The role of the Tenant Farming Commissioner (TFC) was created by the Land Reform (Scotland) Act 2016. The TFC is tasked with publishing Codes of Practice which provide practical guidance to landlord and tenants and their agents.
The latest Code of Practice to be published relates to agreeing and managing new leases. The Code of Practice seeks to establish principles and practices which will help minimise the scope for disagreements and misunderstandings between the parties. It emphasises the importance of each party having a clear understanding of what has been agreed and maintaining a dialogue throughout the tenancy.
The Code of Practice sets out the relevant practices which apply at each stage of the tenancy. If the parties do not comply with the steps below, it may constitute a breach of the Code of the Practice.
Entering into a New Lease
The Code of Practice requires the following:
- The landlord should provide a prospective tenant with a full draft lease at least one month prior to the proposed commencement date.
- The parties should discuss and record in writing their expectations and aspirations as to the outcome at the end of the lease (and if either party is not in a position to comment on their plans for the future, that should also be recorded). The aim is to avoid the parties reaching the end of the tenancy with different expectations about termination, extension or renewal.
During the Lease
In addition to following any statutory requirements (for example, in relation to tenant’s improvements to the holding), the Code of Practice provides that all agreements between the parties should be recorded in writing, with each party retaining a copy.
Ending the Lease –
Termination of Short Limited Duration Tenancies
A short limited duration tenancy (SLDT) has a maximum duration of 5 years. An SLDT comes to an end automatically on its expiry date without the need for written notice by either party.
The Code of Practice provides that, where an SLDT is for longer than 3 years, the landlord should ensure that a discussion takes place with the tenant at least 6 months prior to expiry to either confirm termination of the tenancy or discuss future arrangements.
Termination of Limited Duration Tenancies and Modern Limited Duration Tenancies
Limited Duration Tenancies (LDTs) and Modern Limited Duration Tenancies (MLDTs) have a minimum duration of 10 years. In order to termination these tenancies, the party wishing to terminate must follow the statutory notice procedure.
The Code of Practice provides that termination of an LDT or MLDT should be preceded by constructive dialogue between the landlord and the tenant which seeks to find a mutually acceptable way forward. Such a discussion might include consideration of the matters set out below.
- Tenant’s age and retirement plans;
- The landlord’s future plans for the holding;
- Any opportunities for relocating the tenant to another holding;
- Continued occupation of the house by the tenant if the house is not being re-let;
- Any other special circumstances of either the landlord or tenant which might lead to consideration of an extension, or a new lease or the formation of a joint venture agreement.
The Code of Practice highlights that tenants of fixed term tenancies (SLDTs, MLDTs and LDTs) cannot assume anything other than that the tenancy will come to an end on the expiry date, unless there has been agreement to the contrary.
In addition to the requirements set out above, the Code of Practice includes a number of “recommendations”. However, a failure to comply with a recommendation will not in itself be a breach of the code of practice.