May 23 2017
RENT MODELLING WORK SET TO BEGIN
Scottish Tenant Farmers Association
News Release
23rd May 2017
RENT MODELLING WORK SET TO BEGIN
The Scottish Tenant Farmers Association has welcomed the news that the Scottish Government has appointed a contractor to conduct rent modelling work for the new rent test being applied to 1991 tenancies and available to Limited Duration Tenancies. The contract has been awarded to Savills and will also involve Hamish Lean and Watson, both of whom are well known practitioners, experienced in the conduct of rent reviews.
The 2016 Land Reform Act has radically changed the way in which rents are assessed, moving from a market driven approach to one based on the productive capacity of the holding. Although the new formula is enshrined in statute, the Act requires it to be tested on the ground to make sure it will be achieve its purpose of delivering a fair rent, before the secondary legislation, implementing the changes, is passed by parliament.
STFA has been critical of the delay in getting the rent modelling work underway as the start date of the new rent review system has now moved from late 2018 to late 2019 which means that the rent reviews may not be determined under the productive capacity until 2020.
Commenting on the news STFA Director Angus McCall said; “We are pleased to hear that a contractor has been appointed and rent modelling work will begin over the next few weeks. We are breaking new ground and tenants will soon be subject to a completely new rent test which will, in the longer term, prove to be a fairer, more transparent and more objective way of calculating rents. This is a major change of direction and it is important that as many potential hiccups as possible are identified in the modelling exercise before it is rolled out for general use.
“We are, however, surprised to learn that Savills have been appointed as the main contractor for this work as the firm is known to act for a large percentage of Scotland’s largest landlords and many tenants will have had their rents reviewed by Savills’ agents. These concerns have been raised with Cab Sec Fergus Ewing and we have been reassured by the news that Hamish Lean and Watson Bell, both of whom are STFA recommended agents, will be involved in the process to sense check Savills’ work from a legal and valuation perspective. We have also recommended to the Cab Sec a stakeholder monitoring group should be set up to provide further assurances of transparency and impartiality.
Hamish Lean explains his role: “Scottish Government have appointed Savills to test, analyse and make recommendations on the functionality and application of the new rent review system introduced under Part 10, Chapter 5 of the Land Reform (Scotland) Act 2016. Savills were amongst a number of organisations which tendered for carrying out this work. In order to ensure that the work is done in an objective, fair and balanced manner in accordance with the requirements of the new legislation, I have been asked to act as an independent legal assessor well known for acting for tenants to “sense check” Savills’ work and findings as robustly as possible from a legal perspective to ensure that it is correct on legal grounds and that it is objective, fair and reasonable. Watson Bell’s role, once again being someone well known for acting for tenants, is identical from a valuation and agricultural consultancy point of view.”
“We are sure that these safeguards will go a long way towards creating tenant confidence in what has in the past been a potentially confrontational and controversial process. Every change in legislation is liable to challenge but we hope that the industry as a whole will get behind the new rent review system and make sure it is a success. The tenanted sector needs a stable working environment and rent reviews should be seen as a normal business transaction with rents varying as farming fortunes go up or down. Rent notices dropping through the letter box filling tenants with a sense of dread should become a thing of the past.”