Small landholdings modernisation: consultation analysis

6. Conclusion

This report has outlined the findings of the Small Landholdings Modernisation Consultation held in 2022-23.

The key findings in relation to each of the five sections are as follows:

1. Right to buy

Overall, respondents were broadly supportive of the proposals in this section of the consultation paper, including that providing small landholders with the absolute right to buy the land under their homes and gardens could give them greater security, allow them to invest into their small landholding and business with confidence, and could help to reduce rural depopulation in these communities.

2. Diversification

There was broad support for small landholders’ ability to diversify their activities on their landholdings, with the majority of respondents (83%) agreeing that small landholders should be able to do so. Respondents’ views on the other proposals in this section were more mixed. Over a third felt that small landholders should not require their landlord’s permission in advance of diversifying their activities and a similar number did not agree that small landholders should have to go to the land court if the landlord does not consent to their diversification.

3. Assignation and succession

Respondents’ views on the proposals in this section of the consultation paper were also mixed. However, over half agreed that the legislation setting out who can be assigned or succeed a small landholding should be updated to have similar rights as tenant farmers with secure 1991 Act tenancies. There was less clear support for the proposal that a landlord should be able to object to the person the small landholder wishes to be assigned the small landholding or to succeed it.

4. Access to an umbrella body

Overall, respondents were broadly supportive of the proposals in this section of the consultation paper. The majority agreed that small landholders and their landlords should have access to a public body, and that if a small landholder and their landlord have a disagreement, the public body should be able to mediate.

5. Additional considerations and potential impacts

Respondents made a number of suggestions in terms of further potential changes to small landholding legislation, including: changes to agricultural tenancy types; support for new entrants; and recognising the role that small landholdings can play in meeting climate and biodiversity goals due to their scale.

No significant potential impacts on specific groups were identified by respondents in the final section, but concerns were raised in terms of the impact of a decline in small landholding tenancies on specific groups including young people, those with protected characteristics, and on the wider diversity of the agricultural sector.

This report has outlined the findings of the Small Landholdings Modernisation Consultation held in 2022-2023.

Respondents to the consultation shared their views on a set of proposed legislative reform measures relating to the following parts of small landholdings legislation:

1. Right to buy

2. Diversification

3. Assignation and succession

4. Access to an umbrella body

Overall, respondents were supportive of the proposals in relation to sections 1 and 4, on the right to buy and access to an umbrella body, but held mixed views on the proposals in relation to sections 2 and 3 on diversification, assignation and succession. There was also a lack of consensus among respondents in terms of specific issues such as the introduction of a clawback provision.

More broadly, one group of respondents to the consultation were in favour of bringing small landholdings in line with crofting legislation, whilst other respondents were in favour of alignment with Agricultural Holdings Act 1991 tenancies. Several organisations emphasised the need for clarity to address a lack of understanding around small landholdings legislation, and the mixture of proposals set out above.

No significant potential impacts on specific groups were identified by respondents in the final section, but concerns were raised in terms of the impact of a decline in small landholding tenancies on specific groups including young people and those with protected characteristics, and on the wider diversity of the agricultural sector.

The main conclusions in relation to each section are set out below.

1. Right to buy

Overall, respondents were broadly supportive of the proposals in this section of the consultation paper. The majority agreed that providing small landholders with the absolute right to buy the land under their homes and gardens could give them greater security, allow them to invest into their small landholding and business with confidence, and could be beneficial in reducing rural depopulation in communities with small landholdings in them.

Respondents identified a range of potential benefits, from creating fairness across all types of secure land tenure in Scotland, to increasing tenants’ ability to invest in and plan their business; and environmental benefits. Those who disagreed raised potential issues including practical difficulties, financial risk for land owners, a reduction in opportunities for new entrants, and a wider negative impact on the tenanted sector.

Respondents were also broadly supportive of the other proposals in this section, including that small landholders should have the opportunity to purchase their small landholding if their landlord gives notice or takes action to transfer the land for sale or transfer, and that the most appropriate and fair valuation for the right to buy the land under the home and garden should be decided by a valuer appointed in agreement by the small landholder and their landlord, or failing this, an independently appointed one.

There was less consensus in terms of the introduction of a clawback provision. Whilst some respondents felt it would help to ensure long-term stability within rural communities, and prevent land being purchased for the wrong reasons, others felt there is no need for this provision if the sale price is fair, and that it would be difficult to apply fairly and consistently. There was also no broad consensus amongst respondents in terms of how the clawback should be calculated or the length of time it should apply. There was also no consensus in terms of how the valuation of the right to buy the land under the home and the garden site should be calculated to provide fairness for both the small landholder and their landlord. These practical issues should be given further consideration, taking the range of issues raised by respondents to the consultation into account.

2. Diversification

There was broad support for small landholders’ ability to diversify their activities on their landholdings, with the majority of respondents (83%) agreeing that small landholders should be able to do so, noting potential benefits for rural communities and the positive environmental impacts this may have.

However, respondents’ views on the other proposals in this section were more mixed. Over a third stated that small landholders should not require their landlord’s permission in advance of diversifying their activities, whilst a slightly lower number said they should. For the second group, which included a number of organisations, this was particularly important in terms of long-term land-use change. In terms of whether there should be a set timescale for landlords’ permission, respondents’ views were also mixed.

Around a third of respondents did not agree that the small landholder should have to go to the land court if the landlord does not consent to their diversification, whilst just over a quarter agreed that they should.

3. Assignation and succession

Respondents’ views on the proposals in this section of the consultation paper were also mixed. Over half of respondents agreed that the legislation setting out who can be assigned or succeed a small landholding should be updated to have similar succession and assignation rights as tenant farmers with secure 1991 Act tenancies. However, almost a quarter disagreed. Some respondents instead felt this should be done in line with crofting law, whilst others highlighted the need for consistency across all types of agricultural tenancies.

Almost half of respondents agreed that a landlord should be able to object to the person the small landholder wishes to be assigned the small landholding or to succeed it. Just under a third disagreed. In terms of objection grounds, respondents felt that landlords should consider factors including: the person’s character and interest in agriculture; competency, knowledge and qualifications, and; financial capability and sufficient resources.

Respondents on both sides felt that there should be provisions in place to prevent discrimination against specific groups (for example, in use of the criteria that the successor is of 'good character'). Several felt there was scope for different interpretations of the criteria and misuse of grounds for objection.

4. Access to an umbrella body

Overall, respondents were broadly supportive of the proposals in this section of the consultation paper. The majority agreed that small landholders and their landlords should have access to a public body, and that if a small landholder and their landlord have a disagreement, the public body should be able to mediate.

5. Additional considerations and potential impacts

When asked to give their views on further potential changes to small landholding legislation to support small landholders and their landlords, respondents raised a number of issues, including: changes to agricultural tenancy types; support for new entrants; and the role that small landholdings can play in meeting climate and biodiversity goals due to their scale. These wider issues should be considered as part of any legislative reforms.

Respondents identified a number of potential costs and burdens, largely in terms of: the costs of purchasing the land; the wider cost of new legislation and regulations, and the loss of small landholdings and opportunities for new entrants. In terms of further impacts in specific areas, the results were as follows:

• Environmental impacts - respondents identified positive impacts, including diversification and greater participation in environmental schemes, and potential negative impacts in terms of the loss of small landholdings and the effective management of agricultural land.
• Young people - respondents’ views were varied, ranging from positive impacts in terms of opportunities for new entrants, to negative impacts such as a reduction in land availability. Improvements that respondents felt could be made from a young person’s perspective included: simplifying the small landholding system; support for new entrants and broadening access to land and tenancy opportunities.
• Those with protected characteristics - respondents raised issues such as succession, the need to widen opportunities in rural areas; the importance of protecting the rights of all small landholders; the potentially negative impacts of the loss of small landholding tenancies on diversity in the agricultural sector and in rural areas.
• Groups or areas experiencing socioeconomic disadvantage -respondents noted potential benefits to rural communities and to small landholders experiencing socioeconomic disadvantage, but raised concerns in terms of the impact of a decline in small agricultural tenancies.
• Island communities - respondents identified largely positive benefits including increasing employment opportunities, bringing in new residents; and giving small landholders on islands more control over their future.

This consultation has provided an insight into the views of small landholders, landlords and a range of agricultural organisations on the Scottish Government’s proposals to modernise small landholdings. The findings outlined in this report will inform our work to modernise small landholdings legislation.

Recommendations

A series of recommendations can be drawn from the consultation findings:

1. Small landholders should be given the absolute right to buy the land under their homes and gardens, as this could give them greater security, allow them to invest into their small landholding and business with confidence, and is likely to have wider benefits for rural communities and a positive environmental impact.

2. Small landholders should have the opportunity to purchase their small landholding if their landlord gives notice or takes action to transfer the land containing the small landholding for sale or transfer to another company or trust.

3. Consideration should however be given to the impact of this change on the wider tenanted sector, with practical support for landlords and their tenants. There should also be a specific focus on creating opportunities for new entrants, to ensure fairness of opportunity for young people and the wider diversity of the sector.

4. Further consideration should be given to the introduction of a clawback provision, and how to ensure that it is applied fairly and consistently.

5. Small landholders should be able to diversify their activities on landholdings, as this could provide benefits both to rural communities and to the environment. If they are required to gain their landlord’s permission, a clear timescale should be set to enable small landholders to progress with planned activities.

6. In terms of landlords’ ability to object to the person the small landholder wishes to be assigned the small landholding or to succeed it, the criteria should be clearly outlined and provisions should be put in place to prevent different interpretations of the criteria and any discrimination against specific groups.

7. Small landholders and their landlords should have access to a public body, which should produce guidance and codes of practice. This body should be able to mediate if a small landholder and their landlord have a disagreement, however consideration should be given in terms of how to ensure its neutrality.

8. Further issues of importance to respondents, including wider changes to agricultural tenancy types, support for new entrants, and the role that small landholdings can play in meeting climate and biodiversity goals, should be considered and prioritised as part of any legislative reforms.