Updated Guidance on Relinquishment and Assignation

In his latest blog, Bob McIntosh, the Tenant Farming Commissioner, shares updates on his guide to relinquishment and assignation of 1991 Act tenancies.

It’s been two years since the statutory provisions for relinquishment and assignation came into force, and in light of experience I have recently updated my guide to relinquishment and assignation of 1991 Act tenancies. The relinquishment and assignation provisions enable a tenant with a secure tenancy to relinquish the tenancy in return for a payment by the landlord based on a specific valuation methodology set out in the legislation. Or, if the landlord does not wish to buy the tenancy, the tenant can assign it for value to a new entrant or progressing farmer. The aim of these provisions is to help existing tenants to retire or quit the tenancy should they wish to do so, and to help provide new opportunities for young people to enter the profession.

There continues to be steady interest in the new measures, with most of my enquiries reflecting the desire for parties to reach private settlements with the legislation sitting in the background. Private negotiation provides flexibility over timescales and terms, enabling deals to be negotiated that might, for example, transfer the farmhouse or other land and assets to the tenant in lieu of a monetary settlement. It also has the benefit in maintaining good relationships between the parties, leaving the statutory route in reserve should negotiations fail.

If a tenant decides to pursue the formal statutory route to relinquishment and assignation, they must serve a notice of intention to relinquish on the landlord and send a copy to the Tenant Farming Commissioner. My role is to appoint a valuer to carry out the valuation within 28 days of a notice of intention to relinquish being properly served.

I have revised the TFC Guide to Relinquishment and Assignation in an attempt to make clear what information is required to accompany the notice of intention to relinquish, as it’s important that it includes all the necessary information required for a valuer to undertake the valuation. It is in the tenant’s interests to provide as much information as possible that is relevant to the valuation process and to assemble this before submitting a notice of intention to relinquish. Ideally the tenant should discuss the details with the landlord before submitting the notice.

The guide also clarifies that the TFC is required by statute to appoint a valuer within 28 days of the notice of intention to relinquish being served. The TFC will, in that 28 day period, attempt to ensure that the information provided by the tenant is as accurate as possible, and may reject a notice that doesn’t provide the information that is required. Agreement between landlord and tenant on the accuracy of the information provided by the tenant is helpful at this stage but not a requirement. It is recognised that some aspects of the subjects being valued may require discussion with the valuer during the valuation process.

It is not, however, the job of the valuer to negotiate an agreement between landlord and tenant where there are differences over issues such as the extent of the leased area or tenant’s improvements eligible for compensation. The amnesty process has demonstrated just how long it can take to agree a schedule of tenant’s improvements, so tenants should make every effort to avoid submitting information that is likely to be contested by the landlord. The valuer’s role is to apportion a value to tenant’s improvements that are eligible for compensation and will be reliant on the information submitted first by the tenant and then in the representations to be sought from both parties. If valid evidence is not put forward to show that an improvement is eligible in accordance with statute, the valuer may not be able to take it into account.

The TFC guide clarifies that, in circumstances where the landlord and tenant cannot agree, within the valuation period, on items such as tenant’s improvements that are eligible for compensation, the valuer will have to take a view and apportion a value accordingly.

Take a look at the updated guide A Guide to Relinquishment and Assignation of 1991 Act Tenancies and if you would like to discuss any aspect, please do get in touch with me on 01463 423 300 or by email at tfc@landcommission.gov.scot.