Cautious welcome for rent review assessment report
Despite running to a mammoth 231 pages, widespread comment on the report for the Scottish Government on the proposed new form of farm rental assessment has been that a lot more work is required on the topic.
Last year, the Scottish Government appointed land agents Savills, in conjunction with agricultural lawyer Hamish Lean and farm consultant Watson Bell, to test, analyse and make recommendations on the proposed changeover to basing rents on the productive capacity of a farming unit.
The previous approach – with rental values based on so-called “comparables” – had proved contentious, with tenants arguing that it pushed rents up to unrealistic levels. Legislation included in the 2016 Land Reform Act included measures to address this – and to introduce a new system for assessing rental values where agreement could not be reached between tenant and landlord.
The aim of the report launched this week was to help shape the secondary legislation required to bring the reforms in the new act to fruition, including a modelling exercise on ten sample rent reviews in order to assess if the new proposals and underlying procedures were “fair” to both tenant and landlord.
However, despite the highly detailed nature of the report, most organisations in the sector concluded that more work was required – and the publication should be viewed as an interim report.
Scottish Tenant Farmer Association chairman Christopher Nicholson said he welcomed the progress towards implementing a new productive capacity rent test to replace what he termed the current flawed test based on the open market.
“We have been campaigning for over a decade for the replacement of the open market test which has become increasingly unworkable and has always acted against tenant’s interests due to the land market’s inherent imbalance in supply and demand,” said Nicholson.
He said that the report showed that a rent test based on the physical output of the holding using only the land and fixed equipment provided by the landlord could be used to set a fair rent with transparent methodology.
However, he added: “We believe that the report is heading in the right direction – but there is still much work to do on the details and the success of the new rent test will be dependent on getting everything right.”
NFUS president Andrew Mc Cornick termed the report “a thorough piece of work” but added that it was still some way from providing a final solution in calculating productive capacity for 1991 Act tenancies. “Further discussion and work in relation to this subject is needed before it will be the complete article,” he said.