Small landholdings in Scotland: legislation review

Rent

Issues Raised

100. There have been calls by stakeholders for a fair and open rent review process. Some landlords have stated that rents are kept artificially low as they are based on the productive capacity, which is invariably moderate for most landholdings.

Legislation

101. The landlord and small landholder may by agreement alter the rent. Where such agreement cannot be made, parties can apply to the Scottish Land Court to fix a fair rent. ^[73] As regards statutory small tenants, the legislation is in terms of "equitable rent". ^[74]

102. In arriving at a fair rent the Scottish Land Court will take into account the circumstances of the case, the holding, the quality and situation of land prior to improvements, landlord's improvements and in particular any improvements carried out by the small landholder or their predecessors. No rent is to be allowed on any improvements made by the small landholder (unless the landlord provided benefit in kind or made a financial contribution to them). In addition, a core component of the determination of a "fair rent" is the assessment of the productivity of the holding. Fair rent aims to provide for a fair division of profits from the land. The main element in arriving at a fair rent was deemed to be what the small landholding "could make out of the holding" ^[75] .

103. Once the Scottish Land Court has fixed the rent this normally remains unchanged for a period of seven years, except where parties mutually agree otherwise. ^[76]

104. If a year's rent remains unpaid the small landholder can be removed by the Scottish Land Court. ^[77]

Discussion

105. Rent is fixed by the Scottish Land Court as a "fair rent", which is the same wording used in the renting of crofts. ^[78] While the effect has been to maintain a very low rent for these holdings because the small landholding essentially has a "bare land let", altering the procedure may result in unrealistic rents for some small landholders. Further, in relation to certain other categories of agricultural tenancies the Land Reform (Scotland) Act 2016 provides for a new rent system based on a fair rent taking into account the productive capacity of the holding. ^[79] Further evidence would be required to justify a change in the calculation of rent for small landholders.

106. Any proposed changes to the terms of the rent review provisions applying to landholdings and statutory small tenancies would need to be carefully considered particularly as this could result in an increased burden or benefit created for either party.

107. However, the production of best practice guidance for landlords and small landholders on conducting rent reviews is something that could be considered.