welcome to our latest rural bulletin
This issue covers opportunities in renewables, changes brought in by the Crofting Reform (Scotland) Act 2010 and the Wildlife and Natural Environment (Scotland) Act 2011, protecting the family business during divorce and the long overdue pylon design revamp.
Firstly, we are delighted to announce that Lindsays has made a raft of internal promotions across the firm and within our Rural Services team Andrew Linehan who is based in our Jedburgh office has been promoted to Partner and Karen McHale who is based in our Edinburgh office has been made an Associate. Andrew will be involved in developing rural, estates and renewables business within the Borders and further afield, while Karen will continue to be involved with the firm’s estates and renewable energy cleints all over Scotland.
If you would like to discuss any of the issues covered in this bulletin, please get in touch with a member of our team.
Opportunities in renewables for agricultural tenants
Crofting Reform (Scotland) Act 2010
Wildlife and Natural Environment (Scotland) Act 2011 -Vicarious liability and wildlife crime
What does divorce mean for the farming family?
“T”he pylon of the future?
Opportunities in renewables for agricultural tenants
The current rush to renewables has created many opportunities for landowners. What, then, of the opportunities in renewables for agricultural tenants? For those with leases under the Agricultural Holdings (Scotland) Act 1991 or Limited Duration Tenancies under the Agricultural Holdings (Scotland) Act 2003 there is the potential to take advantage of the boom in renewables.
For tenants whose leases permit such development, there are two ways of approaching the issue, either as an improvement or as diversification.
The Agricultural Holdings Acts allow tenants with eligible leases to ‘provide or lay on generating equipment’ as an improvement, subject to obtaining landlord’s consent. The test for improvements is that they must be reasonable and desirable on agricultural grounds for the efficient management of the farm. It follows that even if there is an existing mains electricity supply, a cheaper source of renewable energy will mean greater efficiency, and so the test may be met. For a renewable development to constitute an improvement, the greater part of the electricity produced must be used on the farm.
There are several consequences of tenants installing a renewable energy scheme as an improvement (i.e. with proper consent), one is that improvements are not rentable, and the other is that they can be compensatable at waygo. Landlords are likely to
want to see such improvements classed as tenant’s fixed equipment to avoid compensation being an issue.
The alternative to viewing renewables as improvements is to treat them as diversification. The 2003 Act introduced a right to diversify let farms to non-agricultural use (subject to notice provisions being complied with) to those with 1991 Act tenancies or Limited Duration Tenancies. This is undoubtedly the more suitable option where there is to be a significant element of exportation of energy from such a scheme, though tenants must remember that diversified activities can be rented with regard to the increased rental value of the land arising from non-agricultural use.
While there is no fixed rule about when the proportion of energy exported would convert a renewable scheme from an improvement to diversification, the principle of the matter would seem to be self-evident.
Tenants are faced with a number of supplementary issues relating to renewable developments, such as difficulties in leasing turbine sites to limited companies and the possible need to seek landlord’s consent to wayleaves (which the landlord is in no way beholden to grant) where grid connection is not on land occupied by the tenant. This can lead to problems with funding and the ring fencing of risk.
Given the sums involved and the difference renewables schemes can make to the economics of farming, we are likely to see a significant increase in the number of renewable schemes by agricultural tenants. There are many limitations on how tenants can proceed with such schemes, but if these can be overcome then the rewards are potentially significant.
If you would like to discuss any of the issues raised in this article please contact Andrew Linehan.
Back to topCrofting Reform (Scotland) Act 2010
The Crofting Reform (Scotland) Bill was passed by the Scottish Parliament on 1 July 2010. The Act itself is being brought into force in stages. The first commencement order was passed in December 2010 with the changes being effective from 1 July 2011, the second tranche came into effect in October 2011 and the last will be effective from April 2012.
The first change closed the Whitbread loophole which means that a crofter who is exercising his/her statutory right to acquire his/her croft will no longer be able to nominate an independent third party and title to the croft, house site and garden ground must now be taken in the crofters own name or a member of his/her family (the extent of which is defined in the Act). The second change extended the period in which a Landlord has a right to share in any uplift in the value of the croft in the event of a further sale by the crofter from five years to ten from the date of acquisition by the crofter.
Further changes brought into force on 1 October 2011 relate to crofters’ duties, the requirement for them to reside within 32 kilometres of the croft unless the Commission consents to their absence, new succession rules and the considerations the Land Court and Commission will take into account when considering a resumption application and de-crofting direction.
From 1 April 2012, the Crofters Commission will be renamed the Crofting Commission. The Commission will have new powers and a new constitution and will be responsible for the promotion of crofting and its regulation. The Commission will be required to report to the Scottish Ministers annually on their activities and the state of crofting.
The last and most significant change contained within the Act is the introduction of a Crofting Register. The Crofting Register will be maintained by the Registers of Scotland and will be an accurate map-based register of interests in and the extent of crofts and common grazings. The Registers of Scotland has still to confirm the exact costs of registration and it is expected further legislation will be required.
If you would to discuss any of the issues raised by the Crofting Reform (Scotland) Act 2010 please contact Karen McHale.
Back to topWildlife and Natural Environment (Scotland) Act 2011 -Vicarious liability and wildlife crime
The Wildlife and Natural Environment (Scotland) Act 2011 is now in force. The Act seeks to extend wildlife legislation and plug some previous omissions. There are provisions regarding hares, deer, badgers and other wild life. The provisions of the Act which have been subject to most controversy and comment relate to wildlife crime.
The legislation introduces into wildlife crime the concept of one person being guilty of a crime committed by another. This is generally known as vicarious liability. The killing of raptors has been the driver for these provisions. The proponents claim that the provisions are aimed at “rogue” landowners who either encourage or turn a blind eye to the killing of raptors on their property.
The provisions apply to a person (A) who has the right to take wild birds over land or has the management or control of that right and to an employee, agent or person providing “relevant services” (B) who commits a wildlife offence. A can also be prosecuted for the offence unless they can show that they did not know the offence was being committed and took all reasonable steps and exercised all due diligence to prevent the offence being committed. The definition of “relevant services” means that the perpetrator of the offence B for whom A may be liable, does not necessarily have to be an employee but can be employed by another person who is providing keepering services.
Responsible landowners will need to demonstrate that responsibility by taking proactive verifiable action so they can avail themselves, if necessary, of the statutory defence of taking reasonable steps and carrying out all due diligence. Such action should include issuing new contracts of employment incorporating provisions regarding wildlife legislation and crime, requiring keepers to join the Scottish Gamekeepers Association and to go on training days, carrying out spot inspections of buildings and keeping registers of substances purchased or kept on their property.
No matter how law abiding landowners are they will require to take necessary action to ensure they do not find themselves in the dock.
Please contact Peter Watson if you have any issues regarding The Wildlife and Natural Environment (Scotland) Act 2011.
Back to topWhat does divorce mean for the farming family?
If a farmer separates from his wife the usual difficulties, emotions and concerns are often magnified and compounded by a worry about what effect this will have on the family farming business. Many will have heard tales of woe about having to sell land or machinery or borrow funds in order to pay out one partner’s wife following a divorce. The divorce can have a serious financial impact not only on the divorcing person but also on any other partners or shareholders in the farming business. The good news is that with some prior planning this can be avoided.
Prenuptial Agreements
The answer for some may lie in a prenuptial agreement. It is a myth that prenups are just for the rich and the famous. In an age where a significant proportion of marriages end in divorce an increasing number of people are using prenups, largely to protect family money or assets which they owned before they met their spouse. This is often relevant for farming families. Prenups also have the benefit of allowing a framework to be put in place when relations are good so that if the marriage does break down they are less likely to end up involved in a bitter and expensive divorce.
Prenups can be tailored to each couple and can cover as much, or as little, as a couple want. They can also provide for different outcomes, for example, it may be a wife will receive more if the marriage lasts longer than a set number of years or if there are children. For most couples the main aim of a prenup is to “ringfence” certain assets so that their spouse can’t claim a share of the value on any subsequent divorce. For farmers, this is likely to be their interest in the farming partnership or company.
There is a natural degree of protection from the law in that assets that are owned before the marriage, or that are inherited or received as a gift are excluded from a claim on divorce. However, time and time again farmers who have sought to rely on this have been caught out as any change in the nature of the asset during the marriage means that it is up for grabs. In practice this means that something small and unrelated to the couple’s relationship such as the retiral of a partner, an alteration in the way that subsidies are paid, the sale of some land or the switching of ownership of one field for another with a neighbour can have unintended and potentially disastrous consequences.
How Do I Raise It With My Future Spouse?
Prenups are, by their very nature, not romantic but they are unquestionably pragmatic. We also find that many prenuptial agreements are requested by the wider family, and for good reason, as they are important for both financial planning and succession planning for those who want to ensure that the family farm remains intact.
Are Prenuptial Agreements Binding?
In Scotland prenuptial agreements are thought to be legally binding and enforceable if they are fair and reasonable at the time they were made.
What if I am Already Married?
If you are already married then it is not necessarily too late. It is possible to enter in to a contract with your spouse called a postnuptial agreement, which is essentially the same as a prenuptial agreement but is signed after you are married.
For some a postnuptial agreement is not a viable option. In that case there are steps that can be taken to reduce the risks. See the next edition for more on postnuptial agreements!
If you would like to discuss any of the issues raised in this article please contact Jennifer Maciver in our family law team.
Back to top“T”he pylon of the future?
Earlier this year the Royal Institute of British Architects (RIBA), on behalf of both the Department of Energy and Climate Change and the National Grid, launched a design competition with the aim of identifying a new generation of pylon in the UK with the potential to deliver for future generations, taking into account both public opinion and the visual impact on, and the preservation of, our natural heritage.
The competition panel received 250 design entries, which were then whittled down to a shortlist of 6 designs, upon which the RIBA sought public opinion, with models of the shortlisted designs being put on public display at the V&A Museum. It was announced in the last few days that the winning pylon is Bystrup’s innovative “T-Pylon” (pictured below) which has a simple “T” shaped structure. The decision of the panel was unanimous, it being considered that of the 6 finalists T-Pylon offered the most elegant and timeless solution.
It could be said that a pylon design revamp was long overdue, given the current iconic “lattice” structure has changed very little since its inception in the early 1920s and is a design that has for some considerable time divided public opinion. In the UK we currently have around 88,000 pylons, and in moving away from our reliance on fossil fuels and fulfilling our overall target of an 80% reduction in carbon emissions by 2050, going forward electricity will form a much greater proportion of our energy mix. An estimated 20 new power stations are to be constructed in the UK by 2020, each of which will necessitate the creation of electricity transmission lines. As pylons are the principal method of transport for this low-carbon energy we can expect to see an increase in the number of pylons over the next few decades.
Despite having won the competition, we may never see the T-Pylon gracing our landscape, as the competition rules stated that there was no guarantee or commitment that the winning pylon design would actually be constructed in the future. However, the National Grid has indicated that it will “give consideration” to developing the winning design for future construction, and have also expressed an interest in progressing two of the other designs, “Silhouette” and “Totem”. The National Grid has also coincidentally recently published details of its new approach to building energy infrastructure, placing an emphasis on reducing visual impact whilst always balancing this with the need to minimise energy costs and the costs of infrastructure construction. It is believed that burying electricity transmission cables underground costs in the region of ten times as much as installing overhead cables/pylons and takes significantly longer to install than pylons, so whilst it may be a more visually appealing alternative, it can be cost-prohibitive.
It remains to be seen whether the T-Pylon design will help to defuse public opposition to pylon installation, but if it is well received then presumably the National Grid will more likely seek to introduce what would then be thought of as being a more aesthetic and visually pleasing pylon than the lattice pylon. We could perhaps yet see the T-Pylon gracing the Beauly-Denny line!
If you would like to find out more please contact Simone Young.
Lindsays’ Rural Services team can offer advice on all aspects of agricultural and rural law. If you would like to discuss any of the issues raised in this Bulletin please get in touch.
This newsletter has been issued by Lindsays on the basis of publicly available information, internally developed data and other sources. Whilst all reasonable care has been taken to ensure the facts stated and the opinions given are correct, Lindsays does not accept any responsibility for its content and advise that specific advice should be sought regarding the topics covered.
© Lindsays 2012
