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Landlords to consider farm capacity in rent reviews

Survey responses must be submitted by October 20
Survey responses must be submitted by October 20

Scottish landowners have pledged to consider the productive capacity of a farm during rent negotiations with tenant farmers.

Landowners body Scottish Land and Estates (SLE) last night said it had changed its position on rent reviews calling for cross-industry talks on the matter.

SLE said it had put forward a second submission to the government’s Agricultural Holdings Review Group, to say it would consider allowing the productive capacity of a farm to be used as a factor in determining rent levels.

The organisation’s chairman David Johnstone said:  “We supported the conclusions of the independent Rent Review Working Group and do not believe that the legislation, as amended, requires major overhauling.

“However, this issue continues to cause great concern to tenant farmers and we are committed to seeking cross-industry agreement on key issues.”

He said SLE supported calls for a change to section 13 of the legislation to consider adding the productive capacity of a holding as a factor in rent negotiations.

“But we would wish to ensure that comparable evidence, including adjusted Limited Duration Tenancy rents) is also retained,” added Mr Johnstone.

We also think it appropriate a review addresses investment by landlords in new fixed equipment.”

SLE said cross-industry talks would also provide a platform to discuss other tenancy issues such as compensation at waygo and the establishment of an industry ombudsman.

Scottish Tenant Farmers Association (STFA) chairman Christopher Nicholson last night said:  “SLE’s olive branch on rent reviews has obviously been offered through clenched teeth but STFA firmly believes that the current rent review system is deeply damaging and requires a thorough overhaul.”

He said the tenants body would welcome the opportunity to discuss solutions to problems in the tenanted sector with other stakeholders, but described the use of open market comparables as a a “red line issue”.

“The need for change is indisputable – the tenanted sector is awaiting the Land Court’s decision over the latest rent dispute between Roxburghe Estate and one of its tenants,” said Mr Nicholson.

“This rent dispute will have taken nearly six years to resolve involving over 15 days in court at astronomical cost.  Whatever the outcome of this case, there can be no clearer demonstration of the need for change.”

He suggested one simple solution to rent reviews would be a cap on rental increases or decreases linked to an annual index such as inflation.

Aberdeen-based independent consultant James Dick, who chairs the Scottish Agricultural Arbiters and Valuers Association (SAAVA), said:  “Taking account of what practical, hard-working tenant farmers are doing on the ground they rent, is better than entirely relying on sometimes invidious comparables.

While it is to be hoped that this will lead to fewer disputes on rents, there will obviously firstly need to be agreement on what farming system a typical tenant would carry out on the holding, including crop yields and stocking densities, in order to establish the productive capacity of the holding.”

The government’s agricultural holdings legislation review group is set to release an interim report on its findings, followings months of discussions with both landlords and tenants, at next week’s Royal Highland Show.

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