Land Reform (Scotland) Bill: business and regulatory impact assessment

Purpose and intended effect

2.1.2 This Business and Regulatory Impact Assessment assesses the impact arising from the Land Reform (Scotland) Bill 2024 proposals relating to Land Management Tenancy, Agricultural Holdings, and Small Landholdings. This document is written subject to the best available information at the time, based on evidence gathered from engagement with relevant stakeholders and relevant public consultations.

2.2 Background

2.2.1 Agricultural tenancies and small landholdings have been subject to statutory regulation for more than 100 years. Agricultural tenancies are governed by two statutory regimes: the Agricultural Holdings (Scotland) Act 1991 and the Agricultural Holdings (Scotland) Act 2003. Small landholdings are governed by the Landholders (Scotland) Acts, which includes legislation from 1886 to 1931.

2.2.2 The Land Reform (Scotland) Act 2016 (the 2016 Act) reforms, in respect of agricultural holdings, were informed by the Agricultural Holdings Legislation Review Group. In 2015 the Group published its Final Report which formed the basis for agricultural holding reforms made in the 2016 Act.[32]

2.2.3 The reforms proposed in the Land Reform (Scotland) Bill 2024 (the Bill) build on the legal framework outlined above and have been informed by the work of the Tenant Farming Advisory Forum (TFAF)[33].

2.2.4 Further background on the proposals relating to the Land Management Tenancy, agricultural holdings, and Small Landholdings can be found in the accompanying documents to the Bill.

2.3 Objective

2.3.1 The legislative proposals aim to deliver the Programme for Government commitments 2021-22 including:

• modernising tenant farming legislation – a key part of the rural economy (for some people this is the only route to enter agriculture);
• modernising small landholding legislation;
• ensuring that tenant farmers and smallholders have access to climate change adaptation and mitigation measures;
• bringing forward a revised approach to rent reviews; and assessing the valuation for resumption.

2.3.2 In conjunction with these, the Bute House agreement committed to ensuring that tenant farmers and smallholders were not disadvantaged from participating in climate change adaptation and mitigation.

2.3.3 The objective of these changes are to ensure that tenant farmers and small landholders are able to contribute to delivering our Vision for Agriculture outlining our ambition to become a global leader in sustainable and regenerative agriculture.

2.3.4 The Agricultural Reform Route Map, underlines the commitment to ensuring that tenant farmers, smallholders (including small landholders) and land managers are given equality of opportunity to allow them to play a key role in making our Vision for Agriculture a reality.

2.3.5 The policy objectives of each of the individual proposals are set out in detail in the Policy Memorandum accompanying the Bill. The aims of the provisions are summarised below:

2.3.6 Land Management Tenancy – this provision will seek to ensure that the model lease is developed in a way to enable individuals to undertake a range of land use activities in a way that supports sustainable and regenerative agriculture, the achievement of net zero targets, adaption to climate change, and increasing or sustaining biodiversity.

2.3.7 Modernising small landholdings legislation provisions include:

• Pre-emptive right to buy – providing small landholders with the opportunity to purchase the land comprised in their small landholding should the landlord (or a creditor with a right to sell) decide to transfer the land,
• Diversification – providing small landholders with greater opportunity to diversify their business, to support profitability and enable them to take action to help address the twin crises of climate change and biodiversity loss,
• Succession and assignation – ensuring that small landholders can bequeath and assign their tenancy to broadly the same classes of people as tenant farmers with secure 1991 Act tenancies,
• Guidance – extending the functions of the Tenant Farming Commissioner (TFC) to include small landholdings,
• Rent and compensation – modernising the law to ensure that there is a fair balance between the interests of small landholders and their landlords.

2.3.8 Modernising Agricultural Holdings legislation provisions include:

• Diversification – providing tenant farmers with greater opportunity to diversify their business, in order to improve farm incomes and help address the twin crises of climate change and biodiversity loss,
• Agricultural improvements – providing tenant farmers with greater scope to improve their holdings, and participate in sustainable and regenerative agriculture,
• Good husbandry and estate management rules – ensuring that tenant farmers can undertake sustainable and regenerative agricultural practices in accordance with these rules,
• Waygo – enabling tenants and landlords to settle their waygo claims in good time, and so move forward with the next stage of their life,
• Rent review – improving the 2016 Act changes, drawing on the work of the Tenant Farming Commissioner, to create a flexible ‘hybrid’ system of rent review meeting the needs of the industry,
• Resumption – ensuring that tenant farmers receive fair compensation where the landlord takes back any part of the leased land,
• Compensation for game damage – modernising the compensation for game damage provisions by making good a wider range of losses, and
• Pre-emptive right to buy – including a power to improve the registration process, to ensure that it is as least burdensome as is possible for the tenant.

2.3.9 The proposals in this Bill will contribute to the following national outcomes:

• Communities – We live in communities that are inclusive, empowered, resilient and safe.
• Environment – We value, enjoy, protect and enhance our environment.
• Economy – We have a globally competitive, entrepreneurial, inclusive and sustainable economy.
• Human Rights – We respect, protect and fulfil human rights and live free from discrimination.
• Poverty - We tackle poverty by sharing opportunities, wealth and power more equally.

2.4 Rationale for Government intervention

2.4.1 The Scottish Government’s vision is for a tenant farming sector that is dynamic, gets the best from the land and supports the people farming it, allowing them to participate in our vision to become a global leader in sustainable and regenerative agriculture. 22% of agricultural land in Scotland is tenanted and tenant farmers, small landholders, and landlords play an important part in the wider rural community. It is important that the legislative framework governing these arrangements reflects modern farming practice, where possible, to ensure that these businesses can continue to contribute to the rural economy.