What types of tenancy might be available to me?
There are four types of agricultural tenancy currently available for use in Scotland, although this will shortly change with the implementation of the Land Reform (Scotland) Act 2016. In reality, the chances of being offered a 1991 Act tenancy (Secure Tenancy) are almost nil, leaving three types of tenancy available to new entrants:
- Grazing or mowing leases (seasonal lets) are agricultural tenancies where the land is let for grazing or mowing only and for a specific period of the year, not exceeding 364 days. When a Grazing or Mowing Tenancy has ended, the land may only be let again for the same purpose to the same tenant provided one clear day has elapsed between tenancies. If, with the landowner’s agreement (actual or assumed), the tenant continues to occupy the land after the tenancy period has ended, the tenancy is automatically converted to a Short Limited Duration Tenancy of five years or any shorter period which may be agreed between the two parties.
- Short Limited Duration Tenancies (SLDT) are agricultural tenancies where the letting is for not more than five years. If, with the landlord’s consent, the tenant under an SLDT of less than five years continues to occupy the land after the tenancy period has ended, the tenancy period is automatically extended to five years or any shorter period agreed between the two parties. If the Tenant continues in occupation (with the landlords consent) at the end of a five-year SLDT than a Limited Duration Tenancy (LDT) is automatically granted. There are no statutory rent provisions for an SLDT. SLDT’s cannot be assigned to third parties, but relatives can succeed to the tenancy.
- Limited Duration Tenancies (LDT) are agricultural tenancies where the letting is for a minimum term of 10 years – with no upper limit. To end an LDT a Notice to Quit needs to be served by the landlord (this is a two-staged process over three years). If the LDT is not terminated by notice at the expiry of the lease, there is instead a cycle of continuations. The Tenant may terminate an LDT at the expiry of the contractual term or the expiry of a continuation by written notice given not less than one year and not more than two years notice. LDT’s can be assigned to a third party, subject to Landlords consent (Landlords can only object on the grounds of the ability, finance or character of the assignee). Landlords can also pre-empt an assignation by matching the highest offer. An LDT also gives the tenant the ability to use land for a non-agricultural purpose (diversification).
Land Reform (Scotland) Act 2016
The Bill for this Act of the Scottish Parliament was passed by the Parliament on 16 March 2016 and received Royal Assent on 22 April 2016. Much of the detail for this Act is to be dealt with through “Secondary Regulation”, which will take place over the next couple of years. At the time of writing, none of the provisions of the Act have become law yet.
The 2016 Act introduces two new tenancies:
- Modern LDT a new tenancy is to be created, which will be known as a Modern Limited Duration Tenancy (MLDT), this will replace the current LDT. The tenancy will be for a minimum of 10 years and has many of the same features as the current LDT.
- Repairing Tenancies a Repairing Tenancy has a minimum term of 35 years. The lease requires the tenant during the “repairing period” to improve the land into a state capable of being farmed. The repairing period will last for five years, or longer if agreement between landlord and tenant or it can be extended by the Land Court.
The 2016 Act may also provides New Entrants with opportunities to become a Secure Tenant under the 1991 Act legislation:
- Assignation and succession of agricultural tenancies the Act will provide wider rights of succession and assignation to 1991 Act tenants, LDT’s & future MLTD’s and Repairing Tenants. This means family members who previously were unable to succeed to a tenancy may now be eligible.
- Relinquishing and assignation of 1991 Act tenancies this part of the Act will allow a Tenant to assign their tenancy for value to a person “who is progressing in farming” or a “new entrant”. The landlord has a right of pre-emption. If a tenant wants to go down this route, they must offer to relinquish the tenancy to the land owner in the first instance (it is independently valued). If the landlord does not accept the tenants notice to relinquish, the tenant may then assign the tenancy.
The full detail for the 2016 Act will be introduced over the next two to three years and this page will be updated as the information becomes available.