New Scottish rent negotiation plans proposed
New rent negotiation measures could be in place in Scotland in time for May 2013 rent reviews, NFU Scotland has said.
A report published by the Rent Review Working Group, set up by the Tenant Farming Forum, proposes a series of measures.
The group was set up following the landmark Moonzie farm case in February, when the Scottish Court of Session ruled that single farm payment could be used in determining rental values on rented holdings.
The ruling overturned a decision made by the Scottish Land Court in 2010, and it was the first case that tested whether rents paid for short and limited-duration tenancies, created by the Agricultural Holdings (Scotland) Act 2003, could be used to determine the value of other rented holdings.
Measures proposed in the report – Review of Agricultural Rent Review Procedures in Scotland – include no change to Section 13 of the Agricultural Holdings (Scotland) Act 1991, a practitioners guide on how rent reviews should be conducted, establishment of a rent register and development of an expert rent review panel.
Section 13 of the 1991 act is the clause that dictates what can be taken into account during rent negotiations.
“The relationships between tenants and landlords in Scotland have been fairly brutal for a while; the Moonzie case was pivotal in terms of trying to sort out the problems,” said NFU Scotland president Nigel Miller.
NFUS welcomed the proposals, but said it was disappointed no amendment to Section 13 was proposed; it was impossible to compare the conditions of the 1991 act to short and limited-duration tenancies as outlined in the 2003 act, he added.
The union called for a practitioners’ code and rent register to be made mandatory, rather than voluntary, and called for a three-fold approach to rent negotiations:
1. The use of open market comparables backed up by a mandatory requirements for rents to be lodged on a database
2. Any adjustments to rentals then determined through a formula that takes issues such as scarcity, key money and marriage value into account
3. Any rental rate must be judged against a budget for the farm to test the viability of the rent proposed for that business.
Going forward, the TFF needed to beef up the proposals and put them into practice ahead of the next round of rent reviews in May, he added.
The TFF comprises NFU Scotland, Scottish Land & Estates, Scottish Tenant Farmers Associations, RICS Scotland and the Scottish Association of Young Farmers Clubs.