Land Reform - Limbo and Assignation

10 March 2016

As the Land Reform (Scotland) Bill approaches the end of its journey towards becoming law - it will reach Stage 3 in the Scottish Parliament on Wednesday 16 March - Anna Zahedi from our Rural team provides an update on the progress so far and on what unanswered points remain.

The Rural Affairs, Climate Change and Environment (RACCE) Committee’s scrutiny of the Land Reform Bill at Stage 1 revealed that a recurring and unnerving theme was a considerable lack of precision and lucidity, and that clear guidance and subordinate legislation would be required if objectives were to be met, and successfully implemented. 

A polite summary of the Scottish Government’s 77 page response to the concerns raised by the Committee could be Thank you for your concern, it has been noted. Whilst The Scottish Government acknowledge the Bill’s inadequacies and their eagerness to pass the Bill before the imminent end of this parliamentary session is understandable, the Land Reform (Scotland) Act 2016 will leave a worryingly large grey area in an already cloudy sky. Subordinate legislation and the various codes of conduct and practice have yet to be written and the debate will no doubt continue until these are settled at a later date.

During the course of January and February, and after five meetings between the RACCE committee and Cabinet Secretary for Rural Affairs, Food and Environment Richard Lochhead MSP, the 49 amendments that had been originally tabled had more than tripled by the time Stage 2 was officially complete. Although some of these were simply formal changes to wording and structure, a number of new insertions were also made by various MSPs. 

Having personally observed the final Stage 2 meeting, it was evident that the Scottish Government and RACCE Committee were pressed for time, retaining amendments which they could not even remember or find amidst the flurry of paperwork. Surprisingly, it appeared that some MSPs were inadequately trained in the legislative process and therefore unable to differentiate between policy ideologies and the practical implementation of legislation. 

One trend that is increasingly apparent (and potentially quite sensible) is that the Scottish Government is trying to better align the existing types of agricultural tenancies, so that they all follow a more generic format. For example, under Chapter 5 (Assignation of and succession to agricultural tenancies) of Part 10 (Agricultural Holdings), assignation and succession are essentially treated as one and the same. The list for those eligible to succeed is broadened to incorporate more distant relatives for both 1991 Act Tenancies and 2003 Act Tenancies, and the grounds on which a landlord can object are also aligned across different types of tenancy.

Claudia Beamish MSP, RACCE Committee member, proposed extending the list of persons eligible to inherit upon the assignation of 1991 Act tenancy (Section 84) to include any person who could be referred to as a ‘longstanding employee’: the criteria being that the employee must have primarily carried out farm work on the subject holding amounting to a period of at least ten years (whether continuously or otherwise). However, no additional amendments clarified who would take precedence if conflict were to arise between a remote relative and a longstanding employee. So this amendment was withdrawn, with a view to Claudia Beamish producing a revised version at Stage 3.

At present the Bill provides a number of options for 1991 Act tenants:

  • To assign their tenancy to any person who would be entitled to succeed under the original circumstances (in accordance with the Succession (Scotland) Act 1964).
  • To assign their tenancy to a ‘near relative’ – a person who falls under the new criteria which in practice will include more distant relatives.
  • To assign their tenancy to a new entrant or to a progressing farmer.
  • To convert their 1991 act tenancy to a new Modern Limited Duration Tenancy (MLDT) - with a minimum term of 25 years - and then serve notice to relinquish their tenancy – an assignation for value.
  • - If the landlord accepts the tenant’s notice then the landlord will have to pay the tenant the amount of compensation due at waygo and the middle value of the holding between vacant possession and if the tenant were to remain in occupation.
  • - If the landlord rejects the tenant’s notice, then the tenant can assign their tenancy but only to a new entrant or progressing farmer.

Unsurprisingly this last point has proved to be most controversial and could be the proverbial straw that breaks the camel’s back, as it now appears to be dividing opinions among the major representative bodies. 

With the grounds for assignation being widened in favour of the tenants, Alex Fergusson MSP aimed to even out the playing field by introducing an additional ground on which a landlord may object to a proposed assignee – requiring the assignee to have a ‘substantial connection with the holding’, although he admitted that this would require subordinate legislation that he himself has not yet got around to fully considering. However this amendment was rejected by those present.

As the Bill stands, the grounds by which a landlord may object to an assignation or succession are as follows: 

  • The person must be of good character (legislation does not provide a definition!) 
  • The person must have sufficient resources to enable them to farm the holding with ‘reasonable efficiency’ (what will be considered as ‘reasonable efficiency’ is as yet unknown.) 
  • If the person has neither sufficient training nor experience in agriculture which would enable them to farm the holding with reasonable efficiency, and is not undertaking a course to remedy this, (again definitions are to follow).

As with any important piece of legislation, one would expect full subordinate legislation to be in place prior to submission to parliament and for any proposals to be well researched and based on fact. Unfortunately, and bizarrely, it would seem the importance of this issue remains to be fully recognised.

Until Stage 3 has been finalised, it is impossible to say exactly what changes the Land Reform (Scotland) 2016 Act will bring, but evidence to date suggests that land agents, landlords and tenants need to actively encourage and demonstrate to those at Holyrood what they believe to be good about the current system and to propose realistic alternative mechanisms to help the Scottish Government achieve their goals.

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