Three of the leading membership organisations in the country have joined forces to launch an initiative aimed at applying a common sense test to farm rent reviews.
The move, which will involve self-regulation overseen by a review panel is,in the first instance at least, a short-term one and is a reaction to some recent controversy, most notably over the well-publicised 78% rent increase recently set by the Land Court for Roxburgh Mains near Kelso.
The Agricultural Holdings Legislation Review Group (AHLRG) set up and chaired by farm minister Richard Lochhead may come up with answers to address the flaws in the legislation enshrined in 2003 but even with a fair wind behind it the final report will not be ready until the end of this year. Converting recommendations into legislation could then take many months if not years.
The initiative announced today aims to provide a stop gap and has been created following intense negotiations between NFU Scotland, Scottish Land and Estates (SLE) and the Scottish Tenant Farmers Association (STFA).
The plan is that a panel consisting of one officebearer or recent officebearer from each of the three organisations will sit as a panel and be ready and waiting to assess the way in which a rent review process has been conducted.
It won’t quite be a case of knocking heads together but the panel will in the first instance examine the rent review process and make sure that guidelines have been adhered to.
There is no shortage of guidelines with the cross-industry Tenant Farming Forum (TFF) and the Scottish Agricultural Arbiters and Valuers Association (SAAVA) having already published very full guides to best practice.
If these are adhered to the majority of rents should be agreed, as most are now, well before the new panel becomes involved.
If however there is a referral, the panel members will apply a “reasonableness check.” The underlying principle is that in the absence of exceptional factors the rent should be “broadly aligned” to inflation as measured by the Consumer Price Index (CPI) since the last recorded rent settlement.
In a nod to the Roxburgh Mains case where the rent had not been reviewed since 1999 the intention is that the inflation based increase would not exceed 30% in the first instance but any further increase would be phased in over the next three years.
The services of the panel will only apply to 1991 Act secure tenancies and any rent reviews already with the Land Court or cisted awaiting attention will not be eligible.
Of course there is the possibility that either the landlord or tenant will refuse to listen to the three wise men or women of the panel.
In that case the Land Court is the next and last resort and the law as expressed in the Agricultural Holdings (Scotland) Act 2003 will be applied. That of course can involve a frightening degree of expense depending on the level of legal involvement. The proposed review panel will have a minimal application fee, probably around £250.
Summing up the intentions NFUS president Nigel Miller said: “This form of self-regulation gains power not from law but from the three key organisations working together and members standing with them. That consensus can be a positive force now and perhaps in the longer term.”
This hint that the panel could be part of a longer term solution could be significant.
Andrew Thin, who has chaired the tripartite negotiations and is a member of the AHLRG agreed that this could be helpful.
In any event it could be a year or more before any new legislation was in place.
“I see the review panel as being a very low cost approach. It will not involve legal representations and should not be seen as being some sort of shadow Land Court,” he said.
“The idea is that a complainer will make a written submission which will be considered and then the other party will be required to respond, again in writing.”