We recently issued an update rounding up some of the action which has taken place since the passing of the Land Reform (Scotland) Act 2016. One of the points noted in that update is the fact that new rules which significantly extend the scope for tenants to assign agricultural tenancies in life and pass them on, on death, come into force on 23 December 2016.
The current rules are not straightforward and those readers hoping that I’m going to say that the new rules reflect a simplification are going to be disappointed! So, briefly, what has changed? Here are the highlights:
- The classes of person to whom a tenancy can be assigned, bequeathed or transferred on intestacy are widened substantially
- The concept of “near relative” has been extended to a wider class of people and now applies to both assignation and succession (NB it now includes the tenant’s parent, spouse/civil partner, child, child’s spouse/civil partner, grandchild, sibling, sibling’s spouse/civil partner, niece/nephew, grandchild of sibling, sibling of spouse/civil partner (and that sibling’s own spouse/civil partner)…amongst others i.e. this is not a comprehensive list!!
- A landlord’s grounds for objecting to the newly extended list of near relative successors and assignees are restricted to 3 specific grounds – character, or lack of resources and training (and the latter can be overcome if the prospective tenant undertakes a relevant training course in agriculture within 6 months and, meantime, makes arrangements for the holding to be farmed with reasonable efficiency)
- On assignation, if the assignation is not a near relative, the landlord can object on any reasonable ground
- On succession, if the assignation is not a near relative, the landlord can object but the assignee can apply to the Land Court to try and establish that there is a “reasonable” ground for not terminating the lease
To give this some context, under the current rules any attempt to transfer a secure 1991 Act tenancy to a successor who is not within the current narrow list of near relatives (in this context, a much shorter list of people including a spouse/civil partner, child or grandchild) is likely to be faced with an incontestable notice to quit from the land. In short, it rarely works.
Those who do fall within the current narrow definition of near relatives have a reasonable prospect of successfully inheriting a tenancy because a landlord can only object on the basis the proposed successor is not of good character or doesn’t have sufficient agricultural training or financial resources. However, the scope for challenge is always there.
Similarly, assignation is currently only permitted to assignees who would – under the current succession rules – be entitled to succeed on intestacy following the death of the tenant. In practice this means that, depending on whether or not the tenant has close relatives, the right to assign can in some cases extend to more distant relatives. Although a landlord cannot serve an incontestable notice to quit in this situation, consent can be withheld on any reasonable ground (and specifically this would include the situation where the landlord is not satisfied that the proposed assignee can meet the financial obligations under the lease or has the necessary skills or experience to farm the holding).
This blog is (by necessity) an over-simplification of the rules. It is written primarily with secure 1991 Act tenancies in mind but, broadly speaking, similar rules apply to other types of agricultural tenancies. Please do get in touch if you have particular queries about the implications of the changes which will apply from 23 December 2016.
On December 21, 2016