice procedure to be followed by landlords and tenants to deal with improvement claims in the absence of such Agreement, though it seems clear that the Tenant Farming Commissioner’s view is that service of Amnesty Notices should be seen as a last resort. In typical agricultural legislative style, there are strict timescales to be adhered to and advice should be sought without delay if an Amnesty Notice is received.
A year might seem like a generous amount of time, but in our experience agreeing and documenting improvements can take considerable time. If you intend to make use of the Amnesty then take into account the time investment required to complete the process before the deadline.
On July 1, 2019