Amnesty on Tenants Improvements
Poppy Baggott looks at the Amnesty on Tenants Improvements, a provision of the Land Reform (Scotland) 2016 Act that commenced on the 13th June 2017, from which date it will continue for a period of three years.
The Amnesty on Tenants Improvements has been much documented of late, with the hope that minds will be concentrated on addressing what will, in the words of STFA chairman Christopher Nicholson, ‘involve considerable work for tenants in looking out evidence that they (the tenant) or their predecessors carried out the improvements.’
With such abundant guidance available from the NFU, SLE, STFA and the Scottish Government, I won’t dwell too much on the ‘nuts and bolts,’ but will try to pick out some points which may be of interest.
Our first piece of advice, in the words immortalised by TV’s ‘Dad’s Army’, is don't panic. There are three years available to landlords and tenants to sort this out, and so providing the issue is addressed early on, there is every chance that reaching an agreement should be possible within the time frame.
While tenants of secure tenancies, limited duration tenancies and short limited duration tenancies are being urged to scour their records for evidence to support the improvements they have made, those with secure tenancies should consider that, extraordinary circumstances aside, a secure lease will continue in perpetuity, and as such, this amnesty could prompt a lot of work and digging through past files in preparation for a hypothetical situation. However, in the absence of a crystal ball, both landlords and tenants of secure tenancies should give this amnesty serious thought as it will be helpful to both parties to be in accordance as to exactly what is on the holding.
While trawling through farm records, we would advise taking particular care to examine or keep an eye out for any historical or existing ‘write down’ agreements; while there is a familiar ‘greyness’ to this area of the amnesty, we would suggest that improvements which have been written down prior to 2003 may no longer be considered as improvements. Also an area that is very much unclear is instances where there is no consent but there is a written agreement. We foresee this will throw up some problems for both parties over the course of the amnesty.
A further point of note is that the breadth of what constitutes ‘fixed equipment’ is considerable, not stopping at the buildings on a holding but extending to include the land as well. Ditches, drainage, field boundaries, accesses, and services such as water or electricity will all be taken in to account. This certainly widens the scope of what defines an improvement but will also undoubtedly open up debate as to whether the works done actually constitute an improvement or are simply repairs or renewals which the tenant may be obligated to carry out under the terms of their lease or post lease agreement.
In addition to the above, there will also be instances where landlord’s buildings may have been demolished and replaced with new buildings without the landlords consent. This is most likely to have happened in the instance of redundant traditional steading buildings. It will be difficult to say whether these new buildings should be considered as improvements for the amnesty as the landlord clearly gave no consent and fixed equipment belonging to the landlord is irretrievably lost; again, the characteristic blurry nature of how these things should be dealt with makes it hard to comment with any certainty.
While this amnesty could be regarded as yet another dig at landowners and landlords, it should be pointed out that it was Scottish Land and Estates, an organisation which provides support for landowners who were the driving force behind the amnesty and who are adamant that its members are committed to making it work.
The best advice that we can give at present is for both parties to be prepared; if tenants are aware of improvements which they have made without consent, then they should prepare notices carefully setting out why it would be fair and equitable for them to receive compensation at the end of the tenancy. Landlords should similarly be prepared to correspond with tenants and to look through their own records for evidence of instances where improvements may have been made but not acknowledged. Agreements should be revisited and perhaps this should be looked upon as a good opportunity for productive liaison between both parties to establish the exact position as regards to what their holdings consist of.