Agricultural Holdings Legislation Review

20th June 2014

Interim report identifies challenges to overcome.

The main barriers to a vibrant and thriving tenant farming sector in Scotland have been identified in the interim report of the Agricultural Holdings Legislation Review Group.

The Review Group, led by Rural Affairs Secretary Richard Lochhead, has spent the past six months gathering evidence on tenant farming in Scotland and how to achieve its vision of a vibrant and sustainable sector which gets the most from the land and the people farming it.

Its interim report, published today, highlights the main obstacles to achieving this vision and sets out how the Review Group plans to work to find solutions. The main challenges are:

Scotland's shrinking tenant farming sector: Scotland has one of the lowest proportions of rented land anywhere in Europe and there are concerns that shorter leases are replacing longer letting arrangements. This lack of availability of new lets is affecting new entrants and established farmers wishing to expand, which is creating stagnation in the sector.
Constraints on investment caused by: increasing use of short-term lets leading to potential difficulties in obtaining finance; lack of access to direct farm payments for new entrants; restrictions imposed by the statutory framework for 1991 Act tenancies which may be affecting landlords' and tenants’ willingness to diversify and invest.
The balance of rights and risk for tenants and landlords: while there are examples of good tenant-landlord relationships, the Review Group has also heard anecdotal evidence suggesting uncertainty is putting landlords off letting land while some tenants feel they are disadvantaged by current contractual arrangements.
The Review Group will now spend the next six months developing specific recommendations for its final report which will be published by the end of this year.

Speaking at the Royal Highland Show, Mr Lochhead said:"A vibrant tenant farming sector is the foundation of a sustainable future for Scottish agriculture and I am determined to do all I can to reverse its decline. No industry can expect to flourish when there are such significant barriers to new entrants and successful businesses that want to improve, diversify and expand.

"This interim report provides a firm basis for the detailed thinking that needs to be done to overcome the challenges we face, which extend well beyond the reach of government.

“It is no surprise that the issues we are dealing with are complex. For instance, the right to buy, the potential for assignation and rent review procedures for 1991 Act tenancies have generated much interest and many sensitivities.

“The Review Group has done some careful initial thinking on these issues. In particular, there are suggestions that a right to buy may help in certain situations and we also note the Land Reform Review Group have made a number of recommendations around a right to buy for the tenanted sector in their recent report.

“The detail of how any solutions would work, in what circumstances they should be available, will require a lot of detailed consideration and further testing before any conclusions can be reached.

“I am grateful to all members of the Review Group and the many organisations and individuals for their invaluable contributions so far. I am confident that by working together we can bring about changes that will re-establish a vibrant tenanted sector at the heart of Scottish agriculture and the heart of our rural economy."

The Interim Report of the Agricultural Holdings Legislation Review Group can be accessed via: http://www.scotland.gov.uk/Publications/2014/07/5054