The land of Scotland and the common good: report

Part Seven Agricultural Land Holdings

Introduction

1 Agriculture is Scotland's most extensive and economically important rural land use. Historically, agriculture was carried out very largely on land leased from land owners by tenants. While the amount of Scotland's agricultural land managed by tenants declined throughout the 20th century and continues to do so, a significant proportion remains tenanted.

2 The relationships between land owners and different types of agricultural tenants, and the future of tenanted agricultural holdings in Scotland more generally, were prominent issues during the Review Group's inquiry and are considered in the following sections.

3 In Scots property law, only land (immoveable property) can be the subject of a lease that binds successor owners and the authority of owners to grant leases over all or part of their property. This is considered one of the basic rights of land ownership. A lease is a contract by which someone (the tenant) is allowed to occupy someone else's land (the land owner's / landlord's) for a finite term (duration) in return for periodic payments (rent). Legislation to safeguard the rights of tenants is amongst the oldest extant Acts in Scots law. The Leases Act 1449 converted leases from a personal right of contract into a right over land by securing a tenant's lease against landlord succession.

4 There has been a long history of legislation governing leases in Scotland. This has dealt with both the overall legal framework governing leases and specific provisions related to the different types of leases that exist. With the former, a relevant modern trend has been legislation to abolish types of perpetual and very long leases by converting them into ownership. Since 1979 for example, a particular type of perpetual tenancy held by 'tenants at will' can be converted to ownership through a right to buy. ^[1] The Scottish Parliament has also both abolished the archaic system of extra payments over and above rent or 'leasehold casualties' in some very long leases (for example, 999 years or more) and reduced the maximum lease allowed in Scots law to 175 years. The conversion of qualifying long leases into ownership is imminent. ^{[2] [3]}

5 The extent to which there are specific statutory provisions to regulate the relationship between land owners and tenants varies greatly with leases for different purposes. Residential leases, referred to in Section 22, are much more strictly regulated than the lease of a building for commercial purposes, such as shops and offices. The legislation governing leases for agricultural purposes, started with two Acts in the 1880s and has evolved into the current arrangement with a number of different types of statutorily defined agricultural tenancies.

6 The first of these two Acts was the Agricultural Holdings (Scotland) Act 1883, which improved the compensation that tenants were due at the end of their tenancy. The second Act was the Crofters Holdings (Scotland) Act 1886, giving greater rights to small land holders or crofters in seven counties in the Highlands and Islands. Crofters only paid rent to the land owner for the land, their houses and other structures on the land being regarded as their own improvements. A third Act, the Small Landholders (Scotland) Act 1911, then extended the principles of crofting to the rest of Scotland and created small landholders as a distinct type of agricultural tenant.

7 This remains the basic pattern today. The agricultural holdings legislation was most recently consolidated in the Agricultural Holdings (Scotland) Act 1991 and the crofting legislation in the Crofters (Scotland) Act 1993. Both these Acts, as amended, remain the primary legislation, while small landholders continue to hold their tenancies under the Small Landholders Act 1911-31. Two new types of statutory agricultural tenancies were also created in 2003 by amending the 1991 Act. ^[4] Therefore, in addition to the full 1991 tenancies, there are also now Limited Duration Tenancies and Short Limited Duration Tenancies.

8 A hundred years ago, in 1912, over 90% of both Scotland's agricultural holdings and agricultural land area were tenanted. By contrast, over 70% of holdings and over 75% of agricultural land are now managed under ownership rather than tenancies. In 2012, 1.65 million hectares, or 24% of Scotland's 5.67 million hectares of agricultural land, was still tenanted. ^[5] There were around 16,500 tenanted holdings. The majority of these were rented crofts, with only about 100 small landholdings and around 6,700 agricultural tenancies under the 1991 Act accounting for the balance.

9 In the first two sections below, the Review Group considers the distinctive position of crofting tenure and the closely related 1911 small landholdings legislation. In the third section, the Group considers the position with tenancies under the 1991 Act.