Starter farm initiative - tenant insights: review

Moving-on

Communication regarding end of tenancy

Whilst the tenancy agreements were always known to be for a fixed 10-year period, during the Covid pandemic tenants were informed of a 3-year extension to their tenancy due to the landlord instigating a review of their Starter Farms. Further, during this period discussions about the future of the Starter Farm Initiative took place in trade press.

Some of the tenants suggested that the landlords could have been more proactive and clearer with communications – particularly regarding the Strategic Review related extensions and lease termination dates^[12]. "Communication could be better around end dates". There remains angst about the future of these farms as tenancies and if the Starter Farm Initiative has run its course with feedback that there has been a lack "clarity on what they [FLS] actually want to do [with the farms]" which makes "it difficult to know where we stand" or how to "talk about next steps".

One tenant said that they felt that the end of the initiative (as indicated on FLS website^[13]) being communicated to them via the front page of the Scottish farmer^[14] was "very badly handled… and unprofessional" and when it "kicked off nobody communicated with us". Others, however, gave their landlord the benefit of the doubt noting "there hasn't been a great deal of clarity but they will be waiting on answers" and they [FLS] "have done fine".

Around half interviewed thought their tenancy would be further extended beyond the 3-year extension. Reasons given for this answer included that the landlord "said they would be speaking to us individually – they did mention extending the lease or even selling [to us]" with another tenant adding there are "rumours that some units will be sold" and that they [the landlord] "said they will either re-let, take back in hand or there is an option to purchase". Others felt that they would not get their lease extended "no intention of extending it…already told us that".

The most common perception was that the landlord would be reviewing each farm in the autumn of 2022, but interviewees suggested that not all of the tenants would be offered the same opportunities (i.e. to purchase or further tenancy extension). Some also felt that the landlord was not actually sure themselves what they were going to do with the land.

Applying for new tenancies

All tenants wanted to continue farming and were prepared to take on another tenancy – with an average score of 7.1 when asked on a scale of 1-10 whether they would continue to farm after the tenancy ends. Only three had an existing exit strategy due to their reported stage of their current tenancy. Half had already applied for other tenancy opportunities, with one successfully securing a new tenancy – thereby taking the next step on the 'agricultural ladder'. Other tenants that were actively looking for tenancy opportunities had applied for 1-2 each and had been unsuccessful to date. The tenants reported that they were generally outbid on rent offerings, and in one case the tenant was a not considered a good fit by the tenancy panel.

Those that had not applied for tenancies noted that lack of active searching was because they still had time on their current tenancy- "if we hadn't got the extension we would have been actively looking". Many of this group remained uncertain about potential opportunities that could come from their current starter farm tenancy with some believing they might get the chance to continue their tenancy or buy their farm. A further reason tenants hadn't applied for other tenancies was that not many tenancies have been coming onto the open market.

Nearly all tenants would consider the option to buy their starter farm, however, most said that it would depend on whether they could afford it.

Land Matching Service

Just over half the interviewees had registered with the land matching service (LMS), with others looking at it but not registering and one did not know about it. One tenant said they had been successful in realising an opportunity through the land matching service. Some felt that there were not many opportunities and other volunteered that "it was a great idea in essence" however there remain barriers to land availability in LMS^[15].

There was concern voiced by one tenant that industry (land agents, lawyers, accounts, etc.) engagement in the LMS had deteriorated since the Scottish Government had taken control of the service from NFUS. "[Historically] they would give some free advice and some help… for the person offering the opportunity as well as the person looking for the opportunity. Since Scottish Government took it over, all that fell by the wayside because Scottish Government can't be seen to be teaming up with private companies."