Sharing Land Values – there is no quick fix!

After the publication of ‘Advice to Scottish Ministers on Options for Land Value Uplift Capture’ to Scottish Ministers, Shona Glenn, Head of Policy and Research, discusses how a Shona - portrait 001 - compressedmore collaborative approach to land development, in which the public and private sectors share risks and reward, should be a long-term aim. 

The value of land depends on where it is and what you can do with it – and what you can do with it is largely determined by the planning system. That is why, when planning permission is granted – or there is an expectation that it might be granted in the future – the value of land tends to increase. As this value is publicly created, there is a strong argument that it should be used to pay for the infrastructure needed to develop the kinds of places people want to live.

When the Scottish Land Commission was created one of the first things the Government asked us to do was to investigate how this could be achieved. This week we published some suggestions.

Our first suggestion is that we need to stop looking for quick fixes – they don’t exist! History has shown that poorly designed solutions don’t last long and tend to provoke conflict and resistance while they do last. Such an approach will not help to increase the supply of new homes.

Proposals to simply exclude hope value from the compensation local authorities pay to landowners when exercising compulsory purchase powers risk falling into this category. But the ambition to use this value for common benefit seems entirely right.

Commentators often point to Germany as an exemplar to follow so we looked at the German system to see what we could learn. What we found was that, while planning authorities in Germany can acquire land at existing use value, it is fundamental differences in their planning system that allow this to happen – not different compensation rules.

At the heart of this is a trade off between certainty and flexibility.

Planning in Germany is a very systematic affair with a formal hierarchy of plans and large public investments in the implementation of those plans. There is a lot of legal certainty about what kind of development will be permitted at an early stage so land values tend to be determined very early on. This means there is relatively little scope for hope value to arise and market value tends to be much closer to existing use value.

Scotland could move toward a more plan-led, German style, planning system – but it will take more than a simply changing compensation rules to achieve that.

Part of what we need to do is get better at using the planning system to actively shape land values – over the long-term this should help to reduce the gap between market value and existing use value.

A step toward this would be more clarity and consistency in the use and application of developer contributions across the country (the Land Commission has recommended a national review). The Infrastructure Levy proposed in the Planning Bill would be a further step in the right direction.

But this will only take us so far. If we want to move to a more plan-led system in which decisions about what to develop, where and when are driven more by the public interest than market forces then we need to take a serious look at how land is allocated for development. Over the next year the Land Commission will be working with stakeholders to do just this.

Planning policies can be an effective tool for shaping land values but this approach is likely to be most effective in areas where there is significant value to capture. In many parts of Scotland this is not the case. That is why we also need to recognise the need for the public sector to take a more proactive role in initiating and driving forward major development in Scotland and to accept the risks – and associated costs – of doing so.

Moving toward a more plan-led system will also take time – but the housing crisis is happening right now – so what can we do?

We believe that the Masterplan Consent Areas (MCAs) contained in the Planning Bill could be part of the solution. To do this they would need to be designed to provide a framework for collaboration that would allow the risks and rewards of development to be shared more equitably between the public and private sector. (Land value sharing anyone?)

This would be very different to our current approach, that tends to see large-scale development as a zero-sum game in which the public interest can be achieved only at the expense of commercial interests. What we are proposing is based on the principle that a more proactive involvement by the public sector should enable additional value to be created that would not otherwise exist. We believe that creating a framework that would enable landowners and developers to share in this value should make it possible to harness their own rational self-interest in pursuit of the common good.

A framework for delivering this approach that is consistent with the existing provisions for MCAs contained within the Planning Bill already exists. Over the next few months we will be working with stakeholders to look at how it could be made to work in practice.

Today’s recommendations to Scottish Government are informed by 18 months of research, including a joint report from the Scottish Land Commission and Scottish Futures Trust, Funding Scotland’s Infrastructure published today:

The Commission started by looking at lessons we could learn from the past. Last year we published a research report looking at historic attempts to capture land value uplift in the UK.  We have also published discussion papers on Public Interest-led development in Scotland; on local authority land acquisition in Europe and the lessons for Scotland.

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TFC blog: Discussions and Advice Vital for Diversification

Tenant Farming Commissioner, Bob McIntosh, gives an update on the latest his latest Guide to Tree Planting on Tenanted Agricultural Holdings. Bob - portrait NEW

With the current economic uncertainty surrounding agriculture, and increased pressure on business margins, more farm operations are looking to diversify into a range of different non-agricultural activities for future security.

This, along with a focus by Scottish Government on increasing woodland in Scotland, is causing more farmers and landowners to consider the pros and cons of woodland creation.

This new Guide outlines the rights of both tenants and landlords to plant trees and provides information on applying for permission to plant.

Importantly, a tenant of a secure tenancy or a limited duration tenancy wishing to use the land for a non-agricultural purpose such as tree planting can now do so provided they obtain written consent for diversification activity.

Before 2003 a tenant had no right to plant trees on the holding or, if they did, had no right to harvest them.

The guide also provides information about ‘waygo’ compensation.

This determines whether a tenant or landowner might be entitled to compensation depending on whether the planting has increased or decreased value of the land.

A tenant is entitled to compensation when the value of the trees is more than the loss of rent to the landlord in retaining the trees until their likely date of cropping plus the cost to the landlord of returning the land to agricultural use.

If the assessed value of the trees is less than this, the landlord will be entitled to compensation from the tenant to the value of the difference.

The trees should be valued on the basis of their worth to a willing purchaser for future cropping.

This is an important and potentially decisive issues affecting a tenant’s willingness to plant trees.

If a tenant were to quit the holdings when the trees are still pre-harvesting age, and given that the cost of returning the land to agriculture could be significant, the tenant may find that they have to pay compensation to the landlord so it is important that all aspects and implications are carefully considered at the outset.

As with most forms of diversification, a tenant needs to ensure correct procedures are followed and that any necessary consents are obtained.

Since tree planting is a long-term business that will affect the land use and associated costs and incomes well into the future, tenants are advised to discuss their plans at an early stage with their landlord so that discussions can take place around the best way to achieve the most favourable outcome for both parties.

Similarly, landlords who would like to see more woodland on their land have the opportunity to discuss a variety of business arrangements with the tenant in order to achieve this.

 

TFC blog: Guide Designed to Help Farmers and Landlords

Tenant Farming Commissioner, Bob McIntosh, writes about his work to improve relations with tenants and landlords.Bob - portrait NEW

I’ve recently published a new code of practice, designed to avoid the sort of issues that sometimes hit the headlines when tenant farmers and landlords have different aims and aspirations.

The new code of practice for agreeing and managing agricultural leases is designed to ensure there are robust procedures in place to avoid misunderstandings when a lease is being entered into, disagreements when changes are made during the term of the lease and disappointment when a fixed duration lease is ended.

The code sets out some simple principles that both tenants and landlords can follow.

This includes taking the time to fully understand the lease. An agricultural lease comes with responsibilities and liabilities.

Both parties, but particularly tenants, ought to take time to question and understand the terms of any lease they are signing and seek professional advice if they’re unsure.

Another principle in the new code is to record agreements in writing.

In any tenancy, agreements may be reached which alter the rights and responsibilities of both parties.

It could be a relatively simple matter such as the tenant notifying the landlord of an intention to construct a new shed. Whatever the issue, it is important that neither party relies solely on verbal or unwritten agreements.

Memories are short and personalities change, so to avoid future disagreements and misunderstanding both parties should ensure that agreements that impact on the rights and obligations of either party, are properly recorded in writing with both parties retaining a copy of the record. The new code also suggests holding regular reviews.

I recommend that tenants and landlords periodically review progress to check their initial understanding about the duration of the tenancy and the impact of any subsequent changes.

If either party changes their plans, I recommend that they tell the other party promptly.

Another principle in the code is discussing the end of the lease – in good time.

With tenancies of fixed duration, it’s best if discussions about the aspirations and intentions of both parties at the end of the lease start in good time, to minimise uncertainty and allow both parties to prepare for a change in circumstances.

The full code of practice can be found here.

This is the sixth code of practice I have issued as Tenant Farming Commissioner to help shape positive relationships between landlords and tenants.

 

TFC blog: Agreeing and Managing Agricultural Leases

Tenant Farming Commissioner, Bob McIntosh, summarises the latest Code of Practice on Agreeing and Managing Agricultural Leases. Bob - portrait NEW

A decision to sign up to an agricultural lease is one which results in responsibilities and liabilities and should not be taken lightly and without understanding the full consequences and implications.  Understanding the terms of the lease at the outset is the first important step but thereafter it is essential that any agreements affecting the responsibilities set out in the lease are properly recorded. There needs to be a full understanding by both landlord and tenant of the nature and implications of a fixed duration lease.

There are some important principles which if followed will help to ensure that misunderstandings and disagreements don’t occur during the term of the lease.

1. Understanding the terms of the lease

A desire to secure a lease can sometimes lead to tenants signing up without fully understanding the implications. Landlords should always allow time for the tenant to understand, and if appropriate, negotiate the terms of the lease. This is particularly important in the case of the Modern Limited Duration Tenancy (MLDT) because the law allows some flexibility in agreeing such issues as the rent review mechanism and the responsibility for replacement and renewal of the fixed equipment. Not every MLDT will therefore contain the same terms and tenants are advised to take professional advice if they are uncertain about any of the implications of the draft lease provided by the landlord. Once the lease is signed it will be legally binding and changes can only be made with the agreement of both landlord and tenant.

Most new agricultural leases will now be for a fixed term and can only be renewed by agreement. It is important that, at the beginning of a fixed term lease, landlord and tenant have a discussion about what might happen at the end of the term, and the aspirations of both parties should be recorded so that there is no misunderstanding at the end of the term about what was agreed at the start. It is understandable that either of both parties may be unable to say what their attitude to continuation will be when the time comes and if that is the case it should be recorded. The aim is to avoid reaching the end of the term with different expectations about what will happen next. Unless an agreement has been reached to the contrary, tenants should never assume other than that a fixed term lease will terminate at the end of the term.

 2. Recording changes and agreements

During the term of the lease there are likely to be occasions when something occurs which might affect the rights and responsibilities of one or both parties. A common example would be the need for a tenant to seek consent for, or give notification of, a tenant’s improvement that might qualify for compensation at waygo. Too often this is subject to a verbal agreement between the tenant and the landlord or landlord’s agent. This is fine at the time but memories are short and personalities change and the end result is disagreement about what may or may not have been agreed. It is imperative that any such agreements and notifications are properly recorded in writing. In many cases a simple exchange of letters or emails (with a printed copy retained) will suffice but in the case of a more complex issue it may be necessary to have a proper legal agreement drawn up. Tenants and landlords are advised to take professional advice about the best way forward if there is any doubt about the most appropriate action to take.

 3. Actions towards the end of the lease

If a fixed duration tenancy has been in place for a reasonable length of time (and many are of 15 years or more duration) it is understandable that the tenant may have invested emotionally and financially in the holding and will be disappointed by a decision by the landlord not to renew. The law ensures that tenants of LDTs and MLDTs must be given reasonable notice of a decision to end the lease at the expiry of its term but this will not always be enough to prevent public and political opinion from seeing this as an ‘unfair eviction’ as has happened in one recent case. It will be helpful therefore if a conversation is held between landlord and tenant well in advance of the end date to explore the aspirations of both parties and to consider what options may be available. Much will depend on the landlord’s intentions towards the land but discussions might include consideration of-

·      the tenants age and the possibility of extending the lease to enable the tenant to reach pension age.

·      whether there might be an option of the tenant retaining the house if this is not needed

·      the impact on the tenant’s business if this is the only or main income source

·      whether another holding in the landlord’s ownership might be available.

 Tenants must accept that a fixed duration tenancy is just that and that it may not be possible for the landlord to provide any of the above, but landlords should be aware that a decision to terminate a fixed duration tenancy will be more supportable if it is preceded by such discussions.

Read the full Code of Practice.

Understanding International Experiences of Community, Communal and Municipal Ownership of Land: a knowledge exchange webinar

Guest bloggers Annie McKee (The James Hutton Institute) and Jane Atterton (SRUC) look at understanding international experiences of community ownership of land for an upcoming knowledge exchange webinar.   This is part of a review commissioned by the Scottish Land Commission of international experience of community, communal and municipal land ownership.  The project will explore relevant forms of community, communal and municipal land ownership outside Scotland, particularly focusing on the interaction between governance structures, management objectives, the distribution of land rights and cultural perceptions. Lessons for Scotland will be provided from this international experience.  

The community ownership of land in Scotland represents an important and currently active agenda. In many countries around the world, community engagement and involvement in landownership and management is well established. Critically, legal ownership is often not the defining characteristic of what can be loosely termed communal, municipal or community ownership at a global level. Reviewing indigenous rights and communal ownership also highlights the importance of specific rights over resources, which may be separate to ownership, and which may represent key aspects of community development and self-determination. Bundles of land rights and/or strong local governance structures can result in a community-led approach to land management and decision-making related to land, despite the outright ownership of the land lying with another body (e.g. a State-owned company or local municipality administration).

Other institutions (including the public and private sector organisations) can play important roles in delivering asset-based community development in some contexts (for example, community land trusts in the United States).  Reviewing indigenous rights and communal ownership also highlights the importance of specific rights over resources, which may be separate to ownership and can represent key aspects of community development and self-determination. Critically, due to the complexity of ownership formats internationally and the varying emphasis of the importance of property ownership, understanding community ownership in an international context requires consideration of governance structures for managing land and associated rights (as opposed to who ‘owns the land’ in a legal sense) as well as the historical evolution of community-based ownership.

In Scotland, what constitutes ‘community landownership’ is arguably reasonably well agreed upon i.e. ownership (legal title and exclusive right of possession) of land and/or assets by a community body that is locally-led and linked to a defined geographic community (Scottish Government, 2017). Community ownership in Scotland is therefore predominantly ‘place-based’ and based on the acquisition of ‘full’ property rights (although it is recognised that various partnership and lease arrangements exist between communities and landowners). In this sense, ‘community ownership’ in Scotland is a relatively distinct form of landownership and generally seen as distinct from public ownership of land (e.g. by Forestry Commission Scotland, a state agency and the largest single landowning entity in Scotland). In contrast, the interpretation and conceptualisation of ‘community’ or ‘communal’ ownership of land varies considerably across Europe and further afield and is often less clearly distinguished from ‘public ownership’. Understanding these global perspectives

A webinar will be held on 5th March from 1.30-3.30pm to discuss emerging findings from ongoing research commissioned by the Scottish Land Commission, led by Dr Jane Atterton at Scotland’s Rural College (SRUC) that seeks to understand international experiences of community, communal and municipal ownership of land. The webinar will connect people with knowledge and expertise in the field of community land ownership internationally, to build new understandings and identify key themes relevant to the ongoing research.

The research team (including researchers from SRUC, the James Hutton Institute, and Universities of Aberdeen and Sheffield) will outline the main themes from the desk-based evidence review and in-depth international case studies during this webinar, which will be chaired by Malcolm Combe, Senior Lecturer in Rural Law from the University of Aberdeen. The international case studies to be discussed include and exploration of state and community-owned common land management in Norway, the community land trust model as developed in the United States, common forest management and ‘access to land’ initiatives in France, amongst others.

The focus of the webinar discussion will be to identify the key lessons relevant to the ongoing processes of changing landownership in Scotland. This online meeting will provide an opportunity to discuss the research findings and the emerging lessons with an expert group of international academics, practitioners, stakeholders, and interested members of the public (although places are limited). In summary, the webinar aims to:

  • Draw out implications for Scotland from international experiences of community, communal and municipal land ownership.
  • Interrogate international project advisors, representatives of case studies, and key informants to incorporate their knowledge and experience of other contexts, e.g. regarding the potential barriers/challenges experienced elsewhere.
  • Link practitioners and researchers working on community, communal and municipal ownership of land internationally, for the purposes of transdisciplinary knowledge exchange.

Participants in the webinar will include the Scottish Land Commission staff and Commissioners, relevant Scottish stakeholders (including representatives from the Scottish Government, Community Land Scotland, Scottish Land and Estates, and others), the international advisers to the ongoing research project, and representatives from the case studies featured in the project. The webinar will be recorded and subject to participants’ agreement, will be made publicly available. The webinar report will form part of the research report to be submitted to the Scottish Land Commission in mid-March 2019. The report will collate the webinar messages and present lessons that Scotland could learn from international experiences, as it seeks to develop and support the model of community land ownership.

Any interested individuals who wish to participate in the webinar are requested to contact either Jane Atterton (SRUC) or Annie McKee (The James Hutton Institute) by 5pm on 4th March, to request a space and joining instructions (although please note that spaces are limited). The webinar recording will be uploaded to the project webpage shortly after the event, and the final project report is anticipated for publication by the Scottish Land Commission in late Spring/early Summer 2019.

Community Engagement in decisions relating to land

Scottish Land Commissioner, Sally Reynolds looks at the importance of community engagement in decisions relating to land following the recent publication of a protocol and supporting toolkit by the Scottish Land Commission.

Land Commission board portraits

Early and open engagement by those who own or manage land with the local community should be part of normal business practice in Scotland.

While there are plenty of examples of good practice, there are also occasions when communities feel they’ve been ignored or only lip service has been paid to engaging them.

But, genuine and open engagement is good for land owners because it can reduce potential conflict, help make businesses more resilient and promote innovation.

On the flip side, communities will be better informed and people will have a greater opportunity to engage, understand and influence potential change and opportunities.

By working together and engaging in a process, it is often easier to make constructive progress.

That’s why we, at the Scottish Land Commission have this week launched a new Protocol and toolkit about community engagement in decisions about land.

This sets out in really practical terms how landowners, land managers and communities can work together to make better – and fairer – decisions about land use, especially when changes are on the agenda.

The toolkit will help landowners in engaging with communities. It includes a ‘decision map’ with ideas for engagement methods and what is expected of landowners and managers in different situations.

We believe it will promote an open approach to decision making, all of which is a vital part of increasing the accountability of land ownership and making the most of opportunities.

The Protocol defines standard good practice for engagement over land use and management.

I live and work on community owned estates and I have seen first-hand the positive outcomes engagement can have for both the community and land owner. I also know how daunting it can be for organisations who would like to engage with the community but don’t know how to get started. That’s why I am really excited about this new protocol and toolkit as I think it will help all parties work and move forward together.

This Protocol is the first in what will become a series of Land Rights and Responsibilities Protocols on different subjects that we will produce over the coming years to encourage practical implementation of the principles set out in the Scottish Government’s Land Rights and Responsibilities Statement (LRRS).

The Protocols will be short, clear, practical and fair to all parties, setting out clear expectations of what ought to happen in normal circumstances and provide guidance and practical advice to land owners, land managers and communities, to make more of Scotland’s land.

One initiative that illustrates good practice in terms of the principles of community engagement is the East Neuk Community Action Plan (ENCAP) Steering Group in Fife, which has successfully brought together landowners, community groups and others in to community-led planning. Partners include the East Neuk Estates Group which forged strong relationships with community groups, responded to the priorities they identified and integrated these into their own estate and land-use plans.

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Scotland’s proposed new Rights Act and land reform

Land Commissioner Megan MacInnes looks at the proposed new Rights Act.

At the end of last year – and possibly lost amidst political headlines and the pre-Christmas rush – First Minister Nicola Sturgeon announced a seismic shift for human rights in Scotland, which could have profound impacts for land reform.Land Commission board portraits

The 10th December is International Human Rights Day and in 2018 marked the 70th anniversary of the Universal Declaration on Human Rights. It was also the day on which the First Minister’s Advisory Group on Human Rights Leadership published its recommendations for how Scotland can become an international human rights leader. The recommendations focus on the adoption and implementation of a new Rights Act; a statutory framework for human rights which for the first time would include economic, social and cultural rights, as well as environmental rights.

It is these economic, social and cultural rights which are the human rights most closely associated with land. Therefore, the fact that the First Minister has set up a task force to take the recommendations forward, could mean big changes for progressive land reform and the work of the Scottish Land Commission.

Until recently conversations about human rights and land reform in Scotland focused on how the protection of private property rights were hindering land reform. However, with the consideration of economic, social and cultural rights included first within the Community Empowerment (Scotland) Act in 2015 and then the Land Reform (Scotland) Act in 2016, this relationship has been rebalanced.

As described in the Land Lines discussion paper published by the Commission: “the human rights focus shifted from avoiding human rights violations to actively pursuing positive human rights impacts. This … envisages using, and in some cases unlocking, land in pursuit of the progressive evolution of human rights, particularly ESC [economic, social and cultural] rights.”

Within the economic, social and cultural rights it is the rights to food and adequate housing which are most closely dependent on individuals, families and communities having access to and secure tenure over land, and thus the progress of land reform. Other rights associated with land include the right to physical and mental health, right to education and right to take part in cultural life.

But what does this mean in practice? Referring to human rights can strengthen a communities’ case for improvements in services – the Leith housing project involved tenants becoming aware of and exercising their right to adequate housing as a means to improve their housing conditions. Human rights can also help identify connections between land and wider social, cultural and economic trends. The community acquisition of 17,000 acres of land on the Isle of Harris by the West Harris Trust in 2010 reversed trends of depopulation and seasonal, unsustainable housing and employment opportunities, thereby having a positive impact on economic, social and cultural rights. Conversley, the negative impacts of long-term derelict land on individuals and communities are well documented, restricting their ability to meet important needs – rights – such as affordable housing or cultural facilities.

As a result of this rebalancing of human rights and land reform, human rights support rather than hinder progress. The right to property is recognised as not being absolute and can be limited in pursuit of the public interest and balanced against other human rights. The Land Reform (Scotland) Act 2016 requires Minsters to have regard for economic, social and cultural rights in preparing the Land Rights and Responsibilities Statement and Guidance on Community Engagement, as well as in decisions relating to the community right to buy for sustainable development.

The Land Rights and Responsibilities Statement, published in September 2017 by the Scottish Government, articulates for the first time that along with rights to land come responsibilities; to your neighbours, your community and the wider public. The Statement adopts a human rights approach to land rights and responsibilities with the intention of improving the connection between land (in rural and urban areas) and the Government’s wider objectives of inclusive and sustainable economic growth and social justice.

The Rights Act can bring in to statute the protection and respect for economic, social and cultural rights which currently exist only in policy. What is being proposed is not just a technical but practical and most importantly accountable; it creates a new task force, provides capacity building and introduces human rights-based indicators for our National Performance Framework. This highlights the importance of human rights in Scotland’s future and enables public bodies like the Land Commission to place them at the heart of our programme of work.

Like the Advisory Group, I will end by handing over to Eleanor Roosevelt, the key architect of the Universal Declaration on Human Rights; “Where, after all, do universal human rights begin? In small places, close to home ….. so close and so small that they cannot be seen on any maps of the world. Yet they are the world of the individual person; the neighbourhood he lives in; the school or college he attends; the factory, farm or office where he works.” What can be closer to home than the rights to having food on the table and a roof over our head? And land is critical to both.

 

TFC blog: Tenancy Trends

Tenant Farming Commissioner, Bob McIntosh reflects on the trends of agricultural tenancies in Scotland. Bob - portrait NEW 

The ability to rent agricultural land is important to the development of the agriculture sector. It brings together those with land but no desire to farm and those who desire to farm but have no land and it provides opportunities for new entrants who don’t have the capital to buy a farm.

While the principle is widely supported, the mechanisms for achieving a healthy renting sector have evolved and changed in response to the constant search for the ideal balance between the landlord’s desire for flexibility and the tenant’s desire for security. Prior to 2003 the secure (Agricultural Holdings (Scotland) Act 1991) tenancy was the main method of letting land but successive changes to agricultural holdings legislation have made this vehicle less attractive to landlords. The introduction of Limited Partnership agreements and the rise of contract farming arrangements was a common response by landlords and in recognition of the need for new letting arrangements the 2003 Agricultural Holdings (Scotland) Act saw the introduction of limited duration tenancies (LDTs). With 15 years experience now of limited duration tenancies it is interesting to review the current tenancy statistics and trends.

The total area of agricultural land rented out has been in long term decline for decades and by 2018 only 22% of Scotland’s agricultural land was in some form of rental agreement. Interestingly though, the last two years data suggest a small rise, for the first time in many years, in the area in some form of rental agreement. The most recent Annual Agricultural Land Occupation report produced by the CAAV has suggested that, for the first time, there was a rough balance between land leaving and entering the rented sector in Scotland. Whether this is a flash in the pan or represents a reversal in the decline of tenanted land remains to be seen but it is an encouraging sign. Of course land coming out of the rental sector is not always bad news. Scottish Government figures indicate that around half of the land coming out of tenancies between 2005 and 2015 was due to tenants buying their farms. While this may diminish, at least in the short term, the number of farms available for rent, it contributes to the Scottish Government’s desire for a greater diversity of land ownership and is clearly something that has been welcomed by the tenants given the opportunity to purchase their holding.

Since 2003 the number of Short Limited Duration Tenancies (SLDTs) and LDTs has steadily increased. By the end of 2017 there were estimated to be 1192 SLDTs and 710 LDTs in existence, some 4370 secure (91 Act) tenancies and some 459 Limited Partnership agreements. Over the last 12 years, therefore, the percentage of total tenancies represented by the limited duration tenancies has increased from 5% to 28% while secure tenancies have declined from 85% to 64% and Limited Partnerships from 11% to 7%.

While it seems clear that the introduction of limited duration tenancies has had a beneficial effect on the number of tenancies available, it is also clear that the duration of LDTs, which can be on any length, is tending to be relatively short (10 to 15 years). It seems that landlords are being cautious about committing to long term leases, probably because of a desire to retain future flexibility and fear of further legislative changes that might increase security for the tenant and/or extend the pre-emptive right to buy to limited duration tenancies.

This creates uncertainty for the tenant about the possibility of an extension and may reduce the incentive for the tenant to invest in improving the holding. It will also undoubtedly lead to some difficult discussions when a tenant who has invested emotionally and financially in a 15 year tenancy is told that it is not being renewed and that the tenant has 2 to 3 years in which to quit the holding and find an alternative home and possibly an alternative occupation. Even though there are legal grounds not to renew a tenancy there is the risk that political and public opinion may see this as an unfair ‘eviction’ and the sector has to approach this situation with care and sensitivity.

Ultimately, a fixed term tenancy must be able to be treated as such and landlords have the right not to renew a tenancy if it is not in their best interests. However, such a decision will be more readily supportable if it is preceded by a constructive dialogue with the tenant that attempts to find a mutually acceptable way forward. Such a discussion might include consideration of the tenant’s age and retirement plans, any opportunities for relocation or continued occupation of the house even if the land is not being re-let and any other special circumstances that might lead to consideration of an extension to the existing lease, granting of a new lease or formation of a joint venture or partnership as an alternative way forward. It may not be possible to arrive at a conclusion that suits both parties but that can only be determined if the discussion takes place.

Looking to the future, we have yet to see any impact of the recently introduced Modern Limited Duration Tenancy (MLDT) though its similarity to the LDT suggests that it will not radically change the direction of travel. We can perhaps expect to see more examples of partnerships, joint ventures and share farming arrangements between landlords and tenants as an alternative way forward. Such arrangements have the potential to increase the opportunities available to new entrants to ensure the ongoing        vitality, resilience and competitiveness of the agricultural sector and rural regions in Scotland.

The future of community ownership

Scottish Land Commissioner, Lorne Macleod, looks at the future of community ownership following the publication today of the Commission’s recommendations to Scottish Ministers.

The ability of communities to own the land on which they live and work has long been central to the land reform agenda in Scotland. Land Commission board portraitsWith more than 562,000 acres of land in community ownership, many parts of Scotland already have control of their local land asset.

We have published a report today which looks at how this can continue to grow and for community ownership to become a normal and realistic option for communities across Scotland.  The sector is developing rapidly, and to become a normal option for both urban and rural communities there needs to be a clear vision for the way in which community ownership matures over the coming decades.

The report was informed by research from a team at Scotland’s Rural College which considered the experience of community ownership in Scotland over the last 25 year .

We make a number of recommendations for the future of community ownership; in particular, that it should become a routine option for communities, so it is planned and proactive rather than reactive.

We recommend that there needs to be a:

  • clear vision for how community ownership can become a mainstream way to deliver development and regeneration in urban and rural communities
  • recognition that community ownership is not an end in itself but a means to delivering wider outcomes
  • a shift from community acquisition being driven either by specific problems or a reaction to land coming onto the market, to being planned and proactive.

We will now work with Scottish Government to bring interested stakeholders together in a Community Ownership Delivery Group (CODG) to shape the policy tools and specific interventions needed to deliver the recommendations in the report that include:

  • embedding community land and asset ownership into local place planning
  • ensuring that targets for community ownership reflect the outcomes sought in both rural and urban communities
  • ensuring support for community ownership transfers is provided across the whole geography of Scotland
  • considering longer-term sources of financial support for both capital costs and post-acquisition development
  • supporting negotiated transfer of land as the norm, whilst streamlining right to buy processes.

Community ownership and right to buy has developed significantly over the last 20 years and community ownership is now seen as integral to regeneration and sustainable development in both rural and urban contexts in Scotland.

Community ownership should be seen as normal and routine, as it is internationally, for a community to acquire and own land that could provide local housing, business development, community facilities, recreation facilities, greenspace, as a fundamental way to create more vibrant communities and regional economies.

Community, communal, and municipal land ownership has a long history and is perfectly normal across much of Europe and elsewhere so the next stage of the Commission’s work will be to explore what makes such ownership successful, to draw lessons that can help normalise and support further community ownership, and inform that sustainable long term vision for the sector in Scotland.

We see community ownership as one part of a much more diverse  land ownership pattern in Scotland. It can unlock productivity, spread the benefits of land more widely and give people a greater stake and influence in land use decisions. We are delighted the Cabinet Secretary has accepted in principle our recommendations and we look forward to playing our part in enabling communities to take on ownership of the land and assets they need to meet their needs and ambitions.

TFC blog: Housing in Agricultural Tenancies that are occupied by the tenant

Houses which are rented out in the non-agricultural sector are subject to regulations which ensure that the landlord provides a property that meets certain minimum standards. Unless exempt, private landlords are required to register with the Local Authority and Local Authorities have powers to intervene if a rented property is not meeting the required standard. Bob - portrait NEW

 The Tolerable Standard (TS) is a very basic standard that all houses should meet, including those in agricultural tenancies. It is a condemnatory standard: accommodation which is below the TS is not acceptable as living accommodation and Local Authorities have a duty to ensure that they are closed, demolished or brought up to standard. The Repairing Standard (RS) is the minimum standard that should apply to any property let out on a residential tenancy.

 The requirement to meet the RS does not currently apply to most privately rented agricultural housing.  Housing on agricultural holdings, including ‘tied housing’, rented crofts and small landholdings that is rented to an individual under an agricultural tenancy is currently not required to meet the same standards as other private rented accommodation.  In such cases the farmhouse is treated as an item of fixed equipment like a shed or any other item of fixed equipment. The result is that in most tenancies the landlord has the responsibility for replacing and renewing parts of the farmhouse which are worn out through fair wear and tear and the tenant is responsible for repairing and maintaining the farmhouse. In cases, however, where a post lease agreement may have transferred responsibility for replacement and renewal of fixed equipment in a secure tenancy to the tenant, this will include the farmhouse. The end result of this is that some farmhouses have been improved by the landlord, some by the tenant, some by both and some have hardly been improved at all.

 All of this is set to change. The current position arguably puts the agricultural tenant in a less favourable position than someone in a rented house in the non-agricultural sector.  Scottish Ministers have indicated that they do not see it as equitable or acceptable that this situation should continue, and intend to make legislation in 2019 to introduce a requirement for rented agricultural housing to meet the RS by 2027. This should give ample time for discussions about what work may be required and where responsibilities lie, and for the necessary work to be carried out.

 This change will undoubtedly lead to some difficult discussions between landlords and tenants. The legislation puts the onus for any work required on the landlord but it is not clear whether this will take precedence over existing post lease agreements which transfer responsibilities to the tenant. No doubt too, this will be an opportunity to engage in the age-old pastime of disagreeing over whether some of the work that may  be necessary  is due to the landlord’s failure to renew or replace or the tenant’s failure to maintain. Whatever the complexities of agricultural holdings legislation, Ministers have made it clear that they expect these complexities to be addressed, so entrenched positions will not deliver a solution. A summit on this issue has already taken place last month, and all involved in the agricultural holdings sector need to give this issue some serious thought and must come together to agree a sensible way forward that respects the legislation and which is fair to both landlord and tenant. We have the time to do this, and hope that landlords and tenants will work together on this in the same cooperative way they have on other shared challenges.