What types of tenancy might be available to me?
Following the introduction of the Land Reform (Scotland) Act 2016 there are several tenancies available to New Entrants as listed below:
- 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 up to five years 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 landlord’s consent) at the end of a five-year SLDT than a Modern Limited Duration Tenancy (MLDT) is automatically granted. There are no statutory rent provisions for an SLDT.
- Modern Limited Duration Tenancies (MLDT) are agricultural tenancies where the letting is for a minimum term of 10 years – with no upper limit. These replace Limited Duration Tenancies. For New Entrants there is a 5-year break clause which can be applied. To end an MLDT a Notice to Quit needs to be served by the landlord (this is a two-staged process over three years). If the MLDT is not terminated by notice at the expiry of the lease, there is instead a cycle of continuations. The Tenant may terminate an MLDT 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. MLDT’s can be assigned to a third party, subject to Landlord’s 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 MLDT also gives the tenant the ability to use land for a non-agricultural purpose (diversification).
- 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 also introduced more opportunities to become a Secure Tenant under the 1991 Act legislation. It is not possible to create a new 1991 Act tenancy, but the 2016 Act now allows for extended family members to succeed in a secure tenancy.
The act also introduced the relinquishment and assignation of a 1991 Act tenancy.
An existing tenant can offer to relinquish a secure tenancy back to their landlord and if they accept then a process with an independent valuer, appointed from the Tenant Farming Commission, is followed.
If the landlord does not pursue the relinquishment avenue, then the tenant has the option to assign the tenancy to either a New Entrant or a Progressive Farmer. The value of the tenancy is negotiated privately between the two parties and the landlord can only object on limited grounds.
Both relinquishment and assignation are complex procedures and independent advice should be sought by all parties involved in the processes.