Tenant Farming Rent Review Survey: final report

6. Recent Experience with the Rent Review Process

6.1. Summary of key points

• Over half of survey respondents were either very or fairly satisfied with the rent review process overall (53%) compared to 15% who were very or fairly dissatisfied.
• In terms of the various aspects of the rent review process, respondents were most likely to be satisfied in terms of who carries out the rent review (61%) and least satisfied with the cost or expense of the rent review process (53%).
• A higher number of respondents considered the rent review process to be easy (47%) than difficult (16%).

6.2. Satisfaction with Rent Review Process

The survey asked respondents how satisfied or dissatisfied they were with a range of aspects of the rent review process. Over 6 in 10 respondents (61%) were either very or fairly satisfied in terms of who carries out the rent review, compared with 53% regarding the cost or expense of the rent review process. The proportion of respondents who were very or fairly dissatisfied was highest regarding how rent reviews have been carried out (18%).

NB: This table excludes those who answered 'don't know'.

Over half of survey respondents were either very or fairly satisfied with the rent review process (53%) compared to around a third (32%) who were neither satisfied nor dissatisfied and 15% who were very or fairly dissatisfied.

Unweighted base: n=913

Further analysis of satisfaction and dissatisfaction with the rent review process reveals some interesting findings:

• Tenant farmers who had their tenancy for between 10 and 24 years were most satisfied with the rent review process (71%). Those who had their tenancy for 50 years or over were least likely to be satisfied (48%).
• Those whose principal residence was on the main tenancy were less likely to be satisfied with the rent review process (50%) than those whose residence was elsewhere (58%).
• Respondents aged over 70 were most satisfied with the rent review process (63%).
• Tenant farmers whose landlord was a family business (71%) or institution (63%) were more likely to be satisfied with the rent review process than tenant farmers whose landlord was a limited company (35%), public sector organisation (42%) or Landowner's Family Trust (49%).
• Respondents whose landlord or landlord's trust was related to them were more likely to be satisfied with the rent review process (70%) than those who were not related (52%).
• Satisfaction with the rent review process was higher for those who said they represented themselves in the rent review (55%) than those who said the tenant farmer was represented by an agent (24%).
• Similarly, those who said their landlord represents themselves in the rent review process were more likely to be satisfied with the process (65%) than respondents whose landlord is normally represented by an agent (45%).
• Respondents who considered their relationship with the landlord to be better during the rent review process were more likely to be satisfied with the process (74%) than respondents who said their relationship was worse during this time (10%).
• In terms of familiarity with rent review legislation, those who rely on their agent or another person to guide them (48%) or rely on other organisations such as the Scottish Tenant Farmers Association (STFA) or National Farmers' Union of Scotland (NFUS) (36%) were less likely to be satisfied with the rent review process than those who were very or fairly familiar (59%) with the legislation.

Table 6.1 Analysis of overall satisfaction with the rent review process

Question	Response	Base	% very/ fairly satisfied
Q5 What type of agricultural tenancy is this?	Secure 1991 Act agricultural tenancy	607	48%
	1991 Act Limited Partnership	37	57%
	Short Limited Duration Tenancy (SLDT)	111	68%
	Limited Duration Tenancy (LDT)	68	62%
	Modern Limited Duration Tenancy (MLDT)	40	64%
	Other (non-crofting) lease for more than 1 year	38	64%
Q6 Length of tenancy	0-9 years	79	59%
	10-24 years	98	71%
	25-49 years	194	56%
	50-100 years	392	48%
	More than 100 years	107	48%
Q7 Is your principal residence on the main tenancy?	Yes	583	50%
	No	308	58%
Q8 Age	16-40	67	50%
	41-60	358	50%
	61-70	281	52%
	71 and over	191	63%
Q10 Landlord description	Individual landowner	293	57%
	Landowner's Family Trust	326	49%
	Family business	77	71%
	Community ownership	7	58%
	Institution	81	63%
	A public sector organisation	35	42%
	A limited company	58	35%
Q11 Landlord or landlord trust related to you?	Yes	75	70%
	No	817	52%
Q14 Who normally represents the tenant in the rent review?	I represent myself as the tenant	770	55%
	Another partner in the business	50	37%
	A representative of the business	13	65%
	Your agent	114	24%
	Rent hasn't been reviewed since the lease was signed	52	46%
Q15 Who normally represents the landlord in the rent review?	Landlord directly	200	65%
	Resident factor	315	55%
	Landlord's agent	387	45%
	Rent hasn't been reviewed since the lease was first signed	10	63%
Q16a When was your most recent or current review?	In the last 1-5 years	400	57%
	Between 5-10 years ago	187	48%
	More than 10 years ago	92	53%
Q17 During the rent review process is your relationship with your landlord….?	Much/ slightly better	52	74%
	No different	649	58%
	Much/ slightly worse	111	10%
	No rent review has taken place during the tenancy	33	67%
Q18 How familiar are you with the rent review legislation?	Very/ fairly familiar	355	59%
	I am not very familiar; I rely on my agent or another person to guide me	149	48%
	I am not very familiar; I rely on other organisations such as STFA, NFU	74	36%
	I was aware there was legislation but am not very familiar with it	256	54%
	I did not know there was legislation	77	50%

6.3. Ease or Difficulty of the Rent Review Process

Almost half of respondents (47%) found the rent review process very or fairly easy compared to less than a fifth (16%) who found it very or fairly difficult.

Unweighted base: n=910

A number of factors contribute to respondents' perception of the ease or difficulty of the rent review process:

• Respondents who normally represent themselves in the rent review (49%) are more likely to consider the rent review process to be easy than those who are represented by another partner in the business (28%) or are represented by their agent (21%).
• Those who said their landlord represents themselves (57%) were more likely to find the rent review process easy than those who said their landlord was represented by an agent (39%) or a resident factor (47%).
• Respondents who were very (56%) or fairly familiar (51%) with the rent review legislation were more likely to find the rent review process easy than respondents who said they were not very familiar and relied on other organisations such as the Scottish Tenant Farmers Association (STFA) or National Farmers' Union of Scotland (NFUS) (26%).
• Where respondents were related to their landlord or landlord's trust (62%) they were more likely to find the rent review process easy than those who were unrelated (46%).

6.4. Suggestions for Improvement to the Current Rent Review Process

The survey included an open response question which asked respondents for their suggestions on how the rent review process could be improved:

"Thinking about all your answers to the questions above, what could be done to improve your experiences of any aspect of the current rent review process?"

The open-ended comments were analysed and grouped into common themes. This analysis reveals that 12% of comments were from respondents who believed rents should take into account a range of factors such as the productive capacity of the land (4%), the state of repair or consideration of any improvements that have been made (5%) or other factors (4%), 8% expressed dissatisfaction with agents, 6% felt the process or legislation could be simplified and 6% suggested improvements to communication between tenant farmers, landlords and other parties. These themes are explored in more detail below, alongside examples of responses.

1 in 10 comments (10%) were made by respondents who were happy with the current review process. Almost a quarter (23%) of those who responded to this question had no suggestions or were unsure how the process could be improved. Of those, 79% were satisfied with the overall rent review process.

Table 6.2 Suggestions for improvement to the rent review process

Unweighted base, n=423	%
Rent should take into account a number of factors e.g. type of land, repairs, productivity	11.8%
Happy/ satisfied with rent review	10.3%
Dissatisfaction with agents	7.6%
Simplify the process/ legislation	5.7%
Feel like we have no option other than to pay the rent increase/ no consultation	5.6%
Better communication between tenants, landlords and other parties	5.4%
Not had a recent rent review	5.4%
More transparency/ consulted on decisions/ standard framework/ independent body	5.0%
Cost of arbitration/ legal fees	3.6%
Good relationship with landlord	3.4%
Family business/ Trust so done informally/ easily	2.7%
Would like to buy/ tenants' right to buy	2.4%
Would be good if could see other farm rents	2.1%
Less frequent rent review	2.0%
Factor/ Property manager deals with this	1.7%
The process, e.g. lack of continuity in who is carrying them out, need for a clear process and dates	1.6%
The need for longer, secure tenancies and support for new entrants	1.3%
The role of the TFC code of practice (i.e. improving things in future)	1.2%
Reducing the cost of rent reviews, availability of open market evidence	0.9%
Other parties, e.g. preference for negotiating with resident factor, the obligations of landlords	0.7%
Rent reviews are easier now I use an agent	0.4%
None/ Nothing	22.8%
Other	8.0%

Rent should take into account a number of factors e.g. type of land, repairs, productivity

One of the most common themes emerging from responses to this question was where tenant farmers believed that rent charged should take into account a number of factors. This included instances where tenant farmers believed the state of repair should be taken into account or where they were unhappy about repairs not being carried out or the costs involved in having to undertake repairs themselves, depending on the nature of their lease:

• I have full repairing lease which means I have to repair and renew everything and even knock down old estate buildings without compensation.
• We don't get any repairs done, not over the last 20 years.
• The prices hopefully will come down. The only problems are the landlords who want to continually put the rents up but don't do anything for the farmers buildings and land.

Other tenant farmers believed that where they had made their own improvements to the land and the buildings, these should be excluded from the profitability of the land and that they should not be penalised for the improvements with increased rent charges:

• Rents should be limited to profitability of land after tenants' improvements have been discounted.
• Tenant's farming abilities and husbandry and improvements should be taken more into account. A good farmer should not be penalised unfairly.
• The rent is increased no matter how tough the economic climate has been or how much we have invested in the farm.

The productivity of the land was also mentioned as another factor which should be considered when reviewing rent charges. Tenant farmers felt that rent should be based on how viable the land is in terms of productivity:

• If the rent was linked to the productive value of the holding, not the open market value.
• Have a rent review process which is carried out based on some level of productive capacity.
• I feel that more account should be placed on how viable the land is to make a living off it.

Dissatisfaction with agents

Another area of dissatisfaction was in relation to the use of agents to negotiate rent increases. The general consensus from this group of respondents was that landlords' agents can be difficult to deal with and a number of tenant farmers stated that they do not receive sufficient notice on upcoming rent increases:

• There could be a bit more communication from the agent about the amount of increase - it is a bit black and white. They could come out at different times of year - not just summer when everything is all green. Come out during winter as well to see it.
• Any chance my landlord thinks he can get my rent up he sends in his agent who picks away at me which means I have to find the money to get legal representation to support me. This all gets very expensive and stressful.
• Agents should be vetted. Agents should follow the code. Agents should be timely.

Simplify the process/ legislation

There was also a feeling among tenant farmers that the rent review process and associated legislation could be simplified. Tenant farmers spoke about the provision of clear guidelines that should be followed by all parties which should be in easy-to-understand terms and also easy to access:

• There is too much legal jargon which makes it difficult to understand - they should make the information easier to understand and we need a definite indication of when the rent will rise by date - they should tell tenants exactly when the rent will be increased as the landlords' lawyers here are hopeless at this sort of thing.
• Scottish ministers should put clear guidance possibly with legal basis in place on how to calculate a fair rent within the context or duration of lease, production potential and condition of assets at the start of the lease.
• The process is becoming so complex and formal that I will probably have to employ an agent to represent me which may cost more than taking a rent rise and may be in addition to a rent increase.

Better communication between tenant farmers, landlords and other parties

A number of respondents spoke about the importance of ensuring that all parties communicate with each other and are involved in the rent review process:

• The landlord should be involved in the discussions at the meetings. This would speed up the process especially if he is already involved in the estate management. It would also mean that the tenant's comments were passed onto the landlord. Also, the landlord wasn't hiding behind his agent.
• Having regular contact with landlords and discussing each other's ambition and problems works.
• The land agent's acting on behalf of our landlord's do not want to have any contact with the landlord. This does not lead to a good relationship between tenant and landlord. But as long as there is a possibility of "right to buy" then this current system of rent reviews will not change.