New guidelines should aid rent review negotiations
With the rent review season set to get into its postharvest full swing, Scotland’s Tenant Farming Commissioner (TFC) has published updated guidance on how these negotiations should be conducted in a fair and transparent manner.
Building on the 2015 guide drawn together by industry bodies including NFU Scotland, the Scottish Tenant Farmers Association (STFA) and Scottish Land & Estates, it is aimed primarily at 91 Act Tenancies although some limited-duration tenancies are also covered.
In particular the new guide clarifies some aspects of the processes currently used to review rent especially those surrounding the provision of evidence and the use of the inflation linked sense check.
TFC Dr Bob Mcintosh said: “There is clear agreement that long periods between rent reviews can have a detrimental impact on farm business. Parties are encouraged to meet when a rent review is due, even where there is no variation sought in rent payable.”
He said that rent determination was not an exact science but an agreement should be based on discussion and analysis of evidence provided by both sides, adding: “The updated guidance offers information on making and responding to rent proposals, including the need to provide evidence in the case of a rent proposal and any counter proposal made.”
The guide emphasises the importance of avoiding surprise sand encourages a preliminary conversation on the holding in advance of the rent proposal. It also sets out clear guidance on the use of comparable rents in recent case law and emphasises the need for well researched data to be presented to inform any new rent proposal.
The STFA welcomed the new guidance, with director Angus Mccall stating that rent reviews should be based on sound verifiable evidence and negotiations carried out in a calm and responsible manner where neither side tried to “put one over” the other.
He said that it was disappointing that STFA was still hearing reports of rent reviews being carried out with scant regard to the guidelines, albeit by a minority of land agents, but welcomed news that concerns about the scale of some rent increases proposed recently had seen some areas of the guidance reinforced.
Mccall also pointed out that the use of the Consumer Price Index – used as a shortcut to a settlement by some agents – was only one of a number of areas which should be built into the final calculation and was meant to be used as a “sense check” rather than a major factor.
He also welcomed the stress on the need for transparency and honesty in justifying and explaining evidence in support of proposals.
“Too often rent demands have been based on vague comparable evidence presented with no detail, identification or explanation, making it virtually impossible for the other party to analyse to produce counter proposals,” said Mccall.