R&A is the hot topic in the countryside. What is it?

For landowners and tenant farmers, this spring brought important legal changes on how to ‘relinquish’ (or surrender) a secure tenancy

Say ‘R&A’ to many people in Scotland (and beyond) and they’ll assume you are talking about golf. But for landowners, farmers and would-be farmers north of the border, ‘R&A’ currently has a more important meaning: relinquishment and assignation.

The phrase may sound arcane, but it’s a long-awaited legal development affecting tenant farmers and landowners. Specifically, it provides clarity for tenants who are seeking to exit farming or retire – an important consideration when over a third of farmers in Scotland are aged over 65. The new regulations may also provide opportunities for people seeking a way into farming.

The new rules

The new regulations on R&A came into force at the end of February and stem from the Land Reform (Scotland) Act 2016. Briefly, they provide rules and processes for tenants to offer to sell a secure tenancy back to their landlord, including:

• How tenants give notice of this
• How compensation is calculated
• What happens if the landlord declines the offer
• Timelines they need to follow.

Key points of the new R&A regulations

• Compensation is set at 50% of the difference in the value of the land with vacant possession and with a secure tenancy in place. There is additional compensation for improvements made by the tenant, and deductions are made in respect of any dilapidations.
• Valuers are appointed by the Tenant Farming Commissioner. The landlord and tenant may ask for a valuer they have agreed on to be appointed.
• If the landlord does not take up the tenant’s offer, the latter has a year to assign the secure tenancy on the open market to a “new entrant” or “person progressing in farming”; these are defined in the new Regulations.

Practical approaches

As with any new law, there will be continuing comment and debate about some of the finer points of the regulations, but on a general, practical level, the key point for all involved is that tenants and landlords still have the right to negotiate relinquishment of a secure tenancy outside the new provisions.

The existence of a statutory ‘fall back’ position may certainly help to move things along, and the new statutory process offers useful guidance in these discussions and negotiations, but both tenants and landlords may benefit from keeping some flexibility around outcomes and timelines. This remains a highly specialised area, where you want advice from people who understand the terrain.

To read the next article in this edition click here. 

Or you can read the previous article here.