About

Posts by :

LONG RUNNING RENT CASES MUST BE CONCLUDED

LONG RUNNING RENT CASES MUST BE CONCLUDED

Scottish Tenant Farmers Association

News Release

26th November

LONG RUNNING RENT CASES MUST BE CONCLUDED

 The Scottish Tenant Farmers Association is concerned at the lack of progress in settling some long running rental disputes in the Land Court despite the consensus amongst industry bodies that rents should be kept at sensible levels pending legislative change.  Although the recent rent initiative does not apply to cases sisted (put on hold) to the Land Court, it was hoped that the spirit of agreement would influence rent disputes already in the Court process.

Commenting on the situation STFA spokesman Angus McCall said: “With the November term date imminent it would seem that the recent industry rent initiative has encouraged most rent reviews to be settled at sensible levels. However we are aware of a handful which have been left to the last minute and may be referred to the Land Court to keep negotiations open.  We hope this practice will be outlawed in the forthcoming review to stop the Land Court being used as a way of increasing the pressure on tenants.  Rents should only be referred to the Land Court, or preferably some form of arbitration or expert determination, if there is a genuine dispute over the level of rent being demanded.

“One of our main areas of concern relates to the number of unresolved rent review cases still lying unresolved in the Land Court, there are more than a dozen, some since 2008.   This places an intolerable strain on the families affected who have spent years facing the uncertainty of an ongoing rental dispute with the bleak prospect of a Land Court hearing sometime in the future.  It is unbelievable that rent disputes are allowed to continue for such a long period of time and it is doubly disappointing that the current consensus over sensible rent settlements has not done anything to bring them to a conclusion.

“We expect the AHLRG to make some robust recommendations on the conduct of rent disputes and the way they are handled by the Land Court.  Since 2004 over 200 rent review cases have been referred to the Land Court but only 4 rent review cases have actually come to Court.  This is not because of amicable settlements but because the alternative is to face bankruptcy through the Court process.  The move from arbitration to the Land Court has failed the rent review process and until change can be brought about landlords, their agents and tenants must abide by the voluntary rental initiative and that includes those stuck in the Land Court.”

CAP PAYMENTS MUST BE TARGETED AT ACTIVE FARMERS

CAP PAYMENTS MUST BE TARGETED AT ACTIVE FARMERS

CAP PAYMENTS MUST BE TARGETED AT ACTIVE FARMERS

The Scottish Tenant Farmers Association has called on the Scottish Government to tighten criteria for activity rules in the new CAP regime to ensure that only genuinely active farmers receive entitlement to basic payments.  Implementation rules are still to be finalised and STFA considers that there needs to be much more rigorous definition of active farmers and what constitutes agricultural activity.  STFA is also concerned that the Government may not be implementing 2013 as the reference year for claiming entitlements – a measure designed to limit the damage being done to the tenanted sector by landlords bringing tenancies to an end to take advantage of the new CAP rules.

 Commenting on the latest CAP developments STFA chairman Christopher Nicholson said: “In announcing the CAP agreement in June the Cabinet secretary promised to “make every effort to target every public pound at genuine activity – to target those who wear dirty wellies not comfy slippers”. As the rules stand this is not going to happen.  There is nothing to prevent a landowner from renting his land out on a seasonal arrangement while being classified as an active farmer picking up receiving support payments and also being able to receive tax benefits available to working farmers.

 “We would like to see the activity rules strengthened to include proof that the active farmer’s main income is from agriculture, that he is in occupation of the land, that he is taking the entrepreneurial risk of the farming activities on the holding, and that he is in control of the day to day management of the holding.  We can see no justification for anyone to be in receipt of SFP unless they are actually engaged in farming activity on that land.  This concern relates equally to contract farming arrangements where the “farmer” frequently shares very little risk with the contractor.

 “There would appear to be very little joined up thinking between CAP reform and tenancy reform.  At a time when the government is seeking to revitalise and expand the tenanted sector and create more opportunities for new entrants the CAP regime is in danger of achieving the opposite by discouraging land to be let and of encouraging a new breed of armchair farmers who will be able to sit back and receive support payments for very little effort.

 “With a restricted CAP budget and the move to an area payment it is important, even at this late stage, for the government to use the flexibility it has to deliver support payments where they are needed rather than allowing the payments to be used as a return on investment in land.”

 

Government survey shows value of farm ownership and security of tenure

Government survey shows value of farm ownership and security of tenure

News Release

Scottish Tenant Farmers Association

12th November 2014

 Government survey shows value of farm ownership and security of tenure

The Scottish Government has now completed its research into the tenanted sector with the publication of a survey of owner occupiers’ views on tenant farming.  This follows an extensive series of studies carried out over the last few months.

The latest study elicited 337 responses representing a 12% response rate compared to landlords 35% and tenants 53%.  The area of land owned by the sample of respondents has hardly changed since 2000 and is made up of medium sized farms of about 350acs.  More than half of respondents were over the age of 60.  This survey clearly only represents the views of a small number of owner occupier farmers and may not be representative of the whole.

Commenting on the results of the survey STFA chairmen Christopher Nicholson said; “The majority of farmland in Scotland is owner occupied and it is surprising that there was such a low response rate to this survey, but although this survey is limited in statistical significance it has produced some interesting results.

“Contrary to the expectations of many landlords there would seem to be considerable support for granting tenants the absolute right to buy, probably because owner-occupiers appreciate the value of owning their own farms.  More than half of those taking part in the survey (56%) thought that all or certain categories of 1991 tenants should be granted an absolute right to buy their farms.

“87% of the sample of owner occupiers had taken ownership of their farm since 1945, and it is likely that majority of these family businesses were originally tenants who have had the opportunity to buy their holdings.  It comes as no surprise to us that these former tenants recognize the value of ownership in terms of enabling their businesses to borrow, invest and grow. Indeed there are examples of owned and tenanted land up and down the country which show the contrast and different levels of investment between tenanted and owned farms.

As well as agreeing with ARTB for tenants the majority of owner occupiers sampled also recognized the importance tenants’ being able to pass on a viable business to a family member.  Succession provisions are a significant hurdle for tenants and it is only commonsense that the AHLRG are working on proposals to allow wider family succession for tenants, but they must not lose sight of the importance of opening assignation opportunities to allow a wider group of aspiring tenants access to secure tenure.

“History has shown that the purchase of holdings by tenants has allowed much higher levels of investment compared with those that have remained in the tenanted sector.  Putting tenants on a level playing field with owner-occupiers with regard to ability to invest is a key challenge for the AHLRG.  Maintaining and preserving the secure tenure model must be a priority of the review to provide future generations of tenant farmers with the confidence to invest in and grow their businesses .”

 

 

 

STFA STRESS IMPORTANCE OF SECURITY FOR TENANT FARMERS

STFA STRESS IMPORTANCE OF SECURITY FOR TENANT FARMERS

The Scottish Tenant Farmers Association has urged the Agricultural Holdings Legislation Review Group (AHLRG) not to lose sight of the importance of maintaining security of tenure and encouraging investment in tenanted farms.

The AHLRG has just concluded a final round of public meetings where they tested their thinking in in front of mixed audiences of landlords and tenants.  Tenant reaction to these meetings has been mixed with many expressing disappointment that some of the more progressive ideas have become watered down.

STFA Chairman Christopher Nicholson who attended several of the meetings said: “There has been some good stuff coming out of the Group’s thinking.  They are on the right track in the proposed changes to rent reviews.  Improved compensation for tenant’s improvements is welcome as are greater rights of succession and assignation for family members.  Our calls for an ombudsman have been heeded and it looks as though the Group now recognise that the ombudsman must have statutory powers and codes of practice must be mandatory.

“However, there seems to be doubt emerging over the future of plans for open assignation of 1991 tenancies which the Group had hailed as a potential solution to many of the problems found in the tenanted sector.  STFA welcomed this initiative as a way of encouraging much needed investment in tenanted holdings whilst providing older tenants a route to retirement to allow new blood access to secure tenancies.

“The much diluted proposal to limit assignation to lifetime Limited Duration Tenancies is seen as a short term-fix signalling the demise of the secure sector which has been the backbone of Scottish agriculture for the last sixty years. Food production is just as important now in Scotland as it was when security was introduced and there are people who want to be part of that economy and security is an essential ingredient for investment.

“It must be in the public interest that tenanted land under secure tenure is preserved as a resource for future generations.  Turning the clock back to the days before security of tenure when tenants were at the beck and call of their landlords is a bleak prospect and one which will only add fuel to the demand for ARTB.  More importantly, the review will miss the opportunity to breathe life into a stagnant tenanted sector and rural communities by failing to put the farming ladder back in place and encouraging innovative projects for new entrants such as share farming.

“We know of many landlords who are supportive of open assignation of secure tenancies, recognising the measure as a long term solution to key problems which have vexed the tenanted sector for decades.  Such pragmatism has been welcomed by tenants and curbed calls for an ARTB during the course of the review.  However, there is a very powerful minority of landlords in the background who vehemently oppose such reforms. We believe this opposition to be short sighted and risks further deep discord in the sector.”

Ag Holdings Review Group Meetings

AGRICULTURAL HOLDINGS LEGISLATION REVIEW GROUP –

 

STAKEHOLDER ENGAGEMENT

As part of the next stage of their stakeholder engagement programme, members of the Agricultural Holdings Legislation Review Group will be holding open meetings at the following locations across Scotland:

Thursday 09 October 2014 – The Cross Keys Hotel, 36-37 The Square, Kelso, TD5 7HL from 19.00pm to 21.00pm

Monday 27 October 2014 – Porterhouse Restaurant, Thainstone Centre, Inverurie, AB51 5XZ from 19.00pm to 21.00pm

Tuesday 28 October 2014 – The Royal Hotel, 55 Henderson Street, Bridge of Allan, FK9 4HG from 19.00pm to 21.00pm

Wednesday 29 October 2014 – Empire Suite, The Cairndale Hotel, English Street, Dumfries, DG1 2DF from 19.00pm to 21.00pm

Members of the Review Group will discuss their emerging thoughts on their proposals and are keen to hear from tenant farmers, their landlords, landowners and other interested individuals on their views on the proposed approached.

STFA OPEN DAY PROVIDES TEST BED FOR TENANCY REFORMS

STFA OPEN DAY PROVIDES TEST BED FOR TENANCY REFORMS

STFA OPEN DAY PROVIDES TEST BED FOR TENANCY REFORMS

Tenancy reform will be the focus of an open day to be held next week (Thursday 23rd Oct) on an Aberdeenshire farm where tenant farmers will have the chance to put the Agricultural Holdings Legislation Group’s (AHLRG) latest thinking to the test.  The review group have been conducting exhaustive research into the operation of tenanted sector and are now sharing their ideas with the industry in a series of meetings before finalising their report, due in December.  Well known tenancy expert, Hamish Lean, and other members of the Group will also be attending.

The open day is to be held on Craskins Farm near Aboyne, a 700 mixed unit tenanted by the Ross family.  The land is rented from the MacRobert Trust and is made up of 1991 tenancies, a Limited Duration Tenancy and seasonal grazings.  Farming enterprises include beef cows, sheep and malting barley with all progeny finished at home.

The mix of land holdings and the range of fixed equipment provided by landlord and tenant will provide an ideal practical test bed for the Review Group’s proposals.   Rent reviews, are due for a shake up as the AHLRG seek to base rent setting on the productive capacity of the farm rather than on the open market – an approach tenant farmers have been advocating for well over a decade.  The open day will provide an opportunity to examine how a new production based rent system might work on the ground using practical examples.

Other topics up for discussion will be tenants’ improvements, succession and assignation of tenancies and the creation of opportunities for new entrants to the industry.  The meeting is open to members of STFA and non-members are welcome to join on the day and should register beforehand.

 

Notes for Editors:

The open day is to be held at at Craskins Farm Tarland,  Aboyne Aberdeenshire AB34 4TJ

(By kind permission of the Ross Family)

Thursday 23rd October 2014

Registration at 11.00am

To book contact STFA : stfa@tfascotland.org.uk

Tel: 0140863 3275 or 07767756840

 

Members of the Ag. Holdings Review Group will be in attendance

GREENING THE CAP

FAQ’s on Greening the CAP

 

The Scottish Government has published a Greening FAQ on the CAP Website – see link below.  This is a “living document” and will be updated as clarification is received on certain issues from the Commission and as further decisions are taken.

This guidance is welcome with the current uncertainty over the implementation of the CAP and should help producers decide their  plans for next year.

To access the FAQs please click here

JOINT INITIATIVE LAUNCHED TO BRING SENSE AND STANILITY TO RENT REVIEW PROCESS

To avoid any confusion regarding the recent agreement between NFUS, STFA and SL&E  the news release and full text of the joint memorandum can be found below.

NFUS, Scottish Land & Estates and STFA promote stability and confidence in rent determination process

 The three main membership organisations representing landowners and tenants in Scotland have launched an industry led initiative designed to improve confidence in the rent review process for 1991 Act tenancies.

The initiative from NFU Scotland (NFUS), Scottish Land & Estates (SL&E) and Scottish Tenant Farmers’ Association (STFA) reflects the fact that the Agricultural Holdings Legislation Review Group (AHLRG), is considering the issue. The initiative from the three organisations is voluntary but is intended to ensure stability until any emerging AHLRG recommendations on legislative changes can be implemented.

The initiative also follows a number of recent rent determinations in the Land Court which have given rise to some uncertainty about future rent levels.  Believing that predictability about future rent levels for tenanted farms is fundamental to a healthy rented sector within Scottish agriculture, the groups want to create the conditions to allow landowners and tenants to plan and invest with a degree of confidence.

On process, rent reviews will continue to be carried out as normal. However, where agreement cannot be reached, 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 senior office bearers (or recent former office bearers) from the three organisations who will examine a case and assess whether it passes a ‘reasonableness test’.  It works on the principle that, in the absence of exceptional factors, 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. In cases of long overdue rent reviews additional guidelines have been agreed to ensure that rent increases are implemented in a series of reasonable steps.

Statutory requirements for rent reviews will continue to apply. The establishment of a self-regulatory review panel does not affect landowners’ and tenants’ rights under the 1991 Act. The initiative seeks simply to ensure that statutory requirements and published Tenant Farming Forum guidelines are followed by all in a reasonable manner.

Cases that are already in the Land Court process will not be referable to this new panel.

Nigel Miller, President of NFU Scotland said:

“With the final report of the Ag Holdings review group due in December, ongoing and future rent reviews face continued concerns over both rent determination and the Land Court. In that brittle negotiating environment, some form of stability is vital.  As an interim measure, this initiative can be a game changer provided those on the ground buy-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.  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.

“This form of self-regulation gains power not from law but from the three key organisations working together and members standing with them. That consensus can be a positive force now and perhaps in the longer term.”

David Johnstone, Chairman of Scottish Land & Estates, said:

“The vast majority of farm rents are agreed amicably and represent good value and there is plenty of evidence to suggest that the actual rent review process, as it stands, works. However, we recognise the concerns of some landlords and tenants who feel that when agreement cannot be reached the cost and angst of a protracted process that in a few cases can end up in the Scottish Land Court is something that should be avoided if possible.

“This interim agreement provides another voluntary mechanism and sense check. Rent reviews should continue as normal but this initiative should give the industry more comfort and confidence. It is both refreshing and reassuring that all the parties have come together to create this unified interim recommendation as we all recognise the importance of a healthy tenanted sector.”

Following the launch of the joint initiative, STFA Chairman Christopher Nicholson said:

“The method of setting farm rents in Scotland has been a long standing concern of STFA, and recent court cases have demonstrated the difficulties and uncertainties of relying on the current legislation to set a viable and sustainable rent. Until new legislation can be put in place, this measure should return an element of control to rent determinations, and with the backing of all stakeholders sends a clear message from the industry that rent reviews should be conducted responsibly and in accordance with published guidelines.

“With the tenanted sector under scrutiny while legislation is being reviewed, it is in everyone’s interest to support this joint initiative and follow the guidelines which aim to set sensible rents without the stress, costs and uncertainties that have become associated with rent reviews. All tenants undergoing a rent review are strongly advised to get in touch with their representative organisation for further guidance.”

The full text of the joint agreement can be accessed   here

STFA Response to SL&E statement on Roxburghe rent case

STFA Response to SL&E statement on Roxburghe rent case

Following today’s comment on the Roxburghe rent case by Scottish Lands and Estates STFA have issued the following statement.

Scottish Lands and Estates are following the Roxburghe factor’s unhelpful line in the blame game.  It is wholly inappropriate and in poor taste to try and apportion blame in a court decision which may yet be subject to appeal.  There are always two sides to every dispute and Lord Johnstone’s remarks are at odds with others involved in the case.  Moreover, contrary to the tone of Lord Johnstone’s comments, the tenant would have preferred to have settled the rent but not at a rate which, like for like, would be much higher than neighbouring farms on the estate.

There have already been inaccurate and misleading assertions made by Roxburghe Estates in their press release and these need to be addressed*.  SL&E should also get their facts right.  The rent of Roxburghe Mains, according to the Land Court’s papers was last reviewed in 1999, not 1996 and should be seen in context.  An important pint as Scottish Government statistics show  ‘between 1998 and 2008 there was little change in the average rent (and hence a reduction in real terms). The average rent then increased by 15 per cent between 2008 and 2011’. In comparison the rent on Roxburghe Mains, fixed by the Land Court rose by 78% between 1999 and 2009.

Rather than trying to justify what the Court has described as a “dramatic rise” Scottish Lands and Estates should now reflect on the suitability of the current rent review process.  Calls for “constructive and transparent discussions” between landlord and tenant will not heal the sores created by a dysfunctional system which plainly favours one side and takes little account of the productive capacity of the holding.

 

*See previous news release

LAND COURT DECISION – A FAIR RENT?

LAND COURT DECISION – A FAIR RENT?

The outcome of the rental dispute between Roxburghe Estates and their tenant John Elliot is deeply disappointing for farm tenants in Scotland and the implications for agriculture and the tenanted sector are serious.  This latest decision from the Scottish Land Court demonstrates beyond all doubt what STFA have been saying for many years now that the system of setting farm rents is truly in tatters and a complete overhaul can no longer be avoided and must be tackled in the current review of tenancy legislation.

The move in 2003 from statutory arbitration to the Land Court was expected to produce a quicker, cheaper and fairer means of resolving disputes.  Patently this has not happened and the situation has become worse.  The obvious conclusion must be that the fault lies with the rent test which has made rent reviews overly complex and inherently confrontational.  Creating a simpler way of reviewing rent continues to be a priority of STFA and we will be submitting fresh ideas to the Agricultural Holdings Legislation Group.

This latest decision from the Scottish land Court underlines the unsuitability of using a court of law to resolve what is essentially a valuation issue and this result will do little to improve relationships between landlords and tenants.

In the press release from Roxburghe Estates the factor, Roddy Jackson, has tried to apportion blame to the tenant for the length of time taken to bring the matter to court.  However, it must be noted that delays were inevitable due to the pending ruling on the Moonzie rent case.  Mr Jackson continues by castigating the tenant for not agreeing settle out of court and insinuating that the decision not to settle may have been influenced by an STFA insurance scheme for legal costs.

Mr Jackson’s allegation is totally erroneous as Mr Elliot carries no such cover and insurance considerations have played no part in decision making.  It is extremely misleading of Mr Jackson to make such public claims against Mr Elliot and STFA and it is now incumbent upon him to offer a retraction of his statements.

This unfounded accusation is compounded by notes to editors quoting evidence given by Angus McCall in a previous rent case with the obvious inference that STFA has been directly involved in the conduct of other rent court cases, this is categorically untrue.

Whilst STFA provides comprehensive business and litigation insurance cover, it is precisely that – an optional insurance cover which may assist an individual tenant and is certainly not a war chest. In the first rent case (Moonzie), STFA members voluntarily raised £60,000 to help the tenant contest the landlord’s appeal against the Land court’s decision, in the interest of all because of the precedents which would be set. This sum of money was raised specifically to support the High Court appeal and represented a modest contribution towards the total cost of the case.

STFA is prepared to be open about any involvement in rent cases and it is now time to pose the obvious question as to the extent of SL&E’s involvement in similar cases?

This result will be a devastating blow to the Elliot family who felt they had no choice but to stand their ground against heightened rent demands following Lord Gill’s ruling on the Moonzie rent case which has proved a game changer in raising rent expectations.  Mr Elliot is now faced with a 78% rent rise for the period 1999 to 2009 in stark contrast to Scottish Government’s statistics which indicate an average rise in real terms over the same period of less than 15%.  How can this be considered a fair rent?