Agribusiness News February 2024 – Management Matters: Tenancies

Tenancy Opportunities

Across Scotland there are limited opportunities to enter farming ventures, in part driven by land prices and due to less tenancies coming available.

When a tenancy does come available, they are traditionally one of the following:

• Grazing/Seasonal Licence
• Short Limited Duration Tenancy (SLDT)
• Modern Limited Duration Tenancy (MLDT)

Also, more recently introduced there are Repairing Tenancies and Contract Farming agreements.

Finding a tenancy opportunity can prove challenging.  The Scottish Land Matching Service offers those both seeking and offering tenancies an opportunity to be matched up.  It is also worthwhile putting your name in with estate factors and at rural markets.  It is also amazing what the power of social media can achieve!

Applying for a tenancy

When invited to apply for a tenancy, it is important to be concise and grammatically accurate.  Most applications can be submitted digitally so use Word and spell-check to help.

Remember to write about yourself.  The landlord wants to know the type of person(s) applying so include your background and experiences in farming.  You may be asked to provide references from previous landlords or industry peers who can provide character references.  You may also be asked how you would farm the property if you were successful, and what your future aspirations are.

For longer term tenancies, you may also be asked to provide a business plan.  You may be given a template to follow, or you can approach the likes of an SAC consultant to assist in the preparation.

It is also important when applying for a tenancy that you are fully aware of the financial obligations expected of the tenant and whether you can service those costs.  Having a chat with an accountant or a banking advisor is recommended.

You may also want to consider registering with a solicitor as you may want to have them look over any potential tenancy agreements, particularly for the longer-term ones.  It is important as a tenant that you fully understand the terms of the agreement, especially if there is a break clause which can remove the pressure if a venture doesn’t work out.

What a landlord is looking for

When letting a property, a landlord or their Factor are looking for a tenant who has the skills and enthusiasm to run the property, whether that’s an upland hill farm, arable unit, or dairy farm.  Finances are a big contributor, but so also is having a good working relationship between landlord and tenant.

In some situations, a landlord may favour a New Entrant due to the opportunity available to them to put in an application to the National Reserve for entitlements. In the current climate, many farms still require the Single Farm Payment to help pay rent, especially in the first few years.

On a final note, a mention needs to go to the changes to the Agricultural Policy in 2025.  Presently, there is nothing to contravene any of the aforementioned, but caution should be exercised when making any major commitments.

Where to find further information

Further information on tenancies can be found at the following sources:

• Farm Advisory Service
• Scottish Land Commission
• SAC Consulting
  

Jennifer Galloway, jennifer.galloway@sac.co.uk   01776 702649