Call to tenant farmers over compensation agreements

LEGAL WINDOW: Opportunity to ‘get house in order’ and establish terms of any improvements made

Scottish tenant farmers have been urged to take the chance to establish compensation agreements with landlords during a temporary legal ‘amnesty’ which begins next week.

Under the Land Reform Act there is a three-year window in which landlords and tenants can agree on which farm improvements can be compensated when the tenancy ends. It is often a fractious negotiation, and the aim of the new law is to simplify the process.

Farm improvements made from this year will require the tenant to adhere to statutory procedures, to ensure more clarity for all parties in future.

Scottish Agricultural Arbiters Valuers Association president Rob Forrest briefed members on the opportunity which starts on June 13.

“I strongly encourage all tenants to use this chance to get their ‘house in order’ and establish the compensation terms of any improvements made,” he said.

Valuers’ adviser Jeremy Moody said the amnesty only determined what improvements are eligible for compensation and does not agree value, which can only be established when the tenancy ends. And it will not lead to any immediate payments.

“However, for existing improvements, it is a very sensible approach to gather evidence to show what work has been done to date and by whom, discussing it all with the landlord.

“The aim should be to seek agreement and have a signed document to define what will be compensated at the end of the tenancy, all recorded for use at the future waygo,” he added.

“This process is best pursued by the tenant and landlord, and professional support may be beneficial for objectivity and experienced advice in making sense of what can be 50 years of patchy records for a claim that may be made after a tenant’s death.

“Discuss improvements with an inspection of the farm, and once agreement has been reached, record the outcome on an amnesty agreement and keep with all legal papers for future reference.”

Mr Moody said it was essential to gather as much evidence as possible for the process.

“This can include farm maps, planning papers, information from family members and invoices – just to name a few.

“It may take some time, so start early and drive the process for a quick and amicable conclusion,” he said.

“The opportunity to establish clarity as to what is compensatable is a very positive development for landlord and tenant relations and, as good housekeeping, could save risks of future conflict and legal procedures.

“I highly recommend all tenants and landlords to act on this chance to agree terms, so all parties are clear on their position and effective business planning can be made with an accurate knowledge of the position.”

I strongly encourage all tenants to use this chance to get their ‘house in order’. . . ROB FORREST

Valuers’ adviser Jeremy Moody said the aim should be to seek agreement and have a signed document to define what will be compensated at the end of the tenancy.