How Scotland’s land reform is affecting sales and tenant farmers

When Scotland’s Land Reform Act received royal assent in April 2016, implementation was always going to be a job for the tortoise, not the hare.

The ambitious policy set out to make significant changes, including a focus on who had controlling interests in Scottish land, the implementation of business rates for sporting estates and a community right to buy. 

Wide-ranging changes were also planned for the tenanted sector, such as creating a tenant farming commissioner and designing a new rent test.

See also: How to prepare for farm and land sales

Progress has indeed been slow – mainly due to the complex nature of the work.  

However, two-and-a-half years on, there is evidence of powers enshrined within the Act being deployed.

Right to buy

Island of Ulva © Knight Frank

The recent sale of the island of Ulva, off Mull, under right-to-buy powers was a significant result.

When the Howard family launched it for sale with Knight Frank, it attracted immediate interest from a range of bidders.

But when the local community activated its right to buy, competitive bidding and the normal sales and marketing process halted while Ulva was effectively taken off the market.

A crowdfunding project raised in the region of £37,000, while about £4.2m came from the Scottish Land Fund – a pot of public money set aside for community purchases.  

Tom Stewart-Moore, Knight Frank’s head of farms and estates, said estates thinking about selling must now consider the community right-to-buy prospect.

“If there is a possibility of community interest then we have to engage with them early and sellers need to be aware of that,” he said.

“We need to work out how serious their interests are and bottom that out before you go to the market.”

Impact on Scottish tenants

An important change was the appointment of a tenant farming commissioner in November 2016.

The Scottish Tenant Farmers Association (STFA) says the introduction has injected confidence by providing an impartial avenue to help solve problems and give guidance.

STFA executive director Angus McCall said: “While the role should not be regarded as a ‘fixer’, the commissioner has helped bring both sides of a dispute to the table and discouraged some bad behaviour.” 

A review of agents had, Mr McCall said, discovered that behaviour must improve or greater sanctions would be put in place. 

Still to come

But certain elements of the reforms are yet to hit the sector.

Designing a new rent test has proven extremely complex and contentious and is unlikely to be ready before 2020.

Relinquishment and assignation powers, which allow retiring tenants to pass tenancies down a generation, are also eagerly awaited.

“Most tenants will be pleased with progress once the rest of the Act is implemented,” Mr McCall added.

NFU Scotland’s policy manager Gemma Cooper said the new rent system would be more transparent but extremely complicated and urged landlords and tenants to ensure they are properly advised.

She added: “There is also still work to be done on assignation for value, which will allow 1991 Act tenants the opportunity to sell their tenancies.

“The mechanics are still to be agreed, but where a landlord is unable to buy the tenancy back, it could provide opportunities for other businesses.”

Sporting fears

Fears that a significant number of farms would be caught up in a tax on sporting potential has been alleviated by a small business exemption offering relief for those under the £15,000 rateable value threshold.

Only the largest and grandest estates are footing bills running to tens of thousands of pounds, and there are no reports of potential buyers being turned off when sporting estates hit the market.