Tenant Farming Forum’s proposal

Granting a tenant the absolute right to buy (ARTB) his or her farm from the landowner as a last resort in a dispute, is a surprise conclusion by NFU Scotland in its submission to the Agricultural Holdings Review Group.

Wednesday, 23rd April 2014, 9:00 am

However, the union stresses that its favoured option to revitalise the tenancy sector and encourage landowners to let land is the appointment of an independent adjudicator, backed up by new legal standards, improved tax incentives and a low-cost dispute resolution system to avoid the current costly alternative of the Scottish Land Court. The union’s acceptance of the concept of ARTB – even as a last resort and the ultimate sanction against landlords who repeatedly fail to meet their obligations – is likely to incense the landowners’ organisation, Scottish Land and Estates, who see ARTB as an “unwarranted attack on property rights and destructive to the farming industry.” SLE has thrown out an olive branch by suggesting an extension to the Tenant Farming Forum’s proposal for an Office of Scottish Tenant Farming to “name and shame” landlords and tenants who engage in bad practice and an amnesty for farm tenancy improvements to enable tenants to register improvements eligible for compensation at waygo. But SLE calls for a “complete rejection” by Government of calls for an absolute right to buy.“We need to create a framework for the 21st century which inspires confidence in farmers and those who let land,” says SLE chairman, Luke Borwick. “The alternative is the introduction of measures that are rooted in radical ideology and narrow self-interest which, instead of revitalising the “tenancy” sector, will run it into the ground.“It is a scandal that the fate of much of the current – but especially the next generation – of Scottish farmers is being jeopardised by agricultural issues being turned into a land-reform political football.”However, NFU Scotland makes the point that there is currently no route to address long-term failures within tenancies and suggests that ARTB may have that role.“As a tool to resolve failures, ARTB has the ability to provide an answer in some circumstances and is seen by some as a land reform tool which can deliver wider ownership,” the union’s submission contends.“However, we do not consider that it is a complete answer due to many tenants inability to purchase their farms and the limited scope of proposed rights.”The union also warns that the introduction of ARTB would have wider ramifications and could impact on secure tenancies.“We believe that the adjudicator is the best approach for the long-term future of the industry,” the union concludes. “The use of an independent adjudicator to intervene when failure occurs could be of value to the industry.”The point is also made that the adjudicator would have a role where tenants disregard their obligations.“The ultimate sanction for a tenant in this instance would be the loss of the tenancy after repeated failings,” the union states. The Scottish Tenant Farmers Association (STFA) also sees the need for an ombudsman or regulator and is suggesting the creation of a Lands or Tenancy Commission to carry out this function and act as an interface between landlord and tenant. But the association make their view on ARTB clear abundantly clear: “The commission could also have a key role to play in facilitating and implementing an extension to the right to buy legislation for tenant farmers.”The Agricultural Holdings Review Group is currently gathering evidence from interested parties and such is the importance that the Scottish Government attaches to the review that the Cabinet Secretary for Rural Affairs, Richard Lochhead, is chairing the group himself. The review has been prompted by concerns about the lack of land being made available for renting – landowners would claim because of the political threat of ARTB – and the difficulties this creates for young farmers and new entrants getting a start in farming. Many tenancies have continued on a perfectly amicable basis for generations but there are big issues surrounding rent reviews (especially the use of rents paid for short duration tenancies as comparables when fixing the rent of a tradition long-term tenancy) and the role of firms of land agents who are often viewed as the “villain of the piece”, the payment of compensation to tenants on waygo for improvements which they have paid for themselves (which is seen as acting as a disincentive to tenants to retire), lack of investment by landlords, the right of succession and the assignment of tenancies and the need for a more favourable tax regime to encourage landowners to offer farms for let. NFU Scotland president, Nigel Miller, who has been chairing a series of nine members’ meetings throughout Scotland in recent weeks to gather views, says it is clear that long-term personal relationships are the backbone of a successful tenancy sector.“In some parts, the relationship between landlords, tenants and third parties are fractured,” he points out. “Where relationships are broken, the introduction of ARTB or other forms of radical intervention are high on the agenda for tenants who feel that this offers an escape route from what they perceive to be a dysfunctional system.“On balance, the union opposes the introduction of ARTB and strongly believes an independent adjudicator could close down chronic problems and presents a strong, positive way forward to rebuild the tenanted sector.”Mr Miller adds: “A healthy and vibrant tenanted sector is vital for the future of Scottish agriculture. It underpins may established farming businesses that are the core of food production and communities the length and breadth of Scotland.” It is a thorny issue and a sensitive one and the union is clearly treading on egg shells in framing their submission. But the union is right in their assertion that granting the ARTB – except perhaps in extreme cases – will not provide the answer. In fact, it will have the completely opposite effect to the outcome which everyone is seeking.