The land of Scotland and the common good: report

Section 27 - Small Landholdings

1 A particular type of agricultural tenant in Scotland concerns those who hold their land under the Small Landholders Acts 1911-1931. The character of these small landholdings is similar to crofts and the legislation governing them has a shared history with crofting. However, while once numerous, there are few Small Landholders left in Scotland. The Review Group considers that the circumstances of these tenants has been largely neglected by successive Scottish Governments. ^[35]

2 The Crofters Holdings (Scotland) Act 1886 provided a statutory framework governing the relationship between tenants and landlords over small holdings where only the land (as opposed to the house and other structures) is leased. The legislation provided the tenants with rights of security of tenure, succession, fair rents and compensation. However, as described earlier, the restriction of the application of the 1886 Act to seven counties in the Highlands and Islands, meant the qualifying tenants under the legislation were restricted to those counties.

3 The Small Landholders (Scotland) Act 1911 then sought to extend the principles of crofting tenure to the rest of Scotland. The purpose of the Act was " to encourage the formation of small agricultural holdings in Scotland and to amend the law relating to the tenure of such holdings (including crofters' holdings)". The Act provided that the Crofters Acts were to be read as if the expression " landholder" were substituted for " crofter" and that the Act " shall have effect throughout Scotland". ^[36]

4 The 1911 Act, while giving extra rights to existing small holders outside the Crofting Counties, was related to the Government's land settlement programme and empowered the Board of Agriculture created by the Act to establish new holdings. The Act also obliged the Board "to compile and from time to time revise a register of small holdings throughout Scotland". ^[37] However, while the register was started in 1912, it was suspended during the First World War and never updated after that.

5 The 1911 Act was followed by the Land Settlement (Scotland) Act 1919 and the Small Landholders and Agricultural Holdings (Scotland) Act 1931. The Crofters (Scotland) Act 1955 then re-introduced the separation between croft tenancies and other small landholdings (which continued to be held under the Small Landholders Acts 1911-31). When Scotland's agricultural tenancy legislation was consolidated in the Agricultural Holdings (Scotland) Act 1991, which remains the primary legislation, the Act did not deal with crofts or small landholdings. Crofting legislation was then consolidated through the Crofters (Scotland) Act 1993, which also remains the primary legislation. As a result, small landholders are still being dealt with under Acts which have not been updated for over 80 years.

6 So while crofters and agricultural tenants have continued to benefit from general improvements in their governing legislation, the tenants still holding under the Small Landholders Act 1911 have not. They have also missed out on the 'right to buy' legislation. As outlined above, their holdings are similar to crofts in that typically only the land is leased and they have also shared some of the same legislation as crofters. ^[38] However, the statutory right of crofters to buy their croft which was introduced in 1976 was not and has not been extended to the 1911 tenants. In addition, these small landholders do not have the pre-emptive right to buy their holding, which was given in 2003 to agricultural tenants holding under the 1991 Act. ^[39]

7 A significant change was, however, introduced as part of the Crofting Reform etc Act 2007. This allowed Ministers to designate areas for crofting tenure outside the Crofting Counties and also amended the 1993 Crofting Act to provide a process by which small landholders under the 1911 Act could convert their small holding into a croft. The first and only designation order came into effect in 2010. ^[40] This covered those parts of the Highland Council area not within the Crofting Counties, including the former county of Nairn. The Order also covered Moray, three parishes in the Argyll and Bute Council area, Arran and the Cumbraes. ^[41]

8 The inclusion of Arran was particularly significant in this context, as small landholders there have been most prominent in raising the issues faced by them and other small landholders. Scottish Ministers had undertaken to improve their position through the Crofting Reform etc Act 2007 and the Scottish Government Minister of Environment and Climate Change at the time is reported to have announced at a public meeting on Arran that it was his intention to 'right the wrongs inflicted on the Island of Arran 121 years previously' when the island was not included in the areas covered by crofting tenure in 1886. ^[42] However, the evidence to the Review Group demonstrates that the few small landholders that remain still face difficulties with their tenancies (see Section 28). ^[43] The Group therefore welcomed the Scottish Government's decision in early 2014, to include agricultural tenancies under the 1911 Act as part of its current Agricultural Holdings Review.

9 Small landholders under the 1911 Act were, initially, very numerous, but no statistics on their original number are available as the register of smallholders was not developed by the Board of Agriculture. While it is recognised that their numbers have declined ever since, there is still no clear information on the number and distribution of these tenancies, and it is thought that very few now survive. The Group understands that only around 16 are now left on Arran, down from an estimated 200 or more in the 1920s and '30s. Holdings where the family succession ends revert to the landlord, who is not required to re-let it as a small landholding, and the Group understands that all the remaining small landholders would be able to trace their antecedents in the holdings back well before the 1911 Act. ^[44]

10 The Agricultural Census for Scotland for 2012 gave an overall total of 104 for the number of small landholdings. That number is only based on a sample survey and the total varies to some extent year to year. However, the sample is relatively big (38% of agricultural holdings in Scotland responded in 2012) with limited fluctuation over recent years in the total for small landholders. The average annual total for the five years 2008-12 was 97. The total area given for these small landholdings in the Agricultural Census also fluctuates year to year, but is around 5000 ha. There are no statistics available on the distribution of the 100 or so small landholding tenancies, as the census data cannot be disaggregated. ^[45] Anecdotal evidence suggests that they are widely scattered from Stranraer to Strathspey. ^[46]

11 The census of agricultural tenants for the Government's current Agricultural Holdings Review may improve the information available about small landholdings. However, it will remain the case that there are now only relatively few small landholders left. The Review Group is concerned that this fact should not be allowed to impede greater progress by the Scottish Government to improve the position of these tenants. The Government's limited expansion of the area designated for crofting tenure only covers some of Scotland's small landholdings. For those covered, the process of converting to a croft has proved very difficult and potentially very expensive for small landholders to try to implement. ^[47] An unhelpful or hostile landlord can present additional difficulties. The Group's understanding is that to date no small landholders have succeeded in converting their holdings to a croft.

12 There are two requirements to be fulfilled by a small landholder before the Crofting Commission will consider their application to convert to a crofter. The first is that they must have a certification of their tenancy from the Scottish Land Court. While the degree to which some small landholders might face difficulties or challenges in establishing their 1911 tenancy, it is not clear, the Review Group notes that this situation is not helped by the Government not fulfilling its obligation to maintain a register. The second requirement is that the small landholder must have paid the required compensation to their landlord. The Group understands the amount of compensation to be the difference between the value of the holding if sold to the sitting 1911 tenant and its value as a croft which can be purchased for 15 times the annual rent. ^[48] The unusual nature of this valuation could make it wide open to challenge.

13 The Review Group considers that the position of the 1911 tenants should be improved in a far more straightforward way. The Group notes that all crofts were 1911 small landholdings for nearly half of the 20th century and considers that small landholders who have certification of their tenancy under the 1911 Act, should also have a statutory right to buy their holding at 15 times its annual rent. The Group recognises that this proposal has EHCR implications for the landlords involved, which would need to be considered carefully. However, such a right to buy could, for example, be achieved indirectly in areas already designated for crofting tenure by making certification of a 1911 tenancy sufficient for conversion to a croft. This would be similar to the way that the 1911 Act straightforwardly made all crofts into small landholdings.

14 The Review Group also considers that, more generally as part of the modernisation of Scotland's land tenure, the special category of 1911 small landholdings should be abolished in due course. The Group notes that while the 1911 legislation created a Board of Agriculture in Scotland to administer this, the responsibility in England was given to local authorities. In 2012, local authorities in England owned 94,000 ha for the purposes of smallholdings, with over 2,400 tenanted smallholdings and over 70% of which are under 40ha in size. ^[49]

15 The Review Group's view is that there should be major improvements in the position of tenants under the Small Landholders (Scotland) Act 1911. The Group recommends that these tenants should, like crofters, have a statutory right to buy their holdings.