The Scottish Government released its consultation on Small Landholdings - Small landholdings modernisation: consultation – on 22 October 2022.
In the first of our blogs on Small Landholdings, we considered which land is affected by the consultation. In this second blog, we are looking at the proposals for modernising the Small Landholdings regime.
In her Ministerial Foreword, Cabinet Secretary for Rural Affairs and Islands, Mairi Gougeon, said "Small landholdings are a part of our Scottish agricultural and national heritage, and we are determined to have them as part of our future. We are fully committed to modernising their truly unique legislative status to ensure small landholders have comparable rights with other types of land tenure, and the opportunity to contribute to our wider objectives…… Scotland’s farmers, crofters and land-managers are vital to our ambition to make our nation fairer and greener, and small landholders are part of this farming ambition."
2016 Review
The consultation follows the Scottish Government's Small landholdings in Scotland: legislation review 2016.
This review raised a variety of issues and highlighted that the historic legislation governing Small Landholdings is not well understood. Concluding the review, the Scottish Government made a number of commitments, including to commission additional research for the purpose of encouraging the creation and establishment of Small Landholdings and Statutory Small Tenancies, and to consider the feasibility of establishing a register of Small Landholdings. It also undertook to keep under review the question of a right to buy, and to consider further whether Small Landholdings could be included within the remit of either the Crofting Commission or the Tenant Farming Commissioner.
2022 Proposals
Building on responses to the 2016 review, after somewhat of a hiatus, the current consultation contains proposals which aim to update Small Landholdings legislation to give Small Landholders opportunities equal to those enjoyed by tenant farmers and crofters. The proposals sit against the background of the Scottish Government's wider climate and land reform goals, including reaching Net Zero by 2045, supporting local communities and encouraging population retention.
There are 4 main proposals which relate to: (1) the right to buy; (2) diversification; (3) assignation and succession; and (4) access to an umbrella body.
1. Right to Buy
Crofters and tenant farmers have certain, differing, rights to buy which Small Landholders do not benefit from. It is suggested that a right to buy would reduce fears associated with a lack of local permanent residential housing, particularly in areas with high levels of tourism.
The Scottish Government proposes introducing an absolute right to buy the the Small Landholder’s house site and garden, together with a pre-emptive right to buy the remainder of the land – i.e. an opportunity to buy if the landlord decides to sell. It is proposed that the purchase price would be determined by an independent valuer, or by agreement between the Small Landholder and the landlord.
The proposal also includes an "appropriate" (at this stage unspecified) clawback provision. This would require a Small Landholder who purchased their house site and/or land, and then sold within a particular timescale, to pay their former landlord an amount which shared any uplift in value. Similar provisions exist in crofting law.
2. Diversification
Currently, the use made of a Small Landholding must be consistent with cultivation. The 2016 review identified that there is some confusion around whether diversification is permitted on Small Landholdings, and that Small Landholders want greater opportunity to diversify.
The Scottish Government proposes to allow Small Landholders to diversify similarly with other tenants of agricultural land and suggests taking an approach akin to that found in crofting legislation. Tenant crofters are allowed to diversify if their landlord gives permission or if consent is obtained from the Crofting Commission.
3. Assignation and succession
Some of the legislation which applies to the transfer of Small Landholdings dates from 1886. The 2016 review found that the provisions are considered unclear and that the categories of those who can be assigned or succeed to a Landholding are considered too narrow.
By comparison, tenant farming legislation has been updated over the years and takes account of a wide range of modern family arrangements and the practical nature of farming. A landlord can object to a secure tenancy being assigned or succeeded to by a particular person on particular grounds. Croft tenancies, on the other hand, may be succeeded to without the landlord having an opportunity to object. Assignation can be to any one natural person (e.g. not a company) and does not need to be to a family member, but consent of the Crofting Commission is always required.
The Scottish Government proposes making provision for Small Landholders to pass on their Landholdings to the same, wider categories of people available to tenants of secure agricultural tenancies. Objection by a landlord would also be on the same basis, for reasons connected with character, resources, training or experience.
4. Access to an umbrella body
The 2016 review found that some Small Landholders believe an organisation with responsibility for Small Landholdings would help ensure that legislation is properly understood and followed. Landlords and Landholders have expressed concerns about the stress, costs and complexities associated with taking matters to the Scottish Land Court.
The Scottish Land Commission includes a Tenant Farming Commissioner who has a legal duty to promote and encourage good relations between landlords and tenants, publishes codes of practice, and has power to investigate alleged breaches of the codes.
The Crofting Commission has a wide range of functions associated with promoting the interests of crofting - regulating and reorganising crofting, investigating breaches of crofters' duties and taking enforcement action.
Given the very small number of Small Landholdings, the Scottish Government considers that it would not be justifiable to create a new body. Instead, it is proposed that Small Landholdings fall under the remit of an existing public body such as the Scottish Land Commission.
Conclusion
It has taken some time following the 2016 review for progress to be made. The proposals are seeking to replicate what is, broadly, already found in other statutory frameworks and to put Small Landholders on a similar footing with other tenants of agricultural land.
The consultation has now closed.
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