The Tenant Farming Commissioner (“TFC”) has fulfilled his statutory obligation to prepare for the Scottish Ministers “a report setting out recommendations for a modern list of improvements to agricultural holdings” (s37, Land Reform (Scotland) Act 2016).
His recommendations are available here.
What is the list of improvements?
During the course of an agricultural tenancy the tenant may make improvements to the land. The tenant may be able to claim compensation for certain improvements from the landlord at the end of the tenancy if the correct procedure has been followed. Qualifying improvements are listed in schedule 5 of the 1991 Act.
Schedule 5 is in 3 parts. The first is a list of improvements which require the consent of the landlord; the second is improvements in respect of which the tenant must give prior notice to the landlord (and following the tenant’s notice, the landlord could object to the improvement); the third is improvements which require neither the consent of, nor that notice be given to, the landlord.
The TFC’s Recommendations
The TFC’s report covers whether any item should be removed from the list (concluding, no); whether schedule 5 should include a catch-all clause; whether to change the status of some improvements; new improvements; and, the need for further clarification.
The current content of schedule 5 and the proposed changes are set out in tabular form at the end of this note. It is proposed that “Structure for the management and storage of manures and slurries", "Silage clamps, pits and pads”, “Works to dwellings”, and “Permissions, consents, contracts, authorisations and restrictions” are all added to Part 2 (improvements for which notice is required). As well as these additions, some amendments to wording are proposed, as follows:
- That paragraph 17 should be amended to read “the provision, distribution and storage of electricity, gas, power and heat”.
- That paragraph 22 should be expanded to “provision of means of sewage, waste, pollutants and run-off management and disposal, including septic tanks, effluent tanks, reed beds, sediment traps, filtration ponds and other bio-filters”.
- That ““Arable land” should be removed from Part 3 to recognise that such improvement is also carried out to pasture."
- That in paragraph 30, “purchased” should be removed as not all acquisitions of manure and fertiliser are purchases, and reference to “soil improvers, conditioners, and digestates” should be included.
First option for further change
Two “Options for further changes” are given. The first refers to the relevant merits and demerits of including a catch-all clause in schedule 5. The argument for this is the future-proofing of the legislation. Updating of schedule 5 has not kept pace with changes in farming practice and changes to primary legislation are typically slow. A catch-all clause based on provision in the Crofters (Scotland) Act 1993 was considered.
The TFC’s conclusion on a catch-all clause is against recommending that one is included “if there is reasonable certainty that schedule 5 can be reviewed regularly and that any accepted changes can be made relatively quickly.” The caveats are significant. Upon whom would an obligation to make regular review rest? Perhaps the TFC, although the TFC is not statutorily obliged to make any more than one review.
An alternative would be to designate someone, such as the TFC, as the person to whom suggested changes to schedule 5 should be reported, and who would determine when legislative amendments are required. If any consequent amendments could be made by SSI, the longer timeframe associated with primary legislation would be avoided.
Second option for further change
The second of the “Options for further changes” is that schedule 5 could include a note “drawing attention to the fact that improvements that are part of a diversification are subject to different regulation with respect to approval and compensation arrangements.” The purpose of this would be to “avoid possible confusion”. Earlier in the TFC’s report the possibility of an overlap between the rules on compensation for tenant’s improvements (under discussion here) and the separate system of rules on compensation for diversification is highlighted. The TFC states that “the boundary between the two does not seem to be always entirely clear and it needs to be made clear that tenants cannot claim for the same improvement under two different regulations.”
This being so, it may be better to explore the boundary between the two types of compensation in greater detail, in order to discover whether it could be drawn more clearly.
What is next?
The TFC has reported to the Scottish Ministers. It is now for the Ministers to determine what is to be done next, although it is likely that amendment to schedule 5 along the lines recommended will follow. The timeframe is not clear.