Tenant farmer and landowner organisations in Scotland have pledged to work together to improve confidence in the rent review process until the Scottish government’s Agricultural Holdings Review Group publishes its final report in December.
In an unprecedented agreement, NFU Scotland, the Scottish Tenant Farmers’ Association (STFA) and Scottish Land and Estates (SLE) have devised a protocol intended to create the conditions to allow landowners and tenants to plan and invest with confidence.
The initiative follows a number of recent rent determinations in the Land Court that have given rise to uncertainty about future rent levels.
Until the Review Group reports in December, rent reviews will be carried out as normal, but where agreement can’t be reached between the parties, the new initiative requires landowners and tenants to have followed existing guidelines on rent reviews and introduces an additional “sense check”.
The initiative will be subject to voluntary self-regulation through a review panel comprising representatives from the three organisations, who will examine each case and assess whether it passes a “reasonableness test”.
And in the absence of exceptional factors, the three organisations have agreed that rent adjustments – whether requested by a landowner or proposed by a tenant – should broadly be aligned with inflation as measured by the Consumer Price Index (CPI) and should reflect changes in the CPI index since the last formally recorded rent review.
Cases that are already in the Land Court process will not be referable to this new panel.
NFU Scotland president Nigel Miller described the initiative as a “game changer” – provided everyone bought in to the process.
“A sustainable rent test linked to a robust inflation index must make sense for all those involved and can move rent determination away from confrontation to focus on the economic potential of the holding,” he said.
“The low-cost rent review panel opens the door to an objective review of the rent determination process and the protocols to ensure balance and avoid the costly shadow of the Land Court weighing on negotiation.”