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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?

INSURANCE POLICY BLAMED FOR LAND COURT RENT BATTLE

INSURANCE POLICY BLAMED FOR LAND COURT RENT BATTLE

LAND COURT RENT DECISION BUILDS CASE FOR REFORM

The Land Court’s recent announcement of its decision to raise the rent on  a Roxburghe Estate farm has bitterly disappointed Scottish tenant farmers .  Yet again the Scottish legal system and tenancy legislation has failed in the setting of a viable farm rent.

Commenting on the case, STFA chairman Christopher Nicholson said: “The Scottish Land Court’s decision to fix the rent for John Elliot’s Roxburgh Mains Farm on the Duke of Roxburghe’s Estate at £48,982, a dramatic increase of over 78%, will deal a devastating blow to Scotland’s tenanted sector.

“Furthermore, in a misleading statement to the press, Roxburghe Estates have inferred that the case was influenced by the STFA legal insurance policy.  However, STFA can confirm that John Elliot was not covered by any insurance scheme which could have provided assistance for legal fees, and therefore insurance considerations had no part to play in the decision not to settle out of court.  Moreover, the inference that STFA has backed this and other Land Court cases is totally unfounded.

“STFA do operate an insurance policy available to members; it is not designed to encourage tenants to pursue a case through the Land Court, but does provide some safeguard and evens the balance of power between landlord and tenant.

“In this situation, faced with changing demands from his landlord, settling a rent out of court was not an option and John Elliot had no choice but to defend his interests through the courts.  The delay in hearing the case resulted from the agreement from both parties to cist (put on hold) the case pending the 2012 Land Court decision on the Moonzie rent review case.

“In making their decision, the Land Court has focused almost exclusively on the evidence of a single open market letting and arrived at an annual rent, which in their own words ‘could not be supported by any budgetary evidence’.  By following the strict legal definition of the open market test as set out by Lord Gill in his ruling on the Moonzie case, the Land Court have driven coach and horses through the advice and thinking provided by various professional practitionerss in light of the Moonzie case including the recently published SAAVA ‘Practitioners Guide to Scottish Rent Reviews’, which emphasises the need to ensure that a farm rent is viable by reference to farm budgets and other settled rents.

“Despite other recent lengthy and costly Land Court cases on rent reviews, the process remains extremely uncertain for both parties.  If a tenant such as John Elliot, himself an knowledgeable and respected farm arbiter with experience of conducting rent reviews, can fall foul of the system then there is little hope for the rest of Scotland’s tenants.  This case clearly demonstrates the need for radical change to the legislation governing rent reviews.

This is a complicated legal judgement and once we have time to digest the detail and matters arising from this decision STFA will be making further comments at a later date.

STFA COMMENT ON LANDLORDS’ RENT PROPOSAL

STFA COMMENT ON LANDLORDS’ RENT PROPOSAL

STFA COMMENT ON SL&E RENT REVIEW PROPOSAL

Scottish Lands and Estates have today signalled a revision of their position on rent reviews.   They are now proposing cross industry discussions which would consider the introduction of productive capacity of a farm as a factor in determining rents.

In welcoming Scottish Lands and Estates’ u-turn on rent reviews following over a decade of stonewalling STFA has insisted that agreement to abandon the use of  open market comparables in 1991 rent reviews must be a prerequisite of any discussions on rent review changes.

 STFA chairman Christopher Nicholson commenting on the news said;  “The industry has been discussing rent reviews in the TFF for over a decade now and has made little progress.  Rents are probably the most contentious issue in landlord tenant relationships, a fact that landlords are only now prepared to acknowledge with the advent of the Agricultural Holdings Legislation Review Group and against a backdrop of land and tenancy reform.

 “SL&E’s olive branch on rent reviews has obviously been offered through clenched teeth but STFA firmly believes that the current rent review system is deeply damaging and requires a thorough overhaul.  We are prepared to discuss solutions with other stakeholders as part of the tenancy review but the question of open market comparables is very much a red line issue.

 “The need for change is indisputable, the tenanted sector is awaiting the Land Court’s decision over the latest rent dispute between Roxburghe Estate and one of its tenants.  This rent dispute will have taken nearly six years to resolve involving over fifteen days in court at astronomical cost.  Whatever the outcome of this case, there can be no clearer demonstration of the need for change.

 “There is a desperate need for rent reviews to become much more straightforward and less confrontational and the industry should look further afield than the constraints of the 1991 Act for a fairer and more suitable way of agreeing rents.  One simple solution, for example, would be to impose a cap on rental increases or decreases linked to an annual index such as inflation.

“The Agricultural Holdings Legislation Review Group have spent the last few weeks taking evidence from tenants and landlords the length and breadth of the country and we look forward to hearing their views on rent reviews in the interim report next week.”

LAND REFORM REPORT WELCOMED BY STFA

LAND REFORM REPORT WELCOMED BY STFA

Report sends strong message to policy makers

The Scottish Tenant Farmers Association has welcomed the final report of the Land reform Review Group published today as a phoenix rising from the ashes.  In contrast to the interim report the Review Group has produced a comprehensive, wide ranging and powerful report on the future of landownership and management in Scotland making sensible and well considered recommendations to diversify land ownership and strengthen rural communities.

Commenting on the report STFA Chairman Christopher Nicholson said; “This is a long report which will take some time to digest but from an initial reading it very much reflects STFA’s thinking over the last few years and will undoubtedly be welcomed by tenant farmers.  Above all the report establishes the link between land and tenancy reform and provides some clear guidance to the Agricultural holdings Legislation Group.

“STFA is especially pleased that the Review Group have recognised the contribution made by tenant farmers in rural communities and the importance of the ‘inter-generational continuity they represent’; a contribution that is rarely acknowledged by policy makers.  The Review Group has also recognised the difficult situation many tenants find themselves in, the bleak future they face and the need for radical reform to the tenancy system.  Tenancy reform is undoubtedly the remit of the AHLRG but it is helpful that the LRRG report has reinforced that need and placed it in the context of land reform.

“The report also comments on the benefits that ownership gives to tenants who freed from the constraints of a tenancy have greater incentive to invest in and develop their businesses.

“The Review Group’s recommendations on the existing tenants’ right to buy are common-sense, the requirement to register an interest in order to trigger a pre-emptive right to buy is unnecessary and has already deterred a number of tenants from registration and the requirement to re-register will account for many lapsed registrations.  Tenant farmers widely support a conditional right to buy which STFA has already recommended to the AHLRG.  We welcome the Review Group’s endorsement, and look forward to seeing how an “actual” right to buy can be applied in the public interest.

“The LRRG’s recommendations to improve the position of Small Landholders by allowing a statutory right to buy will bring a sigh of relief those tenants whose situations have been ignored by successive governments, especially on the Isle of Arran.

“The LRRG report will send out a strong message to policy makers and we hope that many of the recommendations will be implemented as soon as possible.  The establishment of a Lands Commission will be key in monitoring and regulating landownership and management.  STFA does, however, disagree with the proposal to impose non-domestic rates onto farmland.  Although rating farmland could be seen as a useful regulatory tool as well as a means of raising tax the agricultural industry is currently in a state of flux with changes to the CAP regime and volatile markets and the imposition of further cost, especially on tenanted businesses would create added strain to already hard pressed farmers.”

Notes – STFA will be making fuller statement once we have had time to consider the whole report

NEW SL&E TEAM URGED TO ACKNOWLEDGE PROBLEMS IN TENANTED SECTOR

The Scottish Tenant Farmers Association congratulates Lord David Johnstone on his appointment as chairman of Scottish Lands and Estates following Luke Borwick’s seven year tenure of the post.   In welcoming David Johnstone’s commitment to cross industry talks on the tenanted sector STFA also appeals for honesty and openness in recognising the many difficult issues which have been troubling the sector for many years.

Responding to David Johnstone’s inaugural statement STFA chairman Christopher Nicholson said:  “I wish David well in his term as chairman in what will undoubtedly be challenging times as Scotland comes to terms and adjust to what will be far-reaching reforms to our land tenure system.  STFA is always ready to discuss how progress can be made in reforming the tenanted sector but after 10 years of the Tenant Farming Forum the industry is no further forward.

“If we are to make real progress the SL&E’s representatives must be prepared to recognise the deep-seated ailments which are damaging landlord tenant relationships and holding the sector back.  Rent reviews are a prime example where landlords and their agents have steadfastly refused to consider changes to an out-moded rent review formula.   A rent system which favours one side at the expense of the other cannot be fair.

“The tenanted sector is currently under scrutiny and openness and transparency would greatly benefit the review process.  Lack of investment in tenanted holdings has been identified by the Group as one of several key areas holding back the tenanted sector.   The recent report commissioned by SL&E claiming significant investment by estates in tenanted holdings has convinced no one and, what is seen as an attempt to hide the true picture, has done lasting damage to the work carried out by SRUC.  Instead of trying to convince everyone that lack of landlord investment is not an issue through the interpretation and commissioning of expensive reports, it would be more constructive of SLE to address the problem which their own figures so clearly demonstrate.

 “STFA looks forward to working constructively with the new team at SL&E over the coming months and hopes that the new broom will signal a change in direction.  Clinging to the wreckage of an anachronistic land tenure system in Scotland is no longer an option and landowners will have to engage positively in the process of reform if it is not to be taken out of their hands.”

SCOTTISH GOVERNMENT MUST HEED THE NEEDS OF THE TENANTED SECTOR IN FINALISING CAP REFORM

SCOTTISH GOVERNMENT MUST HEED THE NEEDS OF THE TENANTED SECTOR IN FINALISING CAP REFORM

SUPPORTING ACTIVITY AND THE IMPORTANCE

OF THE REFERENCE YEAR

STFA have urged Scottish Government to ensure the new CAP regime is based on support mechanisms targeting those actively contributing to Scottish agriculture.  Following a meeting with Scottish Government officials, STFA are hugely concerned to learn that a number of vitally important issues remain unresolved with only weeks to go until CAP proposals must be announced and submitted to the European Commission.

In particular STFA, along with NFUS, view the government’s intention to abandon the use of 2013 as the reference year as deeply detrimental for the tenanted sector.  A historic based eligibility criteria is essential to halt the land grab taking place as landlords seek to benefit from additional support by ceasing letting arrangements. and to ensure support is only available those who are actively farming the land.  STFA would also agree with NFU Scotland that Scottish Government must make use of the ‘negative list’ and other criteria as further means of ensuring support is targeted at active farmers.

A decision on the architecture of the new scheme is expected in June and final details are still unclear, leaving farmers in a position of great uncertainty.  The CAP consultation and wider discussion with stakeholders have identified an issue with targeting support within the rough grazing region (RGR), with a wide diversity of land type and activity making a single payment rate impossible.  STFA has urged Scottish Government to consider a split within the RGR category or a coupled support payment for the sheep sector as a means of overcoming the issue.  STFA does not believe the recently introduced  ‘French model’ of regional redistributive payments, front loading payments on the first 54Ha, will effectively address the issue of targeting support within the RGR.

Speaking on these issues Christopher Nicolson, STFA Chairman said:

“STFA remain firmly opposed to a move away from using the farmed area in 2013 as a reference point for allocating area based entitlements in 2015.  The consequence of Scottish Governments reluctance to confirm 2013 as the reference year is already being felt, with many tenants losing land as landlords take land back in hand in a bid to benefit from the new scheme.  The evidence shows that much damage has already been done over the last few years as landlords and their agents manoeuvre to repossess land.  This gives STFA huge concern over the future of let land in Scotland.

“Much of the work of the Agricultural Holdings legislation Review Group looking at ways of reinvigorating the tenanted sector will now be put in jeopardy unless the ability fpr landlords to take land back in hand is not  restricted.  As Scotland contemplates what will be the biggest reform to its tenanted sector since 1948 it is vitally important the CAP reform helps rather than hinders this process

“We appreciate the wish of government to simplify the administration of payments but this must not take place at the expense of the objectives and desired outcomes of the new support scheme.  It surely must be imperative that we support activity and profitable agriculture which lies is at the heart of Scotland’s ambitious food and drink strategy.”