We must take rent reviews seriously says Nicholson
With the long-heralded proposals to introduce a new rent test based on the productive capacity of the holding quietly dropped earlier this year, the authorities have gone back to square one in an attempt to find a more equitable formula.
Prior to starting any legislative work on a new rent review test for tenants, the Scottish government has commissioned a market research company to survey Scotland’s tenant farmers to gauge their views on the current procedures for rent reviews.
And encouraging all tenants to complete and return the forms, the Scottish Tenant Farmers Association has warned that without a wholehearted response from the sector, it could be difficult to persuade the government to introduce a new test.
STFA chairman Christopher Nicholson said, “The survey results will be used to inform a review of the rent review test and process for agricultural tenancies.
“So it is important for as many tenants as possible to complete and return surveys to allow any future changes to the rent test to take into account tenants’ views and experiences.”
He added that the current open market rent test had proved an unsatisfactory method of setting rents over the decades in which it had been used.
“With a scarcity of open market lettings it is difficult for parties to find suitable comparable evidence and the current open market test does not take account of the farm’s earnings capacity.”
However, with a new system promised under the Scottish government’s 2016 Land Reform Act, and despite considerable efforts within the industry to come up with a workable approach, an acceptable plan to introduce a rent test based on the earning capacity proved impossible to agree and the idea was scuppered earlier this year.
Following some difficult and lengthy rent review cases heard in the Land Court, since 2014 the Scottish Land Commission’s Tenant Farming Commissioner (TFC) Bob Mcintosh has produced several codes of practice and industry guidance, including encouragement to limit rent increases to CPI increases.
However, the STFA said that many in the industry viewed these as attempts to limit damaging rent increases under the open market test until a new rent test was put in place.
‘Our current rent test places too much emphasis on open market comparable evidence, and not enough emphasis on the earnings capacity of the farm.
‘Before Scottish government can start work to implement a new rent test, this survey of tenants is required to find out what tenants think of current rent reviews.
"The researchers contracted to carry out the work have sent out surveys by post to tenant farmers in mid April.
We would encourage tenants to complete the survey which should take only 5 to 10 minutes and return as instructed by the deadline of 24th May.
“Unless the survey shows an appetite for change away from the current open market test it will be difficult to persuade Government to introduce a new rent test,’ said Nicholson.