Land Reform Bill – Stage 2

Stage 2 of the Land Reform (Scotland) Bill completed on 10 February 2016. The text of the Bill is available on the Scottish Parliament website (PDF here).

There is much that could be said about this, some of it quite technical (meet the “repairing tenancy”, for example, which is going to be introduced by way of a new section 5C in the Agricultural Holdings (Scotland) Act 2003) and some of it quite controversial (meet the provisions for assignation of secure 1991 Act tenancies when a tenant wishes to renounce a lease). Here are some selected thoughts.

DISCLAIMER: there is a lot of assumed knowledge in this blog. Indeed, you have already met the first bit of assumed knowledge, namely that you know what a secure 1991 Act tenancy is. (It is a type of agricultural lease where a tenant enjoys security of tenure – i.e. a right to stay on the land – provided the tenant farms that land properly and pays rent when due. To keep this blog of a manageable length, that’s the only explanation you’ll get. Sorry. (Not sorry.))

The Scottish Land Commission

As noted in a previous blog, there are some changes relating to the staffing of the proposed Scottish Land Commission. New factors to be considered in the new SLC’s appointment process include expertise or experience in: land management; community empowerment; and environmental issues. Separately, the Scottish Ministers “must take every reasonable step to ensure that one of the Commissioners is a speaker of the Gaelic language.” In legal terms, “every reasonable step” is at the stronger end of a spectrum of commitments that fall short of an actual obligation. The language here has more clout than “reasonable endeavours”, but falls short of an absolutely imperative and non-qualified “must”. (The strength of the language here is as a result of an amendment by Angus MacDonald MSP.)

What of the name of the body itself? There have been a few proposals in recent times, ranging from the Scottish Land and Property Commission, the Scottish Land Reform Commission, and the now preferred Scottish Land Commission. I am relaxed about the current formulation, subject to one observation: the forthcoming SLC shares a TLA* with two other organisations that operate in similar fields. Hopefully there will not be too much confusion between the Scottish Law Commission, the Scottish Land Commission and the Scottish Land Court.

Information about Control of Land

This has been a key area for land reform campaigners and the old clause 35 allowing for a request to be made to obtain information about a landowner has been replaced (thanks to an amendment by Graeme Dey MSP) with a scheme which amends the Land Registration etc. (Scotland) Act 2012. This will by demand further information of certain landowners. The scheme is aimed at ownership of land by non-humans, seeking to flush out the name and designation of a person in significant control of a landowning entity. (What is meant by “significant control” is to be defined by regulations in due course.)

Shootings, Deer Forests and Deer

Taxation of sporting estates was identified as an issue in the RACCE Committee Stage 1 Report. The Scottish Government pushed back pretty hard on this in its Response to the Committee. The Committee has accepted the Scottish Government’s position and the Stage 2 version of the Bill retains the framework for the re-imposition of rates to shootings and deer forests (in Part 6).

Deer management in general follows in Part 8 rather than Part 7. (Part 7 breaks the flow somewhat, dealing as it does with common good land, and for information no amendments have been made to that Part between Stage 1 and Stage 2.) Some concerns about the ordering and internal consistency of the Bill were raised by the academics at the School of Law at the University of Glasgow, but evidently the Government and now the RACCE Committee do not share that concern.

Looking at the actual substance of the law, there is a new clause 70A, entitled “Power to require return on number of deer planned to be killed”. The effect of this amendment, brought forward by Mike Russell MSP, means there will now be a power to require information about a landowner’s planned management activities, not just what has taken place. This would establish a need for prospective information over and above and the retrospective information requirement already contained in the Deer (Scotland) Act 1996.

Agricultural Holdings

Where do I begin? I suppose I will start by setting out some competing perspectives, the first from Lesley Riddoch and the second from Scottish Land and Estates (the representative body of Scottish landowners). (The Scottish Tenant Farmers Association said an earlier statement on a related issue from Scottish Land and Estates was hysterical scaremongering.) The Scottish Government press release is here.

Trying to set out all the background and indeed the law in this area would make this a very long blog indeed, so I will keep this brief. (I will say absolutely nothing about human rights law here.)

Let us imagine a situation where a tenant in a secure 1991 Act tenancy is approaching retirement but does not have someone to hand that tenancy on to. Oversimplified, the new clause 89A allows such a tenant to exit a secure 1991 Act tenancy either by providing a mechanism for the landlord pay a sum to the tenant to buy it out or, where the landlord does not wish to buy it out, by assigning (transferring) it to “an individual who is a new entrant to, or who is progressing in, farming”.

This gives a retiring tenant without a proximate successor an exit route that is currently unavailable: under the present law such a tenancy could end on such a tenant’s retirement or death and the landlord would get vacant possession of the land (i.e. the holding not subject to a lease), but under the proposed scheme the tenant has two opportunities to cash-in the tenancy (via the landlord or via an incoming farmer) and only one of those would give the landowner vacant possession, and that opportunity has an associated fee.

There might be a related policy about trying to ensure no land currently under a secure 1991 Act tenancy is taken back into vacant possession. If this is the goal, it would be a valid policy position to run with (albeit I am not sure that has been explicitly articulated by Scottish Ministers), but it is important to note this policy goal might not be achieved with this cut of the legislation. (As an aside, Alex Fergusson MSP spoke up for the policy of letting 1991 Act tenancies “wither on the vine”. That too is a legitimate policy goal, albeit one that does not seem to have traction at Holyrood at the moment.)

An analogy with crofting law might be apposite here. In that (complicated) system, a crofting tenant and a crofting landlord cannot generally agree to wash the land of crofting tenure. Whereas with this proposed system, an agricultural tenant and an agricultural landlord can agree to wash the land of a secure 1991 Act tenancy. This land would then no longer be under a regime giving strong security of tenure and would be unlikely to ever return to it. Sure, buying out tenancies might cost landlords a bit in the short term, but I suspect the landlords who can afford it will do all they can to get vacant possession of their land.

It has been said before that crofting law was designed to protect the tenant, whilst agricultural holdings law was designed to protect the land. At one level, this amendment strikes me as not being about the land, nor even being about the tenant in the abstract, rather it is about this tenant. (This is not a criticism, more a statement of how I see the landlord’s buy-back opportunity.)

What does this amendment do for the future of the tenanted sector in Scotland? One answer to that question is absolutely nothing. Fresh 1991 Act tenancies are not exactly being offered by many landlords, so a reform that affects only those tenancies is not actually going to affect the current (non-) supply. Then again, landowners might view this change as the thin end of the wedge, and worry that any arrangement giving someone any kind of lease or indeed use of their land could lead to the conferral of rights on such an occupier in any further land reform. An assurance from Government that this would not happen would not help assuage such a fear, given the difficulties associated with a parliament binding itself.

All in all, this is a very tricky area. I suspect this will be a huge point of discussion at Stage 3.

Community Engagement

The new clause 37 on “engaging communities in decisions relating to land which may affect communities” is much longer than it was at Stage 1. The Bill provides for a duty on Scottish Ministers to prepare this guidance and, as drafted initially, this guidance was to focus on furthering the achievement of sustainable development. At Stage 2, this has been expanded to also include “relevant human rights”, equal opportunities and aspects of social justice. (Curiously, there is a statement that “‘relevant human rights’ means such human rights as the Scottish Ministers consider to be relevant to the preparation of the guidance.” I am automatically suspicious of any selective approach to human rights.)

There will now also be a duty on the Scottish Ministers to report on how things are going every three years. Presumably, if things are going well and communities are being engaged with by landowners in decisions that affect them, no legislation to enforce engagement will follow. If things are not going well, the soft model of regulation could be replaced by something stronger. Although not a huge change in terms of the burden on the Scottish Ministers, the reporting obligation will have an effect as it will keep the point about engagement in the public view.

Community Right to Buy

Amidst all the focus on transparency of ownership, rates reform and agricultural holdings, the Part 5 community right to buy to further sustainable development has been quietly moving towards enactment with no major changes. This Part of the Bill emerges with the focus still being on a community of place, conferring a right on the people in that place which is linked to furthering sustainable development. The exercise of that right remains tied to a number of rather onerous tests, the most noteworthy being a negatively framed requirement that not granting consent to the community in question “is likely to result in significant harm” to that community. That said, one test has been mitigated: the Stage 1 Bill provided that Scottish Ministers would only consent to a transfer when it was the “only practicable” way of achieving a significant benefit to the community; now the Bill allows for a lesser standard of “the most practicable”.

What’s not in the Bill?

There is nothing in the Stage 2 version of the Bill about Compulsory Sale Orders, but there are indications these will follow in the next Parliament. (Albeit the strength of those indications depends on the outcome of the Holyrood elections in May.) There is also nothing in the Stage 2 version of the Bill restricting ownership of land by non-EU entities.

What next?

Next up is Stage 3 of the legislative process, to be played out in the Chamber at Holyrood. I offer no particular predictions here as to what will happen at that Stage, but I suspect the parliamentary maths at Holyrood are such that there will not be any huge change from Stage 2 to the final draft.

*TLA= three letter acronym

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About basedrones

Bachelor of Laws. Scots lawyer working at the University of Aberdeen. English law qualified. Took far too long to write this bio. Blogs on legal issues, with occasional veering into other purportedly intellectual stuff from time to time. Tweets about legal issues, education, law clinics, fitba, music, rogue cell division and not at all about politics at @MalcolmCombe.
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3 Responses to Land Reform Bill – Stage 2

  1. zetorzetor says:

    The assignation provision will provide opportunity, as younger farmers will buy into them and relinquish LDT tenancies which will be available to new entrants. I can’t see lairds buying many 91 tenancies back.

  2. neilking says:

    I could not disagree with zetorzetor more.

    Lairds will have the opportunity in effect to buy land at a quarter (perhaps less) of its market value. Why would anyone *not* do that? Especially when the alternative is to have a 91 Act tenancy which is now utterly toxic from the landlord’s point of view in the current political climate. If the policy is about trying to ensure no more land falls out of 91 Act tenancies (and I believe Lochhead did explicitly say that in Parliament recently) then s89A is an epic fail!

    Of course landowners will still beef about having to pay anything at all for what they would have got for nothing under the previous regime: in effect they’re being made to pay their tenants a non-means tested pension! This may be subject to an ECHR challenge on the grounds that it’s a disproportionate response to the policy objective which could have been better served by other means, e.g. conversion to 35 year MLDT with no landlord pre-emption. But even if such a challenge is unsuccessful, landlords will still buy 91 Act tenancies back at every opportunity.

    Your point about landowners possibly viewing it all as the thin end of the wedge is an understatement, Malcolm. Lochhead showing himself capable of performing a politically motivated volte face from the recommendations of the group he himself chaired and responding to Michael Russell’s ARTB amendment with weasel words that can be decoded as “not now but we’ll do it the next parliament” has shattered the market’s nascent confidence such that no properly advised landowner will ever again let any agricultural land on any basis at all. I have a feeling MLDTs and Repairing Tenancies will go down in history as the only statutory vehicles never to be used.

    The other big story about Part 10, although it’s gone totally un-noticed, is that open assignation (i.e. assignee can be anybody, doesn’t have to be family or new entrant or progressor in farming) has been brought in when it’s the executor of a deceased tenant selling a 91 Act. The big estates and contractors are likely to pile in to that market as well so no room for new entrants there either.

  3. Pingback: My 2016 in Review | basedrones

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