We are now nine months on from the passing of the Land Reform (Scotland) Act 2016 and over the last couple of months we have started to see some substantive signs of progress with regard to the Act being brought into force. Here we round up some of the latest developments, including those relating to the Scottish Land Commission, sporting rates reintroduction, the register of controlling interests in land and the first agricultural holdings provisions coming into force.

Sporting Rates

The provisions to bring shootings and deer forests back into the realm of non-domestic or business rates were among the first from the Act to be brought into force, back in June of this year, with the regulations providing for shootings to be added back onto the valuation roll from 1 April 2017.

Valuation Assessors across the country have now issued Return of Information forms to landowners and occupiers, seeking information on shooting rights on their holdings. It is understood that the returns have been issued using IACS information held by the Scottish Government, Rural Payments & Inspections Directorate (SGRPID), so farmers claiming basic payment or other aid are among the first to receive the forms. The information required includes details of who owns and exercises the shooting rights, details of leases (if the rights are let), the type of land involved, and details of birds and deer shot in recent years.

At this stage, there is very little information about how rates might in fact be assessed. No methodology is available yet so it is not clear what rates bills might look like, though there continues to be hope that many farmers will escape paying any rates due to the Small Business Bonus rates relief. What is being emphasised (and what was overlooked by many at the time of passage of the Bill through Parliament) is that this change applies to all land over which sporting rights can be exercised – whether or not they are in fact exercised or exercised commercially. This change in the law will not only affect the big sporting estates and anyone issued with a form must complete it.

For those who have let the sportings on their property, it would be prudent to review the terms of their shooting leases, to check whether they cover who has responsibility for any sporting rates.

Scottish Land and Estates has prepared a useful FAQ document on how to complete the form, which is available here.

Controlling Interests in Land

Once section 39 of the Act is brought into force, the Scottish Government will be obliged to make regulations providing for a public register of persons with controlling interests in owners and tenants of land.

In advance of that, the Scottish Government has been consulting (consultation document available here) on how a controlling interest might be defined and the information that should be held on the public register, along with how/when that information might be provided and what sanctions may be introduced for non-compliance.

The consultation closed on 5 December and responses will now be collated and reviewed. There will be further consultation on the terms of proposed draft regulations before final regulations are laid before Parliament and we will keep you updated as to progress.

The Scottish Land Commission

The Scottish Land Commission was formally established on 1 November 2016 and it will become fully operational on 1 April 2017.

It has been confirmed that the Commission will be based in Inverness and the first Commissioners (consisting of five Land Commissioners and one Tenant Farming Commissioner) have now been appointed by the Scottish Ministers (subject to formal approval by the Scottish Parliament). Details and information on the Commissioners is available from the Scottish Government website here. Once in post, the principal remit of the Land Commissioners will be to review existing law and policy relating to the use and management of, and ownership and other rights in, land in Scotland, and to recommend changes to such law or policy.

Appointees include the now well-known Andrew Thin, currently the Scottish Government’s Independent Adviser on Tenant Farming. In that role, he has been working with the National Farmers Union of Scotland, Scottish Land and Estates and the Scottish Tenant Farmers Association on the development of guidance for landlords and tenants of agricultural holdings; it is anticipated that the Tenant Farming Commissioner will build on that guidance when preparing the Codes of Practice, which is a large part of that role’s remit. Andrew is appointed as a Land Commissioner (not the Tenant Farming Commissioner) and will be the Chair of the Commission.

Also among the Commissioners are two crofters, the current Chair of Community Land Scotland (the representative body for community landowners in Scotland) and a professor of property and urban studies, who advised the Land Reform Review Group.

Agricultural Holdings provisions –regulation making powers and widening of succession and assignation of existing tenancies

This month the first of the Act’s agricultural holdings provisions will come into force. An early Christmas present, 23 December 2016 is the appointed day for various enabling provisions of the Act, which will allow the Scottish Ministers to bring forward regulations on a number of matters that are currently wholly unclear, including:

  • who will qualify as a new entrant for the purposes of a Modern Limited Duration Tenancy with a break clause;
  • how compensation provisions will work under the new Repairing Tenancy;
  • the new rent review proposals, including the form and content of rent review notices and how the productive capacity of land is to be determined; and
  • who will qualify as a new entrant or person progressing in farming for the purposes of the new relinquishment and assignation provisions

It’s important to note that these provisions are simply technical ones, enabling further steps to be taken. They address some of the most controversial issues in the legislation – so we probably shouldn’t expect regulations on the various issues to be immediately forthcoming. Watch this space for updates.

On 23 December, the Scottish Ministers will also be given the power to bring forward regulations to vary the valuation methodology for relinquishment and assignation, as currently set out in the Act. Many industry stakeholders have expressed concern as to how the valuation procedure will work, and it had been anticipated that changes could be made if the procedure ends up not being followed in practice. In theory, these powers mean that the Scottish Ministers could vary the methodology before the original provisions have had a chance to be tested at all.

On the same date, substantive provisions that deal with succession to and assignation of existing tenancies will also come into force, which are perhaps likely to have a more immediate effect on a practical level. From 23 December, the categories of person to whom a 1991 Act tenancy or LDT may be assigned during lifetime or transferred upon death will be significantly widened and the ability of landlords to oppose assignees or successors significantly limited.

We will shortly be reporting separately on the detail of the altered assignation and succession provisions and what they mean for parties to existing leases in our blog. In the meantime, if you have queries on the terms of the legislation and its implications, please get in touch.

One important point to note at this stage is that the widened categories of person to whom a lease can be transferred by bequest (i.e. in a will) are only effective if the will post-dates 23 December 2016. Tenant farmers may wish to make a New Year’s resolution to review their wills to take advantage of the new provisions.