Commissioner’s Code on Leases Welcomed by Sector

Scottish Tenant Farmers Association

News Release

7th March 2019


Commissioner’s Code on Leases Welcomed by Sector

Bob McIntosh, the Tenant Farming Commissioner has, today, issued his latest Code of Practice, “Agreeing and Managing Agricultural Leases”, directed towards landowners, tenant farmers and land agents. This is the sixth Code of Practice issued by the Land Commission and is intended to ensure that there are robust procedures in place to avoid misunderstandings when a lease is being entered into, when changes are made throughout the term of the lease and when a fixed duration lease is being ended.

In supporting this latest code of practice, STFA Chairman, Christopher Nicholson said; “Scarcity of tenanted land is not a new phenomenon and competition for vacant farms has always been fierce. It is true today as it was forty years ago that tenants, having made a successful bid for a farm, are quite likely to sign up to a lease without fully understanding its consequences and implications. Fortunately, the new duration tenancies as well as recent reforms to tenancy law have given a great deal of added protection to the tenanted sector and the consequences nowadays of making a mistake will not be as serious as in the past, when signing a lease committed future generations as well as the present one.

“Similarly, it has not been uncommon for secure tenants to sign away their security of tenure for the sake of obtaining more land, a new shed or even just a rent reduction. Dozens of these tenants are now facing a very insecure future in Limited Partnership tenancies which can and often have been, brought to an end with very little notice.

“Recent legislation has outlawed practices such as post lease and write down agreements for tenant’s improvements, but there are a number of tenants who have now found that they have signed away a valuable asset without realising what they are doing.

“We would join with Bob McIntosh in encouraging all tenants to thoroughly examine their leases and pay special attention to any new agreement they are about to sign. Anyone signing a new MLDT or an SLDT should be absolutely clear what the terms are and who is responsible for what and what happens when the lease reaches the end of its term.

“STFA has also been made aware of some tenants of 1991 secure tenancies who have been asked by their landlord to renew their leases for taxation purposes, for the landlord’s benefit, (leases entered into before 1995 are only eligible for 50% inheritance tax relief, whereas post 1995 leases attract 100% relief). In most cases tenants have taken good legal advice and ensured that the new lease has the same benefits as the old one, including carrying forward tenant’s improvements, but there are a minority where this has not happened and the tenant’s family’s investment in the holding has been lost.

“Reluctant though many of us may be to enrich the legal profession, there are times when consulting a lawyer pays off!”