Agricultural Holdings (Scotland) Act 2003

Part 1 — Agricultural tenancies

Chapter 1 — Types of tenancy

Tenancies under the 1991 Act

Effect of termination of tenancy where tenant deceased

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• (1) This subsection applies where—

• (a) a lease is entered into on or after the coming into force of this subsection; and

• (b) the tenancy under the lease is a tenancy of an agricultural holding in relation to which the Agricultural Holdings (Scotland) Act 1991 (c. 55) (in this Act referred to as “the 1991 Act”) would have applied had the lease been entered into immediately before the coming into force of this subsection.

• (2) Where subsection (1) applies, the 1991 Act does not apply in relation to the tenancy (except in so far as this Act applies any provision of that Act to short limited duration tenancies or limited duration tenancies) unless the lease—

• (a) is entered into in writing prior to the commencement of; and

• (b) expressly states that the 1991 Act is to apply in relation to,

the tenancy.

• (3) Section 2 (leases for less than year to year) of the 1991 Act is repealed.

• (4) Where, in respect of a tenancy of an agricultural holding—

• (a) the lease is entered into before the coming into force of this subsection and the 1991 Act applies in relation to the tenancy; or

• (b) the lease is entered into on or after the coming into force of this subsection and (by virtue of the conditions mentioned in paragraphs (a) and (b) of subsection (2) being fulfilled) the 1991 Act applies in relation to the tenancy,

the tenancy under the lease is in this Act referred to as a “1991 Act tenancy”.

Conversion from 1991 Act tenancy to limited duration tenancy

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Leases for grazing or mowing

Leases for grazing or mowing

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• (1) This section applies to a tenancy under a lease under which agricultural land is let for the purpose of its being used only for grazing or mowing during some specified period of the year (whether or not the lease expressly so provides).

• (2) The tenancy is not to be constituted for a period of more than 364 days; and where the term of the tenancy has expired, the land may not be let for the same purpose to the same tenant before one clear day from the date of expiry of the tenancy has elapsed.

New types of tenancy

Short limited duration tenancies

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• (1) Where—

• (a) agricultural land is let under a lease for a term of not more than five years;

• (b) the land comprised in the lease is not let to the tenant during the tenant’s continuance in any office, appointment or employment held under the landlord; and

• (c) the lease does not constitute—

• (i) a 1991 Act tenancy; or

• (ii) a tenancy to which section 3 applies,

the tenancy under the lease is, by virtue of this subsection, a short limited duration tenancy.

• (2) Without prejudice to subsection (1), where the tenant remains in occupation of the land after the expiry of the term of a tenancy to which section 3 applies with the consent of the landlord, the tenancy continues to have effect as if it were for a term of—

• (a) 5 years; or

• (b) such period of less than 5 years as the landlord and tenant may agree to,

and the tenancy is, by virtue of this subsection, a short limited duration tenancy.

• (3) Where the tenant remains in occupation of the land after the expiry of the term of a short limited duration tenancy of less than 5 years (including such a term fixed by virtue of subsection (2)) with the consent of the landlord, the tenancy continues to have effect as if it were for a term of—

• (a) 5 years; or

• (b) such period of less than 5 years as the landlord and tenant may agree to.

• (4) This subsection applies to a short limited duration tenancy where—

• (a) the term of the tenancy has expired and the tenant has not remained in occupation of the land; or

• (b) during the term of the tenancy, the landlord and tenant have terminated the tenancy by agreement.

• (5) Where the landlord and tenant enter into a lease constituting a further short limited duration tenancy which—

• (a) comprises the same land as that comprised in the tenancy to which subsection (4) applies; and

• (b) has effect less than one year from the expiry of the term of, or termination of, that tenancy,

the expired period of the term of that tenancy counts as an expired period of the term of the further tenancy; but this is subject to subsection (3) of section 5.

Limited duration tenancies

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Chapter 2 — General provision as to new types of tenancy

New types of tenancy: general provision

Assignation, subletting and termination of short limited duration tenancies

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• (1) The tenant may not assign a lease constituting a short limited duration tenancy nor sublet the land comprised in the lease.

• (2) A short limited duration tenancy may be terminated by the landlord and tenant by agreement.

Assignation and subletting of limited duration tenancies

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• (1) A lease constituting a limited duration tenancy may be assigned by the tenant if, following notice under subsection (2), the landlord consents to a proposed assignation.

• (2) The tenant must give the landlord a notice in writing of any intention of the tenant to assign the lease; and the notice must include the particulars of the proposed assignee, the terms upon which the assignation is to be made and the date on which it is to take effect.

• (3) Subject to subsection (3A), the landlord may withhold consent to the proposed assignation if there are reasonable grounds for doing so; and, in particular, the landlord may withhold consent if not satisfied that the proposed assignee—

• (a) would have the ability to pay—

• (i) the rent due under the lease; or

• (ii) for adequate maintenance of the land; or

• (b) has the skills or experience that would be required properly to manage and maintain the land in accordance with the rules of good husbandry.

• (3A) Where the tenant proposes to assign the lease to a person who is a near relative of the tenant, the only grounds on which the landlord can withhold consent to the proposed assignation are the following—

• (a) that the person is not of good character,

• (b) that the person does not have sufficient resources to enable the person to farm the land with reasonable efficiency,

• (c) subject to subsection (3B), that the person has neither sufficient training in agriculture nor sufficient experience in the farming of land to enable the person to farm the land with reasonable efficiency.

• (3B) The ground of objection in subsection (3A)(c) does not apply where the person—

• (a) is engaged in or will begin, before the expiry of the period of 6 months beginning with the date of the notice under subsection (2), a course of relevant training in agriculture which the person is expected to complete satisfactorily within 4 years from that date, and

• (b) has made arrangements to secure that the land is farmed with reasonable efficiency until the person completes that course.

• (4) Any such withholding of consent (and the grounds for withholding it) is to be intimated in writing to the tenant within 30 days of the giving of the notice under subsection (2); and, if no such intimation is made, the landlord is (except where the landlord exercises the right under subsection (5) to acquire the tenant’s interest in the lease) deemed to have consented to the proposed assignation.

• (5) Where the landlord has been given notice under subsection (2), the landlord is entitled to acquire the tenant’s interest in the lease provided that—

• (a) the landlord gives the tenant notice—

• (i) in writing; and

• (ii) within 30 days of the giving of the notice under subsection (2),

of the landlord’s intention to acquire that interest; and

• (b) the terms upon which the landlord acquires that interest are no less favourable to the tenant than any reasonable terms upon which the proposed assignation was to have been made.

• (5A) For the purposes of subsection (3A), “near relative”, in relation to a tenant of an agricultural holding, means—

• (a) a parent of the tenant,

• (b) a spouse or civil partner of the tenant,

• (c) a child of the tenant,

• (d) a spouse or civil partner of such a child,

• (e) a grandchild of the tenant,

• (f) a brother or sister of the tenant,

• (g) a spouse or civil partner of such a brother or sister,

• (h) a child of a brother or sister of the tenant,

• (i) a grandchild of a brother or sister of the tenant,

• (j) a brother or sister of the tenant's spouse or civil partner,

• (k) a spouse or civil partner of such a brother or sister,

• (l) a child of such a brother or sister,

• (m) a grandchild of such a brother or sister.

• (6) For the purposes of subsection (3)(b), what is good husbandry is to be construed by reference to the Sixth Schedule to the Agriculture (Scotland) Act 1948 (c. 45).

• (7) A tenant may sublet the land comprised in a lease constituting a limited duration tenancy only on such basis as the lease expressly permits.

Continuation and termination of limited duration tenancies

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• (1) A limited duration tenancy may be terminated by agreement between the landlord and tenant if the agreement is in writing and—

• (a) is entered into after the commencement of the tenancy; and

• (b) makes provision as to compensation payable by the landlord or the tenant to the other.

• (2) At and after the expiry of the term of a limited duration tenancy, the tenancy continues to have effect in accordance with subsection (6) unless it is terminated in accordance with this section.

• (3) At the expiry of the term of a limited duration tenancy, the landlord may terminate the tenancy by giving a notice under this subsection to the tenant.

• (4) A notice under subsection (3) must—

• (a) be in writing and state that the tenant shall quit the land on the expiry of the term of the tenancy; and

• (b) be given not less than one year nor more than two years before the expiry of the term of the tenancy, provided that not less than 90 days have elapsed from the date on which the intimation mentioned in subsection (5) is given.

• (5) A notice under subsection (3) is of no effect unless the landlord has given written intimation of the landlord’s intention to terminate the tenancy to the tenant not less than two years nor more than three years before the expiry of the term of the tenancy.

• (6) If the tenancy is not terminated in accordance with this section, it continues in effect on a cycle of continuations; that is to say, a continuation of three years (a “first short continuation”) followed by a further continuation of three years (a “second short continuation”) followed by a further continuation of 10 years (a “long continuation”) (the cycle being repeated without limit to the number of times).

• (7) During a first short continuation, the landlord may terminate the tenancy by giving a notice under this subsection to the tenant; and subsections (4) and (5) apply to a notice under this subsection as they do to a notice under subsection (3).

• (8) During a second short continuation, the landlord may terminate the tenancy by giving a notice under this subsection to the tenant.

• (9) A notice under subsection (8)—

• (a) must be in writing and state that the tenant shall quit the land on the relevant day; and

• (b) may be given at any time during the continuation.

• (10) For the purposes of subsection (9)(a)—

• (a) where the notice has been given during the first year of the continuation, the relevant day is the day on which the continuation expires; and

• (b) in any other case, the relevant day is the day on which the period of two years from the giving of the notice expires (and the continuation is deemed to expire on the relevant day).

• (11) During a long continuation, the landlord may terminate the tenancy by giving a notice under this subsection to the tenant; and subsections (4) and (5) apply to a notice under this subsection as they do to a notice under subsection (3).

• (12) For the purposes of subsections (7) and (11), the references in subsections (4) and (5) to the expiry of the term of the tenancy are to be read as references to the expiry of the continuation.

• (13) At or after the expiry of the term of a limited duration tenancy, the tenant may terminate the tenancy by giving a notice under this subsection to the landlord.

• (14) A notice under subsection (13) must—

• (a) be in writing and state that the tenant intends to quit the land on the expiry of the term of the tenancy or, as the case may be, a continuation of the tenancy; and

• (b) be given not less than one year nor more than two years before the expiry of the term of the tenancy or, as the case may be, continuation.

• (15) During the term of a limited duration tenancy, the term of the tenancy may be extended by the landlord and tenant by agreement in writing.

Review of rent under limited duration tenancies

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• (A1) Where, by virtue of any provision, a review of rent due as payable under a lease constituting a limited duration tenancy , a modern limited duration tenancy or a repairing tenancy —

• (a) may be initiated only by the landlord; or

• (b) may only determine that the rent is to be increased,

the provision concerned is void and the rent due as payable under the lease is instead to be reviewed and determined in accordance with this section.

• (1) Where a lease constituting a limited duration tenancy or a modern limited duration tenancy makes no provision for review of rent, the rent due as payable under the lease is to be reviewed and determined in accordance with this section.

• (1A) The rent due as payable under a lease constituting a repairing tenancy is to be reviewed and determined in accordance with this section.

• (2) A rent review is to take place on such date as the landlord or tenant may specify in a notice in writing to the other provided that—

• (a) the notice is given not less than one year nor more than two years before the date so specified; and

• (b) the date so specified is not less than three years—

• (i) in the case of the first rent review, from the commencement of the tenancy; or

• (ii) in the case of any subsequent rent review, from the date of the review under this subsection which precedes it.

• (3) On review, subject to subsections (4) to (7), the rent payable is the rent which the tenancy would reasonably be expected to fetch in the open market where there is a willing landlord and a willing tenant—

• (a) disregarding—

• (i) any effect on rent due to the fact that the tenant is in occupation of the land; and

• (ii) any distortion in rent due to a scarcity of lets; and

• (b) having regard to—

• (i) the terms of the tenancy (other than those relating to rent);

• (ii) information about rents for other agricultural tenancies (including when fixed) and any factors affecting those rents (or any of them) except any distortion due to a scarcity of lets; and

• (iii) the current economic conditions in the relevant sector of agriculture.

• (4) Account is to be taken of any increase in the rental value of the land resulting from the use of the land for a purpose that is not an agricultural purpose.

• (5) No account is to be taken of any increase in the rental value of the land resulting from improvements—

• (a) so far as—

• (i) they have been carried out wholly or partly at the expense of the tenant (whether or not that expense has been or will be reimbursed by any grant) without equivalent allowance or benefit having been made or given by the landlord in consideration of their execution; and

• (ii) they have not been carried out under an obligation imposed on the tenant by the terms of the lease; and

• (b) which have been carried out by the landlord, in so far as the landlord has received or will receive any grant in respect of them,

nor may the rent be determined to be a higher amount than would have been payable if those improvements had not been so carried out.

• (6) For the purposes of subsection (5)—

• (a) subject to paragraph (b), “improvements” is to be construed by reference to Schedule 5 to the 1991 Act; and

• (b) the continuous adoption by the tenant of a standard of farming or a system of farming more beneficial to the land than the standard or system required by the terms of the lease or, in so far as no system of farming is so required, than the system of farming normally practised on comparable agricultural land in the district, is to be treated as an improvement executed at the tenant’s expense.

• (7) No account is to be taken of—

• (a) any reduction in the rental value of the land as a result of any dilapidation or deterioration of, or damage to, fixed equipment or land caused or permitted by the tenant; or

• (b) any such reduction resulting from—

• (i) the use of any of the land, or changes to the land, for a purpose that is not an agricultural purpose; or

• (ii) the carrying out of conservation activities on the land.

• (8) The rent determined in accordance with this section is to take effect from the date of the rent review.

• (2) The landlord may initiate a review of the rent that is to be payable under the lease by serving a notice in writing on the tenant.

• (3) The tenant may initiate such a review by serving a notice in writing on the landlord.

• (4) A notice served under subsection (2) or (3) is a “rent review notice”.

Increase in rent: landlord’s improvements

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