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The Agricultural Holdings (Modern Limited Duration Tenancies and Consequential etc. Provisions) (Scotland) Regulations 2017

Type Scottish-Statutory-Instrument

Publication 2017-09-14

State In force

Jurisdiction Scotland

Department King's Printer for Scotland

Source legislation.gov.uk

articles Not indexed

Reform history JSON API PDF

Made: 14th September 2017

Laid before the Scottish Parliament: 19th September 2017

Coming into force: 30th November 2017

The Scottish Ministers make the following Regulations in exercise of the powers conferred by section 5B(3) of the Agricultural Holdings (Scotland) Act 2003[^f00001], section 127(1) of the Land Reform (Scotland) Act 2016[^f00002] and all other powers enabling them to do so.

PART 1 — Introductory

Citation, commencement and interpretation

1

(1) These Regulations may be cited as the Agricultural Holdings (Modern Limited Duration Tenancies and Consequential etc. Provisions) (Scotland) Regulations 2017 and come into force on 30th November 2017.

(2) In these Regulations—

“the 1991 Act” means the Agricultural Holdings (Scotland) Act 1991[^f00003];

“the 2003 Act” means the Agricultural Holdings (Scotland) Act 2003; and

“the 2016 Act” means the Land Reform (Scotland) Act 2016.

PART 2 — Modern limited duration tenancies: new entrants to farming

Interpretation of Part 2

2

In this Part—

“relevant date” means the date on which a contract giving rise to a modern limited duration tenancy under which T is the tenant is concluded;

“shared lease” means— a lease where the tenants under that lease are tenants in common; or a lease where the tenants under that lease are joint tenants; and

“T” means a tenant under a lease to which regulation 3 applies.

New entrants to farming: non-shared lease

3

(1) This regulation applies to a lease constituting a modern limited duration tenancy which is not a shared lease.

(2) T is a new entrant to farming for the purposes of section 5B of the 2003 Act unless paragraph (3), (4) or (5) applies to T.

(3) This paragraph applies to T if, at any point in the five years preceding the relevant date, T—

(a) was—

(i) a tenant under a lease constituting a limited duration tenancy;

(ii) a tenant under a lease constituting a modern limited duration tenancy;

(iii) a tenant under a lease constituting a 1991 Act tenancy;

(iv) a small landholder (construed in accordance with section 124(3) of the 2016 Act); or

(v) a crofter (within the meaning of section 3(3) of the Crofters (Scotland) Act 1993[^f00004]);

(b) was, for a continuous period of three years or more within the five years preceding the relevant date, a tenant under a lease constituting a short limited duration tenancy;

(d) had control of a legal person to whom sub-paragraph (a), (b) or (c) would apply if that legal person were T.

(4) This paragraph applies to T if—

(a) T is a legal person; and

(b) paragraph (3) would apply to the person who has control of T on the relevant date if that person were T.

(5) This paragraph applies to T if—

(a) T is a legal person;

(b) no one person has control of T on the relevant date; and

(i) hold or control, directly or indirectly, more than 50% of the voting rights in T;

(ii) hold or control, directly or indirectly, the right to appoint or remove the majority of the board of directors of T; or

(iii) have the right to exercise (or actually exercise) a greater degree of influence or control over T than persons to which paragraph (3) does not apply.

(6) For the purposes of paragraph (5)(c), paragraph (3) is to be taken to apply to a person if paragraph (3) would apply to that person if that person were T.

(7) In paragraph (3), “tenant” does not include—

(a) the executor, guardian or legal representative (within the meaning of Part 1 of the Children (Scotland) Act 1995[^f00005]) of a tenant, or the trustee or interim trustee in the sequestration of a tenant’s estate;

(b) a person to whom a lease constituting a 1991 Act tenancy is bequeathed in accordance with section 11(1)[^f00006] of the 1991 Act, where—

(i) that person does not accept the bequest;

(ii) the bequest is declared null and void under section 12A(6)(a) or 12B(2)(a) of the 1991 Act[^f00007]; or

(iii) the will or other testamentary writing containing the bequest was made before 23rd December 2016 and the bequest is declared null and void under section 11(6) of the 1991 Act[^f00008]; or

(c) a person to whom a lease constituting a short limited duration tenancy, a limited duration tenancy or a modern limited duration tenancy is bequeathed in accordance with section 21(1)[^f00009] of the 2003 Act, where—

(i) that person does not accept the bequest;

(ii) the bequest is declared null and void under section 12A(6)(a) or 12B(2)(a) of the 1991 Act; or

(iii) the will or other testamentary writing containing the bequest was made before 23rd December 2016 and the bequest is declared null and void under section 11(6) of the 1991 Act[^f00010].

New entrants to farming: shared lease

4

(1) This regulation applies to a lease constituting a modern limited duration tenancy which is a shared lease.

(2) The tenants under a lease to which this regulation applies are new entrants to farming for the purposes of section 5B of the 2003 Act unless the majority of the tenants are disqualified.

(3) For the purposes of paragraph (2), a tenant is disqualified if regulation 3(3), (4) or (5) would apply to that tenant if that tenant were T.

New entrants to farming: supplemental

5

(1) For the purposes of regulation 3, a person has control of a legal person (“L”) if that person—

(a) holds or controls, directly or indirectly, more than 50% of the voting rights in L;

(b) holds or controls the right, directly or indirectly, to appoint or remove more than 50% of the board of directors of L; or

(2) In this Part—

(a) references to voting rights in L or T (as the case may be) are to the rights conferred on shareholders in respect of their shares (or, in the case of L or T not having a share capital, on members or equivalent persons) to vote at a general meeting of L or T on all or substantially all matters;

(b) where L or T (as the case may be) does not have general meetings at which matters are decided by the exercise of voting rights, references to voting rights in L or T are to be read as references to rights in relation to L or T that are equivalent to those of a person entitled to exercise voting rights in a company;

(c) references to the board of directors of L or T (as the case may be), where L or T does not have such a board, are to be read as references to the equivalent management body of L or T; and

(d) references to the right to appoint or remove a majority of the board of directors of L or T (as the case may be) are to the right to appoint or remove directors holding a majority of the voting rights at meetings of the board on all or substantially all matters.

PART 3 — Land Reform (Scotland) Act 2016: consequential, transitory and saving provisions

Consequential modifications

6

Schedule 1 (consequential modifications) has effect.

Transitory and saving provisions

7

Schedule 2 (transitory and saving provisions) has effect.

SCHEDULE 1 — CONSEQUENTIAL MODIFICATIONS

The Rural Stewardship Scheme (Scotland) Regulations 2001

1

(1) The Rural Stewardship Scheme (Scotland) Regulations 2001[^f00011] are modified as follows.

(2) In regulation 2(1) (interpretation)[^f00012]—

(a) in paragraph (b) of the definition of “landlord”, for “or short limited duration tenancy” substitute “, short limited duration tenancy, modern limited duration tenancy or repairing tenancy”; and

(b) in paragraph (b) of the definition of “tenant”, for “or short limited duration tenancy” substitute “, short limited duration tenancy, modern limited duration tenancy or repairing tenancy”.

The Organic Aid (Scotland) Regulations 2004

2

(1) The Organic Aid (Scotland) Regulations 2004[^f00013] are modified as follows.

(2) In regulation 2(1) (interpretation)[^f00014]—

(a) in paragraph (b) of the definition of “landlord”, for “or short limited duration tenancy” substitute “, short limited duration tenancy, modern limited duration tenancy or repairing tenancy”; and

(b) in paragraph (b) of the definition of “tenant”, for “or short limited duration tenancy” substitute “, short limited duration tenancy, modern limited duration tenancy or repairing tenancy”.

(3) In regulation 16(8) (change of occupation), for sub-paragraph (b) substitute—

(b) the death of the former occupier, where that former occupier occupied that farm or part as a tenant, and following the death of that former occupier— (i) the tenancy or lease under which the former occupier occupied that farm or part was the subject of a bequest which was declared null and void under section 12A(6)(a) or 12B(2)(a) of the 1991 Act or section 21(2) of the 2003 Act; or (ii) the tenancy or lease under which the former occupier occupied that farm or part was terminated under section 12A(6)(b) or 12B(2)(b) of the 1991 Act or section 22(2) of the 2003 Act;

3

(1) The Land Management Contracts (Menu Scheme) (Scotland) Regulations 2005[^f00015] are modified as follows.

(2) In regulation 2(1) (interpretation)—

(a) in paragraph (b) of the definition of “landlord”, for “or short limited duration tenancy” substitute “, short limited duration tenancy, modern limited duration tenancy or repairing tenancy”; and

(b) in paragraph (b) of the definition of “tenant”, for “or short limited duration tenancy” substitute “, short limited duration tenancy, modern limited duration tenancy or repairing tenancy”.

4

(1) The Scheduled Monument Consent Procedure (Scotland) Regulations 2015[^f00016] are modified as follows.

(2) In regulation 5(4) (certificates and notices), in paragraph (b) of the definition of “agricultural tenant”, for “or a limited duration tenancy” substitute “, a limited duration tenancy, a modern limited duration tenancy or a repairing tenancy”.

SCHEDULE 2 — TRANSITORY AND SAVING PROVISIONS

Interpretation of schedule 2

1

In this schedule—

“1991 Act tenancy” has the same meaning as in section 93 of the 2003 Act (interpretation);

“limited duration tenancy” has the same meaning as in section 93 of the 2003 Act[^f00017];

“relevant lease” means a lease constituting a limited duration tenancy or a lease constituting a short limited duration tenancy; and

“short limited duration tenancy” has the same meaning as in section 93 of the 2003 Act.

Transitory provision: The Rural Stewardship Scheme (Scotland) Regulations 2001

2

Until the coming into force of section 92 of the 2016 Act (repairing tenancies: creation) for all purposes, regulation 2(1) of the Rural Stewardship Scheme (Scotland) Regulations 2001 (interpretation) is to be read as if—

(a) in paragraph (b) of the definition of “landlord”, for “, modern limited duration tenancy or repairing tenancy” there were substituted “or modern limited duration tenancy”; and

(b) in paragraph (b) of the definition of “tenant”, for “, modern limited duration tenancy or repairing tenancy” there were substituted “or modern limited duration tenancy”.

Transitory provision: The Organic Aid (Scotland) Regulations 2004

3

Until the coming into force of section 92 of the 2016 Act for all purposes, regulation 2(1) of the Organic Aid (Scotland) Regulations 2004 (interpretation) is to be read as if—

(a) in paragraph (b) of the definition of “landlord”, for “, modern limited duration tenancy or repairing tenancy” there were substituted “or modern limited duration tenancy”; and

(b) in paragraph (b) of the definition of “tenant”, for “, modern limited duration tenancy or repairing tenancy” there were substituted “or modern limited duration tenancy”.

Saving provisions: The Organic Aid (Scotland) Regulations 2004

4

(1) The modification made by paragraph 2(3) of schedule 1 has no effect in relation to—

(a) a lease constituting a 1991 Act tenancy which is bequeathed in accordance with section 11 of the 1991 Act (bequest of lease), where the will or other testamentary writing containing the bequest was made before 23rd December 2016;

(b) a relevant lease which is bequeathed in accordance with section 21 of the 2003 Act (bequest of lease), where the will or other testamentary writing containing the bequest was made before 23rd December 2016.

(2) The modification made by paragraph 2(3) of schedule 1 has no effect in relation to an interest of a tenant under a lease constituting a 1991 Act tenancy where—

(a) that interest is comprised in the estate of a deceased person;

(b) that person died before 23rd December 2016; and

(c) at the time of that person’s death, that person had made no will or other testamentary writing containing a bequest of that lease.

(3) The modification made by paragraph 2(3) of schedule 1 has no effect in relation to an interest of a tenant under a relevant lease where—

(a) that interest is comprised in the estate of a deceased person;

(b) that person died before 23rd December 2016; and

(c) at the time of that person’s death, that person had made no will or other testamentary writing containing a bequest of that lease.

5

Until the coming into force of section 92 of the 2016 Act for all purposes, regulation 2(1) of the Land Management Contracts (Menu Scheme) (Scotland) Regulations 2005 (interpretation) is to be read as if—

(a) in paragraph (b) of the definition of “landlord”, for “, modern limited duration tenancy or repairing tenancy” there were substituted “or modern limited duration tenancy”; and

(b) in paragraph (b) of the definition of “tenant”, for “, modern limited duration tenancy or repairing tenancy” there were substituted “or modern limited duration tenancy”.

6

Until the coming into force of section 92 of the 2016 Act for all purposes, regulation 5(4) of the Scheduled Monument Consent Procedure (Scotland) Regulations 2015 (certificates and notices) is to be read as if, in paragraph (b) of the definition of “agricultural tenant”, for “, a modern limited duration tenancy or a repairing tenancy” there were substituted “or a modern limited duration tenancy”.

Signed

FERGUS EWING — A member of the Scottish Government — 14th September 2017

Explanatory note

(This note is not part of the Regulations)

EXPLANATORY NOTE

The Land Reform (Scotland) 2016 Act (“the 2016 Act”) amends the Agricultural Holdings (Scotland) Act 2003 (“the 2003 Act”) to provide for the creation of a new type of agricultural tenancy to be known as a modern limited duration tenancy (“MLDT”). New section 5B of the 2003 Act enables the Scottish Ministers to make provision about the tenants who are new entrants to farming for the purposes of section 5B. Under section 5B(1) of the 2003 Act, where the tenant under a lease constituting an MLDT is a new entrant to farming, the lease may contain provision that the tenancy may be terminated after five years in accordance with section 8D of the 2003 Act (a “break clause”). Section 5B of the 2003 Act is inserted by section 85(3) of the 2016 Act. That section was commenced for the purposes of making regulations under the new section 5B(3) of the 2003 Act on 23rd December 2016, by S.S.I. 2016/365. Section 5B is being commenced for all remaining purposes with effect on 30th November 2017, by S.S.I. 2017/299.

Regulations 2 to 5 of these Regulations make provision as to who is a new entrant to farming for these purposes. Regulation 3 applies where a lease of an MLDT is entered into by a single tenant (“T”). T is a new entrant to farming unless one of the exclusions in regulation 3(3), (4) or (5) apply to T. Where T is a legal person, the question as to whether or not T is a new entrant to farming turns on the status of the person controlling T. Regulation 5(1) makes provision as to what is meant by control. Where no one person controls T, the question as to whether or not T is a new entrant to farming or not turns on the status of the persons who between them control T. Regulation 3(5) makes provision as to how this is to be determined.

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