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Fears of hefty rent increases keep tenants quiet in right-to-buy debate
Farming comment ROG WOOD
29 Aug 2011
The Scottish farming industry is currently embroiled in a heated debate about whether tenant farmers should be given the right to buy their farms.
Sadly, despite the fact that you would assume that in a democratic country like Scotland everyone has the right of free speech, nothing could be further from the truth. Some tenant farmers and their families are frightened to air their views openly for fear of reprisals from their landlords.
That fact has been made abundantly clear to me in recent weeks by the large number of telephone calls I have received from tenants who tell me of their grievances with their landlords and then ask me to keep their identity anonymous. Put simply, they fear hefty rent increases, or a lack of investment in the farm by the landlord, or, more worryingly the loss of their home and business as a result of not having their lease renewed.
Generations of tenants had only limited security of tenure until the 1949 Agricultural Holdings (Scotland) Act that granted lifetime security to tenants and their successors. That enlightened piece of legislation was designed to encourage tenants to make long term investments in their farms, as well as freeing them from the fear of being evicted on a whim of their landlord ? but it also led to the supply of farms to rent drying up.
By the 1970s Scottish landlords had devised a method of circumventing the law by letting their farms to limited partnerships. That?s where the tenancy is granted to a partnership formed between the tenant and the landlord, or a subsidiary company of his, for a limited period of time ? usually between five and 10 years ? with the landlord?s share of the capital limited to a nominal sum. At the end of that period the partnership does not have to be renewed and the ?tenant? partner can be evicted on its dissolution.
That legal loophole became the norm until the 2003 Agricultural (Scotland) Holdings Act established Short Term Duration Tenancies (STDT), that last for five years, and Long Term Duration Tenancies, that endured a minimum of 15 years until this was changed to 10 years in March this year. In effect, Scottish lairds had won the day and Scotland has now reverted back to where it was prior to 1949.
With a significant number of Scotland?s farming tenants with less than 10 years to go before they can be evicted it?s easy to understand their fear of reprisals for daring to speak out ? if they cross their landlord he might not renew their lease!
The most common complaints I have heard from tenants concern the lack of investment in their farms by their landlords. One tenant told me that the Health and Safety Executive had advised him three years ago that his cattle pens were not fit for purpose. Despite his landlord agreeing to renew them, nothing has been done as yet and he continues to risk life and limb.
It?s much the same with fencing, despite the requirement at the commencement of a modern lease for them, and all other fixed equipment on the farm to be in a reasonable state of repair. One tenant told me that when he signed the lease six years ago for some extra land he was reassured by the landlord that the dilapidated fences would be renewed. Despite paying the agreed rent every year, the new fences never happened with the result that he was unable to graze the fields properly as his cattle kept escaping.
Ignoring the aspect of lack of investment in farms by landlords I have had other grievances aired. Another common one concerns the inability of tenants to participate in renewable energy generation schemes which are being actively encouraged by the Scottish Government. The arguments are complex but I will give you a flavour of them.
A prerequisite of making hefty investments in hydro-electric or wind-power schemes is the need for a long term lease of the land. After all, why enter into a 20-year contract to supply electricity when the lease has only a few more years to run?
Even those with traditional, heritable tenancies granted by the 1949 Act, that evolved into what are now referred to as 1991 Act tenancies, are being thwarted. Landlords cannot prevent the development of such power generation facilities, but they can refuse way-leaves for the power cables required to conduct the electricity to the national grid.
That ploy can be used to coerce the tenant into developing the facility as a farm diversification, rather than a tenant?s fixture, so that the landlords can claim a substantial share of the profits generated with little or no investment from them.
Of course, making the investment as a tenant?s fixture allows the tenant to keep all the profits, but leaves him without compensation for the equipment at the end of the lease. Lack of a long enough period of security of tenure of the land, reduced profitability because of enforced profit sharing, or lack of compensation leaves tenants struggling to raise loans at the bank, even if they wished to.
It?s much the same with farm forestry projects where the long term nature of growing trees is not compatible with the short term nature of many farm tenancies.
I am no longer a tenant and have no desire to obtain another tenancy, so I can speak freely without fear of recrimination.
Ten years ago the Scottish Government had an ambitious programme of land reform that has somehow stalled. I believe the evidence now points to the fact that the present system is not working, and does not allow for the most efficient use of Scotland?s precious farmland.
The time has come for Scotland?s farm tenants to be granted the right to buy their farms. That will encourage an explosion in investment and lead to a more efficient industry.