Land Reform (Scotland) Act 2016 - relinquishment and assignation provisions: islands community impact assessment

Introduction

The Scottish Government introduced the Land Reform (Scotland) Act 2016 (the 2016 Act) as part of the Scottish Government’s focus on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth.  The main purpose of the Act is to:

• ensure the development of an effective system of land governance and on-going commitment to land reform in Scotland;
• address barriers to further sustainable development in relation to land and improve the transparency and accountability of land ownership; and
• demonstrate commitment to effectively manage land and rights in land for the common good, through modernising and improving specific aspects of land ownership and rights over land.

Sections 110 and 111 of Part 10, Chapter 7 of the 2016 Act modify the 1991 Act by adding a new Part 3A which enables secure 1991 Act tenant farmers without successors to seek to relinquish their tenancy to the landlord for value, or, to retire with dignity, where their landlord does not want to take the agricultural tenancy arrangement back in hand, to assign that tenancy for value.  This allows tenant farmers with no successors to obtain value from their tenancy in order to support them in their retirement.  The provisions enable an eligible tenant farmer to assign their tenancy to a new entrant or a person progressing in agriculture, as defined.

Sections 110 and 111 and the new Part 3A will be brought into force by The Land Reform (Scotland) Act 2016 (Commencement No. 12) Regulations 2020; The Agricultural Holdings (Relinquishment and Assignation) Regulations 2020 and The Agricultural Holdings(Relinquishment and Assignation) (Application to Relevant Partnerships) Regulations 2021.  The Agricultural Holdings (Relinquishment and Assignation) Regulations 2020 set out the procedure for relinquishment and provide a definition of a new entrant and person progressing in farming.  The Agricultural Holdings(Relinquishment and Assignation) (Application to Relevant Partnerships) Regulations 2021 modify the application of Part 3A to Limited Partnership tenancies, allowing those tenants to seek to relinquish their tenancy but not assign.

The provisions provide a mechanism for eligible tenant farmers who wish to relinquish their tenancy to be recompensed for the value of that tenancy enabling them to move forward into retirement in a more structured manner, and provide them with a return.  This policy will also enable secure 1991 Act tenant farmers who do not wish to retire but who wish to relinquish their tenancy for whatever reason, to do so.

The 2016 Act provides the timescale and structure for eligible tenant farmers to negotiate a relinquishment value for their secure 1991 Act agricultural tenancy through an independent valuation process.

The provisions within the three SSIs apply to secure 1991 Act agricultural tenancies across Scotland, including those agricultural tenancies located on islands.  During the Agricultural Holdings Legislation Review Group consultation period some tenant farmers on certain islands suggested that tenant farmers faced specific difficulties for those wishing to access land on their island due to lack of available tenancies.  This issue is not specific to island communities as demand for land and agricultural tenancies outstrips availability on the mainland as well.  In particular, due to the culture and ability to pass a secure 1991 Act agricultural tenancy onto the next generation, this tenancy type does not normally become available on the tenancy market.

Prior to the 2016 Act and these three SSIs, there was no way to enable tenant farmers of secure 1991 Act agricultural tenancies who do not have an  eligible assignee or successor, or a potential assignee willing to take on the tenancy, to bring their tenancy to an end in a way that provides a structured, time limited approach for the tenant farmer, than reverting to the Scottish Land Court or going through a way-go compensation process for claims to be settled.