The Land Reform (Scotland) Bill (the Bill) is aiming to update the law applying to agricultural holdings by making changes and adding to the many pieces of legislation that have gone before. We discuss the changes proposed for resumption in our other blog and below give a brief overview of the other changes put forward for agricultural holdings.
Tenant's right to buy
The previous attempt by the Scottish Government to abolish the need to register the pre-emptive right to buy enjoyed by 1991 Act tenants was never brought into force. The Bill seeks to overhaul the changes that never happened and enable the Scottish Ministers to introduce regulations dealing with how tenants activate the right to buy, the registration process, how long registration lasts and how registrations may be challenged, varied or cancelled. It is not clear whether they intend to streamline the registering process or introduce additional requirements and procedures.
Compensation for improvements
The proposed changes to the categories of improvements for which compensation may be payable at the end of a 1991 Act tenancy signal a move away from prescriptive lists of improvements in favour of general classifications of improvement, illustrated by non-exclusive examples.
Where improvements need consent, the Bill would require a prescribed form of notice to be given by the tenant and a 70 day period allowed for the Landlord to object. If the landlord did not object within the 70 days, the Landlord would be deemed to have consented. If the landlord refuses to give consent, they must give reasons and, curiously, the landlord and tenant then only have any time remaining in the initial 70 day period to reach agreement, failing which, the tenant can refer the matter to the SLC.
New considerations for the SLC to take into account when deciding whether to allow the improvement would include whether or not the improvement will have a positive effect on the efficient management of the holding or facilitate or enhance sustainable or regenerative agricultural production on the holding[GW1] A list of improvements that will be presumed to facilitate or enhance sustainable or regenerative agricultural production on the holding, unless proved otherwise, is added to the 1991 Act [and depending on the improvement could require notice or indeed consent]. There is also a general reasonableness consideration.
Compensation claims procedure
The Bill introduces a standard claims procedure that could be applied by Scottish Ministers to any element of payment of compensation under a 1991 Act tenancy or any of the limited duration tenancies under the 2003 Act. Broadly speaking, the claimant tenant would have to give specified information including a nominated valuer to the landlord within nine months of a claim date. If the tenant and landlord cannot agree, the Tenant Farming Commissioner would appoint a valuer. The valuer would produce preliminary and final reports, with the final one being due at least three months before the claim date. Both the landlord and the tenant could appeal to the Lands Tribunal against the valuer's final report. Compensation would be due to be paid within two months of the claim date.
Good husbandry and estate management
The changes here are more about updating than overhauling. The concept of sustainable and regenerative agriculture would be introduced into the 1948 Act under both good estate management and good husbandry, which is consistent with introducing the same phrase to the provisions on diversification in the 1991 Act. Other small changes include changing "eradication" to "control" of bracken, whins and broom and a specific reference to the health and welfare of livestock.
The Scottish Ministers may also prescribe activities which are to be treated as "conservation activities", a term that is loosely referred to in the 1991 Act as an example of activities which can be treated as being in accordance with the rules on good husbandry if certain conditions are met.
Rent review
There was much discussion at the time about the rent review mechanism introduced by the 2016 Act and many were uncomfortable with the new methodology. Perhaps, amongst other things, seeking to address such concerns the Bill introduces concepts of rent payable on similar holdings and prevailing economic conditions in the agricultural sector as matters the SLC must have regard to when assessing rent, although the concepts of productive capacity, which caused much of the original concern, remains.
Game damage
The changes around damage by game are perhaps not as sweeping as some of the others in the Bill and represent more of an updating and modernising exercise. However, the Bill proposes some key changes:
- claims for damage would extend beyond crop damage to include damage to non-agricultural crops, including trees, fixed equipment, livestock (including humane destruction of livestock to prevent further suffering or injury) and habitats;
- there would be no financial threshold to meet for claims to proceed;
- more specific guidance would be given on the opportunities a tenant must give a landlord for inspection of any alleged damage.
Diversification
The 2003 Act first introduced the concept of a 1991 Act tenant being able to carry out non-agricultural activity on their holding, provided the correct notification and consent procedure was followed. The Bill now seeks to also require tenants to state any intended environmental benefit in the diversification notice.
If a landlord wishes to object, they must currently show that diversification would "substantially prejudice the use of the land for agricultural purposes". Instead, the Bill proposes that a landlord must show that diversification would substantially prejudice "the whole of the land comprised in the lease for the purpose of sustainable and regenerative agriculture". This also appears in the 1991 Act with the aim of restricting when compensation may be payable to a tenant at the end of a lease and seems to be a higher bar for objections.
Rather than introducing significant new concepts or completely overhauling the existing system, the changes proposed by the Bill to agricultural holdings legislation can perhaps be seen more as seeking to address issues arising from the passing of the 2016 Act and to attempt to modernise agricultural holdings legislation by accommodating concepts of sustainable and regenerative agriculture, activity intended to have environmental benefit and improvements that facilitate both.
It remains to be seen if the Bill as introduced undergoes significant changes during the legislative process and, if passed, what affect the nature of secondary legislation will have.
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