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Spotlight on key issues in tenant farming

Peter MacDougall

Image credit: Julian Tong, Unpslash

Over recent months, several important issues have emerged through our Tenant Farming Helpline. I want to take this opportunity to highlight three topics in particular that have been raised regularly:

  • Rent Reviews
  • Agent behaviour
  • Relinquishment and Assignation

The Tenant Farming Helpline is an important resource, not just for offering advice and guidance, it also helps us to spot trends and recurring concerns across the sector. It helps us understand where further support, or clarification through guidance, may be needed to help the relationship between landlords and tenants function well.

While each of these issues has the potential to cause conflict, they also share a common solution: good communication. Open and transparent conversations can go a long way in preventing disputes and building trust.

Rent Reviews

Recently we have had several calls and emails around how diversification income should be treated in rent reviews. This is becoming a more prevalent issue as tenant farmers, like owner occupiers, look to enhance income though diversification. What has become apparent is the importance of holding discussions with your landlord at an early stage to talk though the options and potential impacts of a diversification and to follow the established procedure prior to undertaking the works. The Tenant Farming Commissioner (TFC) has provided guidance on the procedure that should be followed available on the Scottish Land Commission website.

An important aspect is the impact of diversification on the rent, and it is essential that this is considered at an early stage. It is much easier to address this in advance than try to amend it retrospectively which can lead to conflict. The landlord will likely look to share in the uplift in income of the holding through a higher rent, the size of the increase will be a key consideration when budgeting for the investment and the increased work involved. It is essential that the figures add up and there is fairness for both parties involved.

As this has the potential to upset the relationship going forward it is worth spending the necessary time before starting any work to avoid a dispute in the future. Ensuring the numbers make sense and the benefits are shared fairly is critical and there is a very delicate balance at play here. Handled well, diversification can benefit both tenant and landlord. But if expectations aren’t aligned from the outset, it risks undermining trust and discouraging future innovation.

Agent Behaviour

Another growing theme through the helpline relates to the conduct of agents. The main concerns tend to involve communication issues, and a feeling that the other side is drawing out conversations with the intention to frustrate. This issue is arising equally for agents representing landlords and tenants.

It is always disappointing to hear this, as a lot of work has been done in this area, and significant progress has been made in recent years. It is worth remembering that guidance has been produced by the TFC relating to the conduct of agents that outlines what is expected of agents regardless of who they represent and sets out the method of submitting a complaint. This guidance can be found on the Scottish Land Commission website.

Relinquishment and Assignation 

We are also seeing an increase in the use of the Notice of Intention to Relinquish (NIR) legislation, and we have now been involved in multiple relinquishment cases. Interestingly most relinquishments are negotiated privately, and the statutory process is only being used in the minority of cases. As with any new legislation practical issues are emerging as more cases go through the process which can cause problems if they are not handled carefully.

An example of this is the impact of missing the deadlines in the process, it is not clear in the legislation what happens if a deadline is missed. There is unfortunately no provision for the TFC to extend the process to allow agreement to be reached even when both parties are in agreement and request it. Fortunately, most issues can be avoided through good communication throughout the process and keeping to deadlines, so this is what we encourage. Further guidance on NIR can be found in the TFC’s Guide to Relinquishments and Assignation of 1991 Act Tenancies, which is also available on the Commission website.

If you have any questions related to any of the issues raised above or any other tenant farming related issues, the Tenant Farming Helpline can be contacted by emailing tfc@landcommission.gov.scot or by phoning 01463 423300.