New residential lease rule to take a toll on sub-letting
New regulations on residential leases which came into effect last December could have considerable implications for tenant farmers who sub-let farm cottages or other dwellings, it has been claimed.
Changes brought in under the new private residential Te nancy( PR T) regulations mean that farmers will be unable to put a time limit on the length of any new tenancies granted on surplus cottages or farmhouses– and where these were sub-let on a holding under an agricultural tenancy it could be extremely difficult for the tenant farmer to recover vacant possession.
Following the recent national summit on rural housing, Ian Austin, president of the Scottish Agricultural Arbiters and Valuers Association said that while the changes brought about by the introduction of the PRT regulations were reasonably well understood by consultants and lawyers, the farming industry was less aware of the repercussions of granting any new leases.
He said the Scottish Government had made it clear that unlike existing short assured tenancy agreements, it would not be possible for an agricultural tenant to guarantee secure vacant possession of the surplus cottage if a PRT was in place.
“It has been common practice for landlords and tenants to agree that a surplus cottage can be sublet provided that the agricultural tenant can secure vacant possession of the whole holding, including the surplus cottages, should the farm tenancy end –but the new legislation will make giving this assurance difficult,” said Austin.
This meant that there was a risk that at waygo the landlord could look to recover compensation from the agricultural tenant if they were unable to yield vacant possession.
Gaining permission from a landlord for sub-letting would therefore be more important in the future. And while a pragmatic landlord who expected the agricultural tenancy to run for many years might be happy for subletting to take place, the farmer would have to shoulder the risk of having to compensate his landlord should circumstances change.
“The severity of this risk will ultimately depend on the sub-tenant’s covenant and on what the landlord’s intends for the subjects on receiving them back in hand,” he warned.
The alternative was that surplus cottages either remained unoccupied or the Landlord resumed them from the tenancy agreement to rent out himself – but in either situation the tenant would lose out on a useful alternative source of income.