Nov 24 2020
CODE OF PRACTICE INTRODUCED WHILE RENT REVIEW REFORMS STALL
News Release
Scottish Tenant Farmers Association
24th November 2020
Code of Practice introduced while rent review reforms stall
The Scottish Government has decided not to proceed with implementing changes to the rent test as proposed in the 2016 Land Reform Act and is instead taking a fresh look at how to modernise the rent review system to provide the fairest and best solution for tenant farmers. In the meantime, rents will continue to be reviewed under the existing system. As an interim measure the Tenant Farming Commissioner, Bob McIntosh, is introducing a comprehensive Code of Practice on Conducting Rent Reviews to ensure that rents are reviewed transparently and correctly and proper account is taken of comparable evidence.
A revitalised rent review system was one of the major reforms recommended by the Agricultural Holdings Review Group by former Cabinet Secretary Richard Lochhead and incorporated in the Land Reform Act. The intention had been to replace the market driven formula for determining rents with one based on the productive capacity of the farm. Since then, the difficulties associated with designing a brand new rent test have become obvious and stakeholders have struggled to find agreement on how the proposed legislation should be applied in practice.
Commenting on the situation, STFA Chairman said; “We are very disappointed that, for a variety of reasons, the Scottish Government has decided not to proceed with implementing changes to the rent test. We are now faced with an extended discussion with other stakeholders and the government on the best way forward and it is likely that, even with a fair wind, it will be at least another year or two before we could have another rent regime in place.
“We remain adamant that continuing with the status quo cannot be an option and steps must be taken to create a rent test which does not place such a strong emphasis on an increasingly scarce open market for comparable evidence. We welcome Cabinet Secretary, Fergus Ewing’s commitment to continuing with the quest to re-design a new rent test and Bob McIntosh’s new code of practice which not only details the rent review process which should be followed, but also emphasises some key principles in rent negotiations which are so often conveniently forgotten, especially by landlords’ agents.
“Although it is disappointing that a new rent system has not emerged from the months and years spent on it, it has not been a waste of time and resources. There is now a much greater understanding about how rent reviews should be done and the importance of honesty and transparency in the review process and especially the cardinal principle that tenants should not be rented on their own improvements. The amnesty has been a huge help in this regard.”
Although many problems with rent reviews are associated with an out of date rent test, much of the blame must also lie with the ways in which rent reviews have been carried out over the years. The TFC’s Code describes the legal basis for rent reviews and provides a practical, step-by-step approach to conducting a rent review. The Code also signposts alternative ways to resolving disputes and how to deal with breeches of the Code. STFA recommend it as a must read for both landlords and tenants and particularly land agents.”
The TFC’s Code of Practice on Conducting Rent Reviews is available here. Hard copies have already been distributed to STFA members.