Keeping track of land reform

The next part of the Scottish Government’s programme on land reform has now become law and this includes major changes to agricultural tenancy law.

What is the new legislation?

The new law will be called the Land Reform (Scotland) Act 2016.

Thirty-nine sections concern agricultural landlords and tenants, although much of the detail will follow in secondary legislation.

Who is affected?

Any party to a lease should review its terms to check whether they are affected.

Similarly, anybody who is considering a new arrangement should take advice as to how their plans may be affected.

When does it come into force?

While none of the provisions which make substantive changes will come into force immediately, it is important to understand the implications of these changes in reviewing land management plans.

We do not know when the changes will come into effect.

What are the main changes?

The headlines are: It will not be possible to enter into a Limited Duration Tenancy (LDT).

A new Modern Limited Duration Tenancy (MLDT) for at least 10 years.

Secure 1991 Act tenancies can be converted into MLDTs by agreement. LDTs can be converted into MLDTs, A new Repairing Lease, for at least 35 years, will be introduced.

In the initial period of at least five years, the tenant must improve the land.

Tenants will no longer have to register their interest in purchasing their holding in the event of a sale by the landlord.

Significant changes to the process and calculation of Rent Reviews

The widening of the class of individuals who may succeed to the tenancy on the tenant’s death and to whom the tenant’s interest may be assigned during lifetime; this means that there is less chance of a secure 1991 Act tenancy coming to an end on the tenant’s death

A tenant will have the opportunity to offer to relinquish the tenancy in exchange for compensation.

Where the offer is made and refused by the landlord, the tenant may assign the tenancy to a new entrant or to an individual who is progressing in farming

An amnesty for tenant’s improvements.

A landlord will have to give notice before carrying out improvements on the holding

What will the options be?

Once all the legislation has come into force an owner of land who does not wish to farm it himself will have the following options:

Grazing or mowing lease (as at present).

Short Limited Duration Tenancy (as at present).

Modern Limited Duration Tenancy (at least 10 years with no break clause).

Modern Limited Duration Tenancy to a new entrant (at least 10 years and a break clause may be included).

Repairing Tenancy (at least 35 years). Secure 1991 Act Tenancy. Contract Farming (or similar arrangement).

What should you do?

If you want to know how your lease will be affected once the law comes into force take early professional advice from a specialist solicitor and/or land agent.

Thorntons have produced a legal briefing on the Land Reform Bill which can be downloaded at www. thorntons-law.co.uk/news/.