SUCCESSION planning is an important part of any farming business – and no less so for tenant farmers, with face added complications when planning to pass on a family business.

As such, the Scottish Tenant Farmers Association this week warmly welcomed the publication of the latest guidance on succession from the tenant farming commissioner, Dr Bob McIntosh, which summarises some of the legal basics and outlines the ways in which an agricultural tenancy can be passed on to another person.

STFA director, Angus McCall said: “Succession planning and encouraging the next generation into agriculture is very much top of the agenda just now. Changes in tenancy law over the past couple of decades have broadened the scope of succession and simplified the process of reducing the average age of the tenant farmer. Gone are the days when elderly tenants found themselves 'stuck' in their tenancies, having to wait till after their day before passing on their lease and then only to a small group of close relatives.

“The straitjacket of succession has now been loosened and tenants can now transfer their farming businesses at the time of their choosing to a much wider class of relative, allowing them to step aside and avoid many of the pitfalls which can still exist in relying on succession after death. Lifetime assignation of a tenancy has been one of the success stories of tenancy reform, with dozens of older farmers now able to enjoy a well-earned retirement with the next generation safely ensconced in the tenanted family farm," said Mr McCall.

“Transferring a tenancy is still complicated and requires good legal advice, but Bob McIntosh’s Guide to the Transfer of Tenancies by Assignation and Succession will greatly assist succession planning and prove to be a valuable handbook to all tenants as they plan the best way to pass their tenancies on to the next generation.”

Succession planning is especially important to tenant farmers who are not only faced with handing over the business assets to the next generation but also have to consider the best way to pass on the lease on the tenanted holding. Traditionally the farming lease could only be transferred to a restricted group of near relatives following the death of the tenant. The succession process presented a number of tripwires for the unwary and gave the landlord additional grounds to object to the tenant for up to two years. Without the help of expert legal advice, a number of tenanted families lost their secure family tenancy.

The position has dramatically altered since the 2003 Act with a number of reforms to succession, culminating in the 2016 Land Reform Act which have widened the class of people who can now inherit a 1991 tenancy. The process of assignation and succession has been simplified and many of the obstacles removed, including the infamous 'two man rule' restricting the size of holdings being transferred.

Speaking about the new guide, Dr McIntosh said: “It’s important for tenants to have a plan in place for assignation or succession to ensure that at the appropriate time, they can make way for the next generation.

“I strongly recommend that tenants always obtain independent legal advice that’s relevant to their particular circumstances and seek it in good time as some parts of the process are time-sensitive. Careful thought needs to be given to when and how to make any transfer.

“Which route is chosen will depend on individual circumstances but, generally speaking, making an assignation to a ‘near relative’ during the tenant’s lifetime is likely to be the most straightforward.”