The Maintenance of the Condition of Tenanted Agricultural Holdings - New Code of Practice

  • Insight

06 February 2018

On 24 January 2018, the Tenant Farming Commissioner (“TFC”) issued a Code of Practice entitled “The Maintenance of the Condition of Tenanted Agricultural Holdings” (“the Code”).

This is the TFC’s fourth Code, following “Amnesty of Tenants’ Improvements” (12 June 2017), “Planning the Future of Limited Partnerships” (4 September 2017), and “The Management of the Relationships between Agricultural Tenants and the Holder of Sporting Rights” (31 October 2017).

Issuing codes of practice is part of the TFC’s remit under the Land Reform (Scotland) Act 2016 (which also established the role of TFC). Generally, the aim of the codes is the promotion of dealings and negotiations which are reasonable and fair between landlords and tenants in an agricultural context. The Codes are effectively soft law – that is, they are guidance, which is not legally enforceable.

As with previous codes, consultation was made with various interested bodies. For this Code Scottish Land & Estates, the Scottish Tenant Farmers Association, the National Farmers Union Scotland, the Royal Institution of Chartered Surveyors, and the Scottish Agricultural Arbiters and Valuers Association were all consulted.

Preliminaries to the Code

Nearly two-and-a-half of the total of four pages is taken up with introductory and background material, which is intended to make the scope of and wording of the Code as clear as possible for the parties. For example, regarding scope, it is clearly stated that tenant’s improvements and tenant’s fixtures are not within the scope of the Code. Regarding wording, the Code employs “must” where failure to comply would be a breach of the legislation, “should” indicates behaviour which the Code is aimed to promote (failure to comply could result in a formal complaint to the TFC), and “recommend” indicates circumstances where there is a choice of action.

A summary of the law is given, noting:

  • the difference between leases entered into before and after November 1948;
  • the status of post-lease agreements made before and after November 2003;
  • a non-compliant tenant may be subjected to the ultimate sanction of being made to quit the tenancy; and – prospectively –
  • following commencement of the relevant provisions of the Land Reform (Scotland) Act 2016, an equivalent sanction will be available against a non-compliant landlord, who may be forced to sell the holding.

The Code

The main substance of the Code relates to reaching agreement on a schedule of work, carrying out that agreement, and what to do if agreement cannot reached. The purpose of the Code is to provide a framework for reaching agreement where difficulty in doing so is encountered. If there is no difficulty, the terms of the Code need not be followed.

Four principles are set out. In short:

  1. Act lawfully
  2. Discuss and agree what needs to be done regularly
  3. Keep records of repairs and maintenance,
  4. Agree the approach to a record of condition.

It is recommended that a meeting to discuss and agree what needs to be done should be held at least once every five years. As this is a mere recommendation – not the law or a prescription of the Code – parties can depart from this frequency by agreement without running the risk of falling foul of the TFC.

The process set out in the Code is familiar: one party initiates the process; within a month, the parties should meet on the farm to discuss any works requiring to be done; within a further month, a proposal with timescales should be drawn up. Parties should respond timeously and the whole process of agreeing a schedule of works should be able to be completed within six months. Where there is a failure to agree, alternative dispute resolution (such as mediation or arbitration) is urged before any resort to litigation.

The Importance of Specific Legal Advice

The Code is intended neither to replace the law, nor to provide an exhaustive account of it. Again, its purpose is to provide a framework in which parties can reach an agreement on how to maintain the condition of tenanted agricultural holdings. Consequently, parties and their agents need to be aware of the Code and its contents but should also seek ­– and the TFC highlights the importance of this – specific legal advice on their particular circumstances.

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