AFTER five long years on the statute books, regulations bringing in new legislation for secure farming tenants will actually come into force at the end of February.

The relinquishment and assignation legislation was introduced by the Land Reform (Scotland) Act 2016, and will allow secure tenants to offer to relinquish their tenancy to their landlord in exchange for statutory compensation. It will begin on February 28, 2021.

The legislation provides a new opportunity for secure tenants wishing to retire or leave their holding. The provisions allow an existing tenant to relinquish the tenancy on payment by the landlord of a statutory valuation based on the value of the tenancy and the tenant’s improvements. Crucially, if the landlord does not wish to pay the tenant the statutory valuation, the tenant is free to assign the tenancy for value to a new entrant or a progressing farmer.

The Tenant Farming Commissioner will appoint an independent valuer to calculate the amount payable by the landlord to the tenant for the relinquishment of the tenancy.

TFC, Bob McIntosh, said: “The legislation has a dual purpose. We know that many tenants are often reluctant to retire or give up a secure tenancy because of the financial consequences of doing so. The new arrangements will enable tenants to realise the value in a secure tenancy when they relinquish it and this may release more tenanting opportunities for new entrants to farming.

“If the landlord chooses not to ‘buy’ the tenancy, the tenant can assign the tenancy for value to someone who qualifies as a new entrant to farming or as someone who is progressing within the sector. The ‘price’ of the tenancy will be a matter for negotiation and the incoming tenant will take on the tenancy on the existing terms and at the same rent.”

Secretary for The Central Association of Agricultural Valuers, Jeremy Moody explained that, while the legislation is great news, it's not something that should be lightly undertaken, as it can be both time consuming, and costly, in places. He said: "While this provides the legal framework, tenants are advised to take time to plan and to maintain a conversation with the landlord, minimising surprises, managing timings and perhaps opening other possible deals, as perhaps involving housing or a different assignee.

"Tenants must meet the cost of the valuation – and there will be at least three of these. It's also a very information heavy process, so it's not something I would suggest starting at say, lambing time, as once the ball is rolling, you're under time constraints, and you need to be able to provide quite a substantial amount of information."

The Scottish Tenant Farmers Association also welcomed the news.

STFA chairman Christopher Nicholson said: “Many tenants have been waiting for over four years for this part of the 2016 Land Reform Act to commence which will be greatly welcomed to allow retirement plans to be put into action while creating opportunities for the next generation of farmers.

“Key to making this provision work is support from the Tenant Farming Commissioner who has both published guidance which provides an overview of the process and set up a panel of valuers who can be called upon to determine the statutory valuation.

“In anticipation of this legislation, over the last few years a number of relinquishment and assignation agreements have been negotiated between landlords and tenants on the basis of the proposed legislation. The principles have been tried and tested and useful precedents set," said Mr Nicholson.

“Any tenant thinking of using these provisions needs to understand the process and tight timelines involved, and should be well prepared and well advised before starting the formal process to assign or relinquish the tenancy.

“We believe that a better and easier route for some tenants and landlords is to reach a negotiated relinquishment or assignation, using the legislation as a backstop but avoiding the need to follow the detailed statutory process," he added. "By initiating informal discussions between the tenant and landlord, as suggested in the TFC’s guidance, it is likely to be possible to reach a satisfactory result in a shorter time and with less costs than following the detailed legislation. While the legislation is a necessary framework around which agreements can be reached, only where one party is reluctant to negotiate should it be necessary to follow the prescribed process."