A new era for farm tenancy law

The majority of the Agricultural Holdings (Scotland) Act 2003 is now in force, introducing much needed changes to farm tenancy law in Scotland. The Act is the product of balance and partnership. The short limited duration tenancy and limited duration tenancy are closely modelled on proposals developed jointly by National Farmers Union in Scotland and Scottish Landowners Federation.

I am conscious that some solicitors may have liked to see fewer restrictions on freedom of contract, or something akin to English farm business tenancies.  But farm tenancies cannot be compared with commercial leases. Their purpose is often as much residential as commercial. Farm business tenancies might reflect English circumstances, but they do not suit Scottish needs because rural communities and the rural environment depend on successful businesses that will both attract investment and in turn invest in the land. Leases lasting only two years (the median term of farm business tenancies in England) will not achieve this, but limited duration tenancies will allow the fruits of such investment to be reaped.

The balance that underpins the new Act also ensures that it can protect landlords’ reasonable expectations while extending tenants’ rights to manage farmland effectively. For instance, a tenant wishing to diversify must ensure their activities are consistent with the reasonable rights and expectations of the landlord. The changes should not impact on responsible landlords.

The right to buy in Part 2 of the Act, due to be implemented in late spring, also adheres to these principles: tenants will have a statutory pre-emptive right to buy when the landlord wishes to sell – as long as they pay full market value for the land. The only restrictions in place are those necessary to make this process work.

The new Act is the product of almost six years’ work in close consultation with the industry, and is supported by the main bodies representing landlords and tenants. Professional advisers will require to adjust, but I am confident that they too will come to value the new Act.