Tenant Farming Rent Review Survey: final report

Executive Summary

Introduction to the Tenant Farming Rent Review Survey

Tenant farming represents an important part of Scottish agriculture as more than one-fifth (22%) of all farmed land is rented.^[1]

The Land Reform (Scotland) Act 2016 brought forward a number of legal changes to agricultural holdings legislation. One element was to introduce a new process of undertaking rent reviews.

A code of practice on conducting rent reviews has been issued by Scotland's Tenant Farming Commissioner which outlines guidelines that should be followed to ensure that landlords and tenants reach agreements on rent in a fair and transparent manner.^[2]

Following discussions with key stakeholders and the Tenant Farming Commissioner, the Scottish Government commissioned Research Resource to carry out a survey of tenant farmers in Scotland. The aim of the research was to directly seek tenant farmers' views and experiences of the rent review process.

The survey was carried out using a mixed methodology comprising a combination of postal, online and telephone interviews and took place during April and May 2021. All tenant farmers in Scotland were invited to take part in the research. A total of 1025 responses were achieved across all survey methods. This is a 20% response rate from the tenant farmer population.

Satisfaction with the rent review process

• Overall, just over half of respondents (53%) said they were very or fairly satisfied with the whole rent review process compared to 15% who said they were very or fairly dissatisfied.
• Tenant farmers who were familiar with the rent review legislation were more likely to be satisfied with the process than those who are not. Similarly, where the landlord represents themselves - as opposed to being represented by an agent - satisfaction with the whole process is higher.
• Almost half of tenant farmers who responded (47%) said that they find the rent review process very or fairly easy compared to 16% who find the rent review process very or fairly difficult.
• Thinking about different aspects of the rent review process, those rated as most satisfactory were who carries them out (56% very or fairly satisfied) followed by how they are carried out (54% very or fairly satisfied) and frequency (53% very or fairly satisfied). The aspect with the highest level of dissatisfaction is also how they are carried out (16% very or fairly dissatisfied). When asked what could be done to improve their experience of any aspect of the current rent review process, the top 3 answers were for rent to take into account factors such as type of land, repairs or productivity (12%), dissatisfaction with agents (8%), simplifying the process/ legislation (6%) and improvements to communication between tenants, landlords and other parties (6%).

The rent review process

• Tenant farmers' rent reviews are most commonly carried out every 3-5 years (46%). However, 9% said they are carried out less frequently between every 6 and 10 years, 32% said there was no set timescale for rent reviews, 11% said their rent has never been reviewed and 3% were unsure.
• Where respondents were able to answer, the most recent rent review has been carried out in the last 1-5 years for 59% of respondents, between 5 and 10 years ago for 27% of respondents and more than 10 years ago for 14% of respondents. The review prior to that was most likely to have been carried out between 5-10 years ago (43%) or more than 10 years ago (40%). The remaining 17% of respondents have had 2 rent reviews recently within the last 5 years.
• The vast majority said that the rent review process is initiated from the landlord's side (95%).
• Tenant farmers were most likely to represent themselves in a rent review (82%) and just 11% said they use an agent.
• From the landlord side, the landlord's agent was the most likely representative in the rent review (45%). According to respondents, 35% of landlords are represented by a resident factor and 25% represented themselves directly.

Rent review legislation and disputes

• Familiarity with the current rent review legislation was low with just over one third of respondents (36%) saying they were either very or fairly familiar with it. 15% were not very familiar and relied on an agent or other person to guide them and 8% were not very familiar and relied on other organisations. Just under a third (31%) were aware there was legislation but were not familiar with it and 11% were not aware of this legislation.
• All tenant farmers were asked about their familiarity with the Tenant Farming Commissioner's Code of Conduct on rent reviews. There were similar levels of familiarity in this respect with 29% of respondents saying they were very or fairly familiar with this. 13% were not very familiar and relied on an agent or another person to guide them and 9% were not very familiar and relied on other organisations to guide them. Just over 3 in 10 respondents (31%) were aware there was a Code of Practice but were not familiar with it and 18% were not aware at all.
• The vast majority of respondents had not experienced any significant disagreements during the rent review process (79%). Where respondents had experienced issues, this was most likely to be regarding the rent review itself (11%), fixed equipment (9%) or housing related issues (9%).
• Tenant farmers with disagreements were most likely to take action to resolve their dispute by talking with their landlord or representative to find a solution (50%) or talking with a professional advisor to help find a solution (50%). Other actions taken included asking the Tenant Farming Commissioner to assist (13%), seeking legal intervention (21%), using Alternative Dispute Resolution (6%) or using the Land Court process (11%). On the other hand, 13% of tenant farmers who had a dispute have not been successful or tried to resolve their dispute.

Profile of tenant farmers

• The majority of tenant farmers who responded (76%) said they had 1 agricultural tenancy, 16% had 2 tenancies and 8% had 3 or more tenancies.
• In terms of the lease type, the majority of all leases were secure 1991 Act agricultural tenancies (56%), 18% were Short Limited Duration Tenancies, 10% were Limited Duration Tenancies, 5% were Modern Limited Duration Tenancies, 5% were other (non-crofting leases for more than 1 year), 4% were 1991 Act Limited Partner. When asked about the main lease, 63% of the main leases held by respondents were secure 1991 Act agricultural tenancies and 12% were Short Term Limited Duration Tenancies.
• One quarter (25%) of all tenancies were up to 20 hectares in size and 22% were between 51-100 hectares. The main tenancy size was most commonly 51-100 hectares (22%).
• Almost half of all tenancies (42%) had been held by the tenant farmer or their family for 50-100 years and 12% had held the main tenancy for more than 100 years. Just 10% of tenancies had been held for under 10 years.
• A total of 62% of respondents said that their principal residence is on their main tenancy.
• The landlord for the tenancy was most commonly either an individual landowner (34%) or a landowner's Family Trust (34%). 1 in 10 (10%) said that their landlord or landlord trust is related to them.
• The majority of tenant farmers were male (88%) and over 60 (52%).

Conclusions

• The majority of tenant farmers are satisfied with the current rent review process (53%). The majority have been in their tenancies for 50 years or more (54%). Rent is reviewed frequently for nearly half of tenant farmers with 46% stating their rent is reviewed every 3 to 5 years. While it is evident that there is some degree of dissatisfaction with the current rent review process, this is the case for a minority (15%).
• Dissatisfaction generally increases with the length of tenancy, for example 5% of dissatisfaction for those who have held their tenancy for less than 10 years to 19% for tenant farmers who have held their lease for 50 or more years. Furthermore, tenant farmers whose principal residence is on the main tenancy (19%) are more likely to be dissatisfied than other tenant farmers (8%).
• It is clear that familiarity with the legislation is related to tenant farmer satisfaction with the rent review process, with tenant farmers who are familiar with this legislation reporting higher levels of satisfaction.
• Where the rent review process is undertaken by the landlord directly there is also a correlation with satisfaction. Moreover, where this is the case the majority of tenant farmers feel that their relationship with their landlord stays the same through the process.