Welcome to the 28th meeting of 2015 of the Rural Affairs, Climate Change and Environment Committee. Before we move to the first item, remember to switch off your phones or people will be using tablets, etc. Because the committee's papers are provided in digital form. We welcome Chris John Allard to the meeting as a substitute for Mike Russell. We received apologies from Claudia Beamish and Mike Russell. We need to now move to the first item of business and our agenda this morning, which is to take evidence on the Land Reform Scotland Bill. On Monday 14 September, we undertook a fact-finding visit as part of our scrutiny of the bill. We travelled to Fife, where we visited the Falkland Centre for Stewardship, National Trust for Scotland at Falkland Palace and the King Corn Community Land Association. The visit allowed us to meet with various community representatives who are actively involved in land ownership and management. I'd like to thank everyone who took the time to meet us. We learned some key lessons about community participation in land ownership and management during this visit and these lessons will help inform our scrutiny of the bill and the report that we make. Today we are taking oral evidence on part 2, chapter 3 and part 10 of the bill. I'd like to welcome the guests in a round table format. Scott Walker, the chief executive of NFUS. Christopher Nicholson, chairman of the STFA. Martin Hall, the president of SAVA. Mike Gascoing, the convener of the Rural Affairs Subcommittee of the Law Society of Scotland. Andrew Howard, the managing director for Murray Estates. David Johnson, the chair of the Scottish Land and Estates. Niall Milner, the RICS Scotland Rural and Geomatics Professional Group Board, Royal Institute of Chartered Surveyors, since you get your full title. Good morning to you all. We will be asking you questions around the table. It doesn't require everyone to answer, but if you do, try and make it as short and sharp as possible, as we've a lot to say. First of all, does the panel agree that there are two main objectives for the tenanted sector? First of all to ensure that land, which is currently in tenure, can be invested in so that it is farmed productively. Secondly, to enable new tenancy opportunities to be created for new entrants to farming and to allow existing farmers to farm more flexibly. If you don't think that these are the only two main things, then you might want to say so. So who wants to kick off? Just indicate and I'll bring people in. David Johnson. Yes, I think fundamentally from the Scottish Land and Estates point of view we support the aims of what you're trying to do, what we see is to create a vibrant tenanted sector, and we think that that is vitally important going forward into the future for Scottish farming to restructure and be fit and competitive for the 21st century. We're going to be seeing in five years' time a cap review, which will probably result in less income coming into Scottish farming. So that is where the tenanted sector is going to become vital to allow these farms to restructure. Thank you. I'm going to add to the question by saying, you know, both of these objectives in this bill need to be satisfied simultaneously. Can they be satisfied simultaneously? And if not, where do you think the overriding public interest lies? Because we're very keen to ensure that, as the bill suggests, that the public interest is the main reason why we're proceeding along the lines that we are. Who wants to come in? Chris Nicholson and then Scott Walker. Thank you for the opportunity to give evidence to the committee. We welcome the general thrust of the bill and agree that focus should be on opportunities for new entrants and ensuring continued investment in the tenanted sector. We're aware that there are some gaps in the bill as far as those aims are concerned. And especially in terms of new entrants, we see limited opportunity in that the new types of leases that are being promoted in the bill, modern LDTs and the existing LDTs, are more appropriate for bolt-ons to existing farming businesses rather than to establish and support standalone family farming. We believe that it's in the public interest to try and ensure that security of tenure is maintained in the sector. At the moment around 80 per cent of the agricultural sector, the tenanted sector is under security of tenure. And there is some recognition by the review group and in the bill that the nature of tenancies have changed a lot in the last, say, 50, 60 years in that the original model of tenancy was for the landlord to provide land and fixed equipment and the tenant provided working capital and Hudsonbury skill and labour. However, that's changed and we now have a large number of our members who have been in secure tenancies for many generations now with very little landlord investment in fixed equipment since the start of those leases. And we're now in a situation where all the modern fixed equipment on many tenanted farms is provided by the tenant. And we feel that there are some gaps in the bill that do not fully recognise that and do not provide the security necessary for tenants to carry on investing in their farms. And we say it as clearly in the public interest to ensure that tenants do invest in the future on their farms. We'll come back to some of the detail of that about fixed equipment and so on in due course, but your points about gaps in the bill we will explore just now. Thank you. I'm just dealing with the general premise just now. I think everyone who's given evidence today will all agree that what we're trying to get is a vibrant, thriving tenant sector. And I think everyone would also agree with the two premises that you've put forward that what we want is, at the end of the time, a bill that encourages greater investment to take place in tenant farms and also opportunities that allow more land to be tenanted in Scotland and therefore provide opportunities for new entrants to come into the industry. I think, though, we've got to bear in mind that the bill is only part of the wider picture, so the bill by itself in the NFC Scotland's view cannot deliver all these things. We've got to look at what else the Scottish Parliament, the Scottish Government can do. Fundamentally what we need is an agricultural sector where money is made, so whether that's a tenant, owner, occupier or anyone connected with farming, unless he can actually make money at farming to invest in the business for new entrants to want to come into agriculture is going to be different. So that's about general rules and regulations, but that'd be another discussion at another point of time. And of course there are tax issues and tax implications, which, again, I think we'll talk about as we get into some of the detail of the bill, which, again, cools us in different directions. I think, as Chris said, there's certainly some aspects that we think need to be added to the bill that currently aren't there, which, again, we'll talk in detail, but I think wego, for instance, is one of those things where there's perhaps a consensus forming of something that can be done. That would be of benefit to existing tenants, encourage them to invest and also give greater encouragement for new entrants to come into the industry. David Johnston, I'll give you a chance to come back just now, because I added to the question then Andrew Howard. I think the question you raised about the confidence is one of the key issues that we see within this bill. The public interest is in creating a vibrant tenant sector, and within this bill there are two different parts from our point of view. You have the changes to the 91 act style tenancies and the creation of the modern limited duration tenancy. What landowners looking for from using the new vehicles going forward in the future is confidence that the agreements they're going to enter into for a long period of time, because we believe in fundamentally letting for a long period of time, are going to be honoured and respected. So this is what the MLDT is going forward into the future. The problem we have with some of the measures that are proposed here is that they are retrospective amendments to what has happened previously to previous agreements. That sends out a message that there are concerns that the agreements that we're going to be entered into, why would they be honoured, why are they not going to be retrospectively changed, like some of the proposals of our 91 act tenancies. So we're going to encourage people to let more land into the future. It has to come from this 70% who are the only occupiers around the country, and they need the confidence that their agreement will be honoured going forward into the future. I'm sure that's so, but I'll be asking other people about why there's some lack of confidence to add to what I've asked before, since you brought in the question of confidence, and we might explore that a little further, but why? Especially since the rights of tenants have been eroded considerably since the late 1940s, in terms of their power to bequeath and to assign. The confidence for the tenants are such that there's issues there about their ability to actually contribute to this bipartite activity of land ownership and tenancy. We are aware of your concerns about confidence, but there may be other views on that, which people can express. Andrew Howard, first. Thank you, convener. Do I need to press this? No. Fully automated this Parliament, unlike Westminster. Thank you, convener. I think it's worth noting that there is investment from landlords, as there is from tenants. I think it would be slightly unfair to characterise the system as being one where tenants provide virtually all the fixed equipment as well, because I don't think that would be correct. Going forward, what's essential is to have a framework that's attractive for both parties to invest. You can't just focus on encouraging investment from tenants. You need to have an agricultural holdings framework that means that the landlord is willingly engaging in that process as well, and feels confident and happy to invest alongside the investments that the tenants are making. Thank you, convener. I thought Scott Walker made a really good point, because I've always felt that a measure of success of any land reform bill, any agricultural holdings legislation, would be to see an increase in the amount of land coming onto the net market. I have a very simple question. Do people on the panel think that this bill is likely to lead to that outcome? We'll take Andrew Howard to follow on, and then David Johnson to follow up that. To be succinct, no. Would you like me to expand? Well, that's fine. David Johnson, are you... Not as quite succinct as Andrew is here. I think there's a potential within this bill, depending on the measures that are brought in. There's a huge amount within here that's reserved and coming along later, and the details are to be clarified. There is the potential to provide the opportunity to create that confidence, but there is also the potential to go completely in the other direction, and it is quite delicately balanced at the moment as to which way it's going to go. In terms of the area of land in Scotland, if you look at the statistics that the Scottish Government has provided, the biggest drop in the tenanted area results from loss of tenancies in the secure tenanted sector, which make up around about 80 per cent of the sector. The measures in this bill in terms of making family succession slightly wider and simplifying the family succession process should ensure that more of those tenancies remain tenanted in the future. That's an increase in the amount of land coming in. But it will reduce the current decrease. When you're discussing the public interest from both the tenant and the landlord, surely the issue is about the way in which the land is used to produce food, to produce other public goods. In fact, the purpose of the bill is to ensure that that happens better, and the tenancy part of it is one of the ways to try and help that to happen. The responsibilities of landlords in the process of this country being able to feed itself is one of the public interests that none of you have touched upon. Andrew Howard. A tenancy is one option that you have as a sort of structure for the farming of land where the party who owns the land doesn't necessarily want to farm it himself, and there are others, contract farming agreements, share farming agreements, would be examples. So if the land isn't in a tenancy, I don't think that necessarily means that it's not being farmed productively and delivering the other public policy objectives that the government has set out. I think what the bill needs to aspire to do is to ensure that the agricultural holdings framework is seen as a perfectly viable and attractive option for somebody who doesn't wish to farm the land themselves at that time, whether they be a large landowner or currently an owner occupied farmer. And at the moment, I think that the option of creating a tenancy, even if in all other circumstances it might suit that individual, isn't being taken up and other structures such as contract farming or share farming are being used because of concerns over, frankly, the politicisation of the agricultural holding system. Well, it's the politicisation of the agricultural holding system to suggest that contract farming is something which we should look at and it's been rejected as an approach in Scotland. Therefore, I think we should recognise that we can use the word politicisation in lots of different ways and we should be careful about how we do it. We've been trying to find a way through this maze. We're trying not to be two partisan one way or another in our language, but the word political is something which is quite partisan, I can assure you. We're aware of what's being said. Martin Hall. I think the answer is, I think the bill as it's proposed protects existing agricultural tenants and will it increase the amount of new land coming on the market? I don't think it will. So I think it protects, but I don't think it increases the sector. Great, and we've got Scott Walker and then Chris Nicholson. I'm optimistic. We're at the start of this bill process. There's been a lot of work on before it, and I think what we're all trying to aim to get here is, I'll go back to my point, we want more tinted land in Scotland, we want greater investment in that tinted land in Scotland, and from any few Scotland's point of view, we are very partisan. We want more food produced in Scotland and for that food to produce profit play for those that produce it. So I start off with this process in saying that we've got an opportunity here and it's up to everyone given evidence here today to hopefully push the Parliament, as I would describe it in the right direction, of things that we feel need to be added to the bill that isn't there just now, and also to encourage you in areas where we think the bill maybe is lacking or need a little bit of direction. But there's a lot of people out there who've been asking for a long time to look at the current situation because the current situation, for whatever reason, hasn't been working satisfactory to all parties involved. And it's important that at the end of the process we do have something that is satisfactory to all parties because if it works for everyone, then we are going to get a situation where it encourages people to, one, want to rent land and two, want to be the rentee of that land. So I'm optimistic. The review group's report highlighted other difficulties or obstacles to the letting of land, which I think are very significant in driving current landlord behaviour. The main two points being the way that the present common agricultural policy works in terms of subsidies and also the current fiscal policy which makes it more attractive for landlords not to let land but to use vehicles such as contract farming of farming in hand. I think that until those two topics are addressed, it's going to be very difficult to encourage uptake of new style tenancies. Okay, I think we've got a start on this just now. Let's get digging into some of the details. Tenant farming commissioner, Jim Hume. panel, thanks for coming along. There's proposals from the Scottish Government regarding having a single tenant farming commissioner. He would be a member of the Scottish Land Commission but not a land commissioner. Just generally, I would be interested to hear the panel's views on those proposals and perhaps some of their views on what they would like to see out of a tenant farmer's commissioner and perhaps even commission. We've always been very supportive of the idea of having a commissioner. It's been talked about in different names in different formats over the years but we see this as a hugely important role to make sure that the bill operates correctly and also that we get to a better environment on operating environment. It's important that the commissioner is going to be proactive in our view in the area. So the commissioner is looking already at different codes, different statutes, different best practice. Is that operate within the sector? I need to actively promote and I would say police, those practices, to see that they're here to. We also feel that the commissioner's got to have adequate power so that they can intervene and can take action. I know that has been suggested that where does the role of the Scottish Land Court start and stop and where does the role of the commissioner start and stop and there's a fear of overlapping occur from our point of view in speaking to our members across the country. I think everyone wants to avoid going to court wherever possible. It's a costly process and often the process that ends up even if there is a good relationship you could break down that relationship between a tenant and a landlord to the disadvantage in the future whereas if you have an active commissioner who could actually intervene, who could rule on certain points and could encourage the parties to reach agreement, I think that would all be seen as beneficial. So one of the issues I would raise at this stage is to ensure that the resources and funds available to the commissioner are adequate so that they can take account of being an active role within the sector. Who doesn't it? Somebody else wants to come in. Nile. I think it's very important that the commissioner is an independent and relatively impartial appointment. I think we'll need to make sure that the selection process is robust to ensure that the person that does that job can be as fair as possible with both parties. I think that's very important. Thank you. David Johnson. From the Scottish land list point of view, we support the introduction of the tenant farming commissioner. We think it's a good thing. We think the interim commissioner has hit the ground running and is working together to provide good practice and guidance to help the industry better avoid these disputes. We think that within the bill itself the balance of the rights and responsibilities of the commissioner versus that of the land court have been got just about right. We think that the final arbiter should be the land court and not the disputes. The interim commissioner should be able to provide the guidance which the land court is able to take cognisance off when it's passing a judgment. The balance is about right. Anyone else want to answer? Chris Nicholson. STFA are very supportive of the establishment of the tenant farming commissioner. Much of his role is quite clear now and has been debated. There's one area where we think, in common with others, that some more thought could go into it, which is the tenant commissioner's role in dispute resolution. I think that Rick Smith mentioned in his submission that the land court should be the last resort and there should be arbitration or expert determination encouraged prior to the land court. We see the tenant farming commissioner as having a potential role in that and a bridge between prior to the land court. Meriation arbitration is far better than going to the land court. OK. We may well look at some of that any more. Do you want to pick up? I just wondered if any of the members here today agreed that there should perhaps be a formal link between the Scottish Land Commission and the Tenant Farmers Commission, perhaps the Tenant Farmers Commission or actually being on the Land Commission. I wonder if that would be of interest at all to anyone. I want to comment on that. Christopher Nicholson. We think it's very sensible that the tenant farming commissioner is a member of the Scottish Land Commission. We feel that you can't look at tenancies in isolation from the rest of land reform issues. If there's nothing else on that, the other point I had was really just on accountability. Neil Milner mentioned about the commissioner being independent, but I just wondered what form of accountability you would therefore think would be appropriate. In who he answers to, what he or she answers to. Ultimately, it would be the Government that appoints him. I suppose also it should potentially be some of the groups here today who represent the industry as a whole. That's really what I was looking for. I wonder if there was a mechanism that some of the members here thought would be appropriate. At the moment you have the interim commissioner where the three bodies, NFUS, SLE and STF, are sitting working with him to do that. I see whether the 10 and 5 commissioner, much the same, would be a good way of going forward into the future. As for the independence, ensuring that it is independent, seen to be independent, is what gives it its credibility going forward into the future. That's something that the Government itself can sort out. Therefore, do you all agree with the STFA that the commissioner should have powers to enforce codes of good practice? That would certainly be the way in which her independence would be measured. We've debated this for a long time. We think that it's important that once you have a code of practice, those codes of practice have to be adhered to. It comes down to how you enforce it. If you have an independent commissioner, that would seem to us to be an appropriate way of ensuring that those codes are enforced. Then you get on to the role of sanctions. What are the actual sanctions when those codes aren't enforced? That's when you've got to look at a progressive list of sanctions. In the first instance, it's almost like giving people a yellow card to say, you've got a time frame to adhere to it. That would be your first stage. Then thereafter, you escalate upwards. Andrew Howard? David Johnson? We don't think that the codes of practice should be statutory. We think that they should be there to encourage the best practice. If you're going to end up in the land court where you've got the legal statutory framework, if you haven't followed those codes of good practice, that forms part of the judgment that the land court takes into account, just the way you've behaved. In effect, it gives the same. Andrew Howard? David's made the point, really. You're at risk of blurring the edges between a legal and judicial process, and one that is about guiding the parties to do the right thing. I think we'd have to understand how you would prevent that blurring from being messy. Dave Thomson? I've had a bit of experience myself in my past in relation to codes of practice through trading standards and consumer protection, and so on. My experience tells me that if you have a purely voluntary code of practice, even one that a court can take into account at a later date, then the good people follow it, and the crooks ignore it. The bad people ignore it. That's been shown to be the case in many different spheres. So maybe, as a halfway house, we've mentioned arbitration and mediation, and everyone seems to be in agreement about that. If the status of the codes of practice could be built in to be something that, in a mediation process, would carry almost a statutory position, as opposed to being statutory in a legal sense, but if we could get a form of words that would allow us to embed them into the mediation and arbitration process, then would members of the panel feel that that might be a good halfway house? I'm sure that Dave is talking about his previous job when he was mentioning the word crooks. I was indeed, yes. Martin. I think you raised a good point there, but I think the way to do it would be to give the land court powers to be able to appoint arbitrators, mediators, or whatever, or any abandoned experts, and I think that would be the way to bring that in, and I think that that would work. Sorry, convener, for just coming back. Is there not a danger, though, that the point that David Johnson was making about the statutory nature of the codes that the land court would take them into account? If you build it into a legal process, legal processes by their very nature can be very lengthy, time-consuming and expensive. If you build it into a mediation arbitration process and not, then it's possible that that might be a much more efficient, quicker way, but it would give them legal status. I mean, you could give it legal status in the mediation process and the legal process, but I wouldn't want it just to be left to the end of the line. It needs to be brought in at an earlier stage. If I could come back. I think that opportunity should always be there to be able to refer. If it is perhaps brought in as part of the code, but where I was coming from is, even if it's ignored at that stage and you end up at the legal process, then it shouldn't just end up at the land court. The land court should be able to get a quick resolution to it and if it's proportionate to the dispute in hand, refer it in a practical nature, then refer it to arbitration or to mediation to get it resolved rather than having to go through the lengthy and expensive process that the land court is. It's really a second backstop, but a quicker way of getting it resolved and cheaper as well. I think that this might come up as we go along. I was just going to ask Niall if he thinks that land agents should be part of this process where the commissioner would have power to enforce codes of good practice. Absolutely. Our members act representing tenants, representing landlords, also sometimes managing the properties in hand as well, so we are involved in it at every stage of the process and stages through the industry, so we'd be absolutely welcome being part of that. Okay, thanks very much for that. I'd like to move on to MLDTs. Angus MacDonald has a question. Thank you to our members for your panel. As we know, the objective of the MLDT is to replace the LDTs with a more appropriate balance of obligations and discretions on the parties than the current LDT allows. We've heard from SLE who've stated that the differences between current LDTs and the proposed MLDTs appear minimal, and they go on to state that it's a missed opportunity to develop a truly modern vehicle. We've also heard from the STFA who stated that it provides a few tangible changes. I'd be interested to hear what the panel's views are on the proposed MLDTs and are you all satisfied with the Scottish Government's explanation of the differences between LDTs and MLDTs? Yesio, you're right in that we see a few tangible differences. We have some concerns about calls for more flexibility which would result in us going down the road that we've seen in England developing over the last 20 years where the average length of a farm business tenancy now in England, as far as I know, is around three and a half years. Now that's, I don't believe, is in the public interest for the long-term maintenance of land and farm infrastructure. There is one recommendation of the review group concerning LDTs or MLDTs that has not been brought forward which was the recommendation for a 35-year repairing lease for land that requires improvement. We saw that as one opportunity, a genuine opportunity for new entrants and that's not in this bill. I don't know whether there's intention to bring that forward at a later stage, but in terms of creating opportunity for new entrants, that's one measure that's been recommendation from the review group that's been missed out. We don't know about that, but we will ask that question, Scott Walker. Just starting off by supporting what Chris says with regards to the repairing lease. We were very supportive of that idea of the repairing lease and think that that could be encouraging new people into farming and encouraging some land to be let that otherwise wouldn't have been let so we'd like to see that come forward as an amendment. The issue with MLDTs is not substantially different to what we currently have in terms of the SLDT and the LDTs fundamentally the same vehicle and the issue for us comes back to partly what we've discussed just before about confidence and getting people to let land for a longer period of time. As a rough rule of thumb and this is a very rough rule of thumb if you're doing cropping land you can survive with a shorter lease period. If you've got livestock then you need a longer lease period as a general rule and I think what we're trying to get away from is that the current system sort of encourages by its nature's shorter term leases to be given and what we're hoping to create through the whole auspices of this bill and MLDTs is a system that would encourage people to give longer leases particularly in livestock sort of situations where that's necessary for the nature of farming. So the basic MLDT proposal is fine as it stands be good to get this apparently incorporated into it. Andrew Howard I concur with Chris and Scott that there's not substantive differences the increased flexibility over fixed equipment responsibility I think is welcome because it probably recognises the diverse use of MLDTs and now probably MLDTs in that some are additional blocks of land to units that have already got infrastructure and therefore you don't need to provide above ground fixed equipment as it were. You mentioned the point of flexibility one of the challenges that we face in framing an agreement for a farm now is that there's a greater number of farms of diversifications, other businesses that are being run on that farm which don't really fall into the realm of agricultural activity or they're an adjunct to agricultural activity and the way in which the parties might agree as to how that diversification is undertaken and how the rewards might be split from that diversification don't always sit well with the framework of an agricultural lease now what's going on at the moment is that usually that enterprise is taken out of the agricultural lease and that separate commercial lease will be agreed for that this might have represented an opportunity to provide flexibility that would have allowed that just to be encompassed within one agreement it's not always easy sometimes the two things don't sit that well together but I think that's probably what was referred to in terms of the opportunity to get flexibility into new lease structures David I agree pretty much with everything that's been said so far we think it's from a Nestle's point of view it is a slightly missed opportunity to allow this flexibility that Andrew is talking about because as we're seeing the changes people are thinking of doing stuff that we haven't even dreamed of and we need to allow the flexibility to do that I think the the rollover point where it goes from 10 years and rolls automatically down to 10 years I think is a missed opportunity as well what we have at the moment where it goes from 10 to 3 to 3 and then back to 10 I think is accepted and people are reasonably comfortable with it so we see the reason why that needs to be changed when originally it came out the SLDTs the period between 0 and 10 years had gone now the SLDTs aren't standing back in so there's a break clause at 5 years which probably won't amount too much most people use the SLDTs if they want to do that a greater flexibility would encourage more people to let it go I just want to ask Chris Nicholson where he got the figure of 3.5 years for the average length intensity down south because I think previously on the committee that suggested it was actually in excess of double that length of time I think it may be higher where entire holdings are let on an on an FBT but many FBTs are just for small blocks of land that are bolt-ons to bigger holdings so my evidence would have come from the English TFA I think where it's talking about whole livestock units being let I think it's near 9 to 10 years it's an initial term for a farm business tendency which mirrors are MLDT ok thank you we can check that out I guess anything else Angus no ok in that case we move on to the conversion from one tenancies yes and I I have to say I'm a fan of trying to bring a bit of flexibility within this whole sector and I see conversion as being a means of doing that as I'm sure everybody's aware the original recommendation of the view group was that there should be an ability to convert to 35 year lease which could be assigned for value the bill is actually introducing the potential of converting a 91 act tenancy to an MLDT but it gives the minister a power to determine the length of that limited duration tenancy as I understand it now in its submission the NFUS specifically raised concerns over legal uncertainties what it referred to and I just wondered to start this conversation whether the NFUS could expand a little bit on perceived uncertainties whether you feel that some clarity has been achieved or whether you still have concerns over that element of the proposal this has been an area where there's generated a lot of debate within our membership across the country and what we saw from the government bringing forward the bill was some clarity on the parameters to be discussed because there's no point in discussing potential outcomes that we didn't possibly make the way into the bill because of potential compliance with European human rights now what I mean by that is that for some of our members they would like to see a conversion of a secure tenancy to a secure tenancy to be passed on to others for others it's conversion of a secure tenancy to a fixed term tenancy now in discussions that we've had with a sort of bill team is certainly being flagged up to us that is an issue still to be resolved as to what could actually be done that would be deemed within the powers of the parliament and therefore not be challengeable within law so we felt inappropriate to come to a definite solution on this one given that whatever we may or may not like may not be possible to come forward with so we think it would be useful if the government could actually set out the parameters once those parameters have been established by the government then whether it be NFUS or other organisations I'm sure we could then go to other lawyers and sort of say well what is possible or not possible because at this moment in time when we ask people there's a range of stuff but it's very great so if I may follow that up what you're saying is you'd prefer to see more detail at this stage rather than leaving it to secondary legislation yes we'd like to see more detail at this stage so we can have an informed discussion debate on the subject the basic principle though if I go just deal with the basic principle from NFUS point of view we've saw that we go back to what we saw as a perceived problem was that there were some tenants sitting with a tenancy who didn't have somebody to inherit their tenancy and therefore they would continue in that tenancy for longer than in their interest as an individual for longer than in the interest of the land owner and for longer that we'd believe in the interest of Scottish agriculture because it wouldn't be as productive as somebody else would be therefore to give some form of vehicle that would allow that individual to pass on and sell that tenancy we believed would be useful so that's where we came from originally and why originally we taught by a 25-year length of term which then the Ag Holdings review group suggested being a 35-year term Can I open this out to the rest of the witnesses to just to get their views on this aspect I share Scots view that the principle of what's being proposed could achieve the objective that I think the Government wishes to achieve which is to encourage retirement I think it would have been really important to see the detail of this in the bill because it's a big step I mean this is effectively allowing the change and sale of a tenancy which is not something that's been previously permitted other than in a limited duration vehicle so that would have been very helpful I think it's also it would also be helpful to understand what motivates tenants who are sitting where they are sometimes it might be need because they can't afford to retire in which case this is helpful sometimes it might be their tax status so they're sitting there on a favourable trading tax status as a tenant so there may be little incentive to give up that status at that point and it could also be the housing and lifestyle that's being provided by the farm is better than it would be elsewhere so it's always important to understand what is motivating people if you're going to design a policy that achieves it but if the balance has got right then I think this might achieve its aim now when I say balance this has to be something that provides something for the outgoing tenant it needs to be sensible and affordable for the incoming tenant particularly if you want to encourage younger new entrants to do that because the longer the term and the more sort of without restriction the policy is then it's highly unlikely that they will be able to compete with larger established farmers who will simply outbid them and the landlord probably needs to see something out of this as well and the obvious advantage to them is that they've seen a conversion from a tenancy vehicle where they have no certainty over the end of that tenancy vehicle to one which has a defined term now I would suggest that making that the period of that term too long is likely to lead to more owners interjecting and buying out at that stage which isn't going to achieve the objective of opening up tenancy operations opportunity sorry and it's probably going to increase the risk that somebody feels that it's contravened their rights and therefore they might feel that they want to challenge the policy so I think the principle is probably very helpful but getting the balance right will be important to whether it works or whether it's actually almost counterproductive helpful during the course of the review group's work assignation for value outside family members was a key part of the debate and if you remember back to the time last year when the review group in that interim report was the discussion of giving tenants the opportunity to assign their lease to continue as a secure as a secure tenancy so the assignation provisions have been steadily watered down from the interim report to the final report and now there's uncertainty as to whether the 35-year conversion is possible and as this has happened it's to our mind leaving real gaps in the bill that assignation was meant to address some people have covered them but one of the key gaps is WAGO we're now in a situation where many tenancies have tenant investment going back almost a century and in some cases half the value of the holding open market value of the holding is down to tenants improvements and there needs to be a way a fair way of tenants realising their property right in their lease and their improvements and open assignation was one method of doing that now with the long term nature of investment in holdings and the duration of farm improvements anything less than 35 years is unlikely to allow a tenant significant improvements and fair value for his improvements so that this uncertainty over where assignation is going is causeful for concern because as it's been watered down it leaves gaps that need addressing from other angles we are coming to assignation succession later on I was referring to non-family oh yeah okay yeah yeah yeah sorry right okay sorry understood I think Scott and Andrew I highlighted the problems with tenants trying to come out of the farms and Chris touched on a very important issue within this which is way going and it seems that the core issue within this is trying to establish a fair way going for the tenants coming out that's the problem that's seeking to be addressed so from that point of view sort the problem out by doing away goings don't expand it into other areas from the Scottish land and the states point of view we would love to see more detail on the conversion at the moment it's very light and it is quite difficult to make a detailed judgment call as to how it would work in practice because we don't have those details yet but we can see the principle what it's trying to do is encourage the churn within the sector and we can see merits in what it's trying to achieve the term as has been alluded to is very key to within this if you have a longer term obviously it's more risk to being challenged the shorter term, the less risk but it's allowing the right term to strike the balances we already have the principle that an MLDT should be for a minimum of 10 years there's something in there to guide us in the direction perhaps where we should be looking to go this also cannot be looked in the isolation away from succession assignation as well, the two of them go hand in hand and if you detail I've got that, Martin and then Ed Thomson I just wanted to support Christopher's point actually because it's a gap that's in the current legislation we need to deal with the way we go in conversion from our existing full tenancy to an LDT and the same gap is there in this proposal and we need to address that it's absolutely fundamental if this conversion is to happen and Dave Thomson thanks very much I want to touch later on on the broader issue of assignations but I was intrigued by something that Andrew said when earlier on he was saying that one of the advantages for a landlord a landowner in conversion is that it gives them the moment before conversion there'd be no certainty of end of tenancy I think is the phrase he used and I just wonder if Andrew might want to comment or anyone else for that matter on whether ending tenancies is desirable and is it an objective that landlords aspire to because if it's a desirable thing in terms of conversion is it desirable in the broader sense One of the difficulties for a landlord of the current secure tenancies is that they are as long as the tenant continues to have an eligible successor or assignee that the landlord has lost control over when the end of the term will be I mean in a lease one of the fundamental tenets of a lease is usually that it's for a term and you know what that term is in a period of years but with an agricultural tenancy that has been broken down and it just keeps going and going and of course the landlord is unable to manage their affairs in the way that they would with any other tenancy because they can't plan to a certain date you don't know when it is and I think the fact that nobody offers any secure tenancies anymore that's probably a clear indication of what the marketplace the people who might offer land for tenancies think of the idea of granting a secure tenancy I'm not in any way suggesting that we should try and construct something that starts to whittle away at those secure tenancies against the wish of the tenant I mean one of the positives of the conversion route is that the tenant makes that call effectively they make a decision that they want to sort of terminate the tenancy and receive a payment of money because somebody's coming in and buying the new vehicle that's been created on the back of it just a quick follow up that's alright you mentioned there that the landlord has cannot lost control I think is the phrase that you used why is that a problem though because if you know you've got a secure tenant you can plan into the future on the basis you've got a secure tenant you're getting a fair rent that's your income you know where you stand exactly the same argument would apply to the 1886 Crofters situation so why is it a problem why do you want to get that control unless you want to change what is happening there unless you want to have your own way totally when you have certainty because you know what your rent is going to be into the future forever more um well the owners circumstances may have changed they may wish at some point to farm it themselves they may wish to add it to their existing farming business they may wish to restructure the holdings that they've got on the rest of the estate because individual units might in current terms be too small the landlord having a responsibility to maintain that fixed equipment but it might be on a unit that really doesn't make economic sense going forward to continue to plough investment into that when it might be better can join to another another unit so it's inflexibility in reacting to circumstances as they go forward because you've just locked everything in at that position it is worth saying that for a number of farms we've you know the bulk of our farms are secure tenancies it's a very comfortable relationship in a number of cases it's fine but there are other areas where you might over time see that you could reorganise the nature and the structure of the farms to be more effective and at the wide scale might be more effective for Scottish agriculture but that isn't an ability to control over To pick up on this point and how it also relates sporting everything that Andrew says and how it relates into the wider confidence within the bill having a conversion from a 91 Act to a fixed term tenancy vehicle has the confidence of giving out to landowners that when they enter into an MLDT of a agreed length of time so it's fine 10, 15, 20 years or more that that will in itself then be honoured so the conversion itself here has the chance of increasing the confidence in using the new vehicles going forward into the future going the other way as the risk of doing exactly undermining confidence and just to say that this is not looking at existing 91 Act tenancies or changing them in any shape or form because that is for a tenant to decide just one final point to follow it up you can understand what you are saying there David but the broader point would appear to me to indicate that some landlords maybe all would like to roll things right back to prior to 1948 when secure tenancies were created is that something that people would like to see ultimately all tenancies would be converted to MLDTs and you wouldn't have any tenancies and then landlords would have full control we're not talking about altering the existing 91 Act tenancies they're in place and it's for the tenant to decide whether they wish to convert or have a notice to quit or the point about control that Andrew made and some of the other things indicates to me that there's a desire and an objective that we would like to go back to the pre-48 situation no there's an acceptance that we are in the situation where we are in and we have very good relationships with 91 Act tenancies going forward into the future this is about trying to create the right set of principles the right set of environment to encourage more land to come into the market going forward into the future and also to encourage the churn away from never ending tenancies into the more flexible nature that's fit for Scottish agriculture going forward into the future just before we continue this I think we've got to that point in the conversation where the point is made on both sides Alec Ferguson you wanted to finish off just to round up this section sorry did somebody else want to come in before that no no no you round it out I think there's clearly more discussion part of the bill and I think we hear the call that most parties would like to see more detail at this stage of the legislation but if we are talking about flexibility and it is my belief that flexibility will help to bring about and restore the confidence that I think everybody would agree has been lost to a large degree then it would seem to me that if a reasonable degree of security is given to a tenant who chooses to convert and assign that conversion I think that what I'm coming to is I think something David Johnson hinted at maybe he could clarify it which is that if a 10 year period is deemed to be suitable for a modern limited duration tenancy is there not a logic in saying it should also be suitable for a conversion to a modern LDT a minimum period David Johnson and then Niall Mosa Christopher Nicholls I mean there is a consistency then within the legislation the way it's proposed we've done a little bit of background work on how you would try and value a hypothetical tenancy for conversion and what we found is that there is an increase in the value to an incoming tenant as you go from 10 years to 15 years but when you start going out further than that there isn't necessarily an increase that an incoming tenant would be prepared to pay to an outgoing tenant done on a discounted cash flow basis but there is a risk that the longer you go the more you start to infringe the property rights of the landlord it starts to strike an unfair balance and so the key to this is trying to find the bit in the middle that is suitable for both parties and fair for both parties so first of all Niall just coming back to the issue of why a fixed term might be desirable it provides a natural point for review between both parties I have examples where SLDTs have become 15 year LDTs which has been a 20 year term in total because everyone's quite happy with everyone's getting on so fixed term allows people to sit together and decide what's the next step for that business it might be to add more land for the next 10 year round or 15 year round or whatever's agreed and the other thing about fixed term is it effectively increases the capital value of wanting to secure borrowing against it which if people are looking to bring money into the sector for investment is actually quite important It's helpful and Chris there is a balance here and one of the key considerations is that you have to make it attractive for the tenant to go down this route bearing in mind that farm improvements nowadays modern farm buildings have a life expectancy of 70 years or more tenants build houses, cottages they have a life expectancy of 70 design life of over 70 years some of the improvements to land are permanent it's highly unlikely that a tenant is going to receive fair value for those kind of improvements subject to a lease that's only 35 years in duration and you only have to go across the border to England to see what the value of a house is subject to a 35 year lease compared to a house on a 70 year lease I can't see this being used by tenants if it's less than 35 years especially for tenants of significant levels of improvements because they won't be nobody will be prepared to offer a tenant fair value for his improvements if those improvements are subject to a lease that's less than half the life expectancy of those improvements this is where I think this is starting to get a little bit blurred because what you're talking about is way goings for improvements but if my understanding when you're talking about converting a lease what you're buying is the ability to carry on a business on that ground therefore the way you're going to value it is based on the profitability of the business you see going on within there it's not on how many houses or anything else is on there it's how much can you make profit out of that particular holding so there's a blurring of the lines going on here between two which I think are different I don't think there is the reason why tenants the 1883 Act brought in compensation for improvements for tenants because it was recognised that tenants don't require more than just the resulting profitability for their improvements to justify them they need fair compensation for the capital value of those improvements as well a tenant can't justify going out and building a grain store purely on profitability alone he needs to know that he will receive fair compensation at the end of his lease and he doesn't know when he will have to give up that lease at some stage he might have security of tenure but the tenant there may be other circumstances that force the lease to come to an end in tenure's time or less capital compensation for the capital value of improvements is vital for tenants' ability to invest you're saying we take this on board okay because we obviously have to come to a view ourselves and we've heard quite a lot from both sides but Andrew Howard to finish it up sorry I thought you'd closed it off no I haven't but between David and Chris we have sorry I think that in simple terms the conversion would have to work by effectively taking on the terms and the responsibilities and sort of benefits of the tenancy that was being converted so for instance the improvements that had been carried out by the tenant who was converting to the MLDT those improvements would carry on into the new tenancy so that the landlord of the now MLDT would continue to have a compensation liability to the incoming tenant and the incoming tenant would be able to value that when making an assessment of what they were prepared to bid to the outgoing tenant I mean I think that's the only straightforward legal way that you could do it because it's open and transparent and everybody can make a reasoned financial judgement so the compensation wouldn't disappear anywhere but that benefit if you like would carry on to the new tenant and they'd have to factor that into their bid Christopher Nicholson Wago and this bill at present doesn't address changes that we consider necessary to Wago ok let's encapsulate that in that particular argument thank you Alec Ferguson for winding it up but winding it on yes the tenant's right to buy Sarah Boyack thank you very much and I want to move us on to the issue about the removal of the requirement to register for the preemptive right to buy so I want to draw those of you in just to test out what your views were on it because the law society submission suggests that there might be uncertainties and an impact on land sales depending on how this actually works so I want to explore what kind of tenancy tenants have and what impact the removal of the preemptive right to buy will have so I'm keen to get experience from round the panel. I'm going to ask my name three bits convener so that we can get through all the different issues I wonder if the law society wants to say anything at this point yes convener the current arrangement has a flexibility there largely supervised by the keeper of the registers to establish that what is on the register is the whole farm nothing but the farm and nothing left out and that has worked quite well the society is very cognisant of the difficulties that some tenant farmers have in reaching out for the pen and applying to have a right to buy in their name but we don't feel that the just knocking off of the two issues that appeared in the 2003 act do the job to be quite frank it leaves a huge amount of gull which can only be resolved ultimately through the land court we can see what this is trying to accomplish but I think it's going to raise quite a few problems going forward on a practical side when we see registrations coming through there's sometimes questions over exactly what type of lease it is whether it can be registered or not you get question marks over the area that's in the lease and you can have disputes while you sort out what was originally in the lease or not so the very act of the registration in itself helps to clarify the arrangement that exists between the landlord and the tenant and so the process itself is a good thing to see being done we think that the need to re-register at five years quite happily to do away with that so once registered it is always registered but the process itself I think is of very great importance the other thing that we're having difficulty to understand is recommendations so there's also safeguards in there to try and clarify as to what constitutes discussions with developers or outside third parties and where does the right to buy get triggered or not and that's very very unclear so at the moment you get in a dark situation where people come to ask you about possibly development of land you go have community coming to ask about taking on land on a tentative farm and you cannot have that discussion you cannot afford to risk that discussion so that needs to be clarified there is also the problem I think with if you're going to have this automatically brought in without any registration there are options in place across the country where people have got with developers already in place where do those where does the conflict get resolved between those I don't know how you do that okay, Cyra the issue of the representative impact on the legislation I wanted a little bit more from the law society on that issue what I said earlier is basically the answer to your question this does not help the situation where as others have pointed out there are options in place legally agreed to and competently set out and in the 2003 act there is a provision for those to be to hold sway if there is a rate to buy issue so is the concern here about the potential of a community group getting access to rate to buy or is the concern about a tenant getting access to rate to buy from the landowner perspective the concern here is that where does what take precedence because at the moment you can have the existing options in place with a developer and then if you bring this in as it's proposed you then got something that's going to supersede it which one takes precedence because you've got one that's came beforehand but then you've also got this question about what triggers that rate to buy if it's an automatic rate to buy and the community comes in and asks for a conversation about taking you on a particular field can you have a conversation with the community with that triggering the rate to buy so the tenant takes precedence it's unclear can I just follow up you made a point a minute ago about a tenant registration of the land would be good because it would clarify things why wouldn't that be clear enough in terms of the lease or the tenancy you'd actually entered into with a tenant because we've seen examples around the country where the documents registered in the land registry is actually different from that which is on the lease and so at that point you're able to sit down and work out which is the correct area that should be within the land registry so that's very very important it also comes also to the fund middle as to whether it's SLDT LDT or a 91 act lease and at that point it enables that to be clarified as well so you see it both as a land and as a clarification of a tenancy yes it means there's no dispute later on so from the perspective of the tenant and the farming interest you actually support this removal of the rate to buy so I want to test out the other side of the perspective on this the recommendation to remove the requirement to register a tenant's preemptive right that recommendation was made by both the land reform review group and the ag holdings review group now on any reasonably well managed estate I would have thought it's pretty clear who has what type of lease and what area that lease extends to so the type of lease and the area is already defined so we don't see why the requirement to register is necessary for an agricultural lease a secure tenancy and we're aware that they're only in the region of just over a thousand tenants who have registered their right preemptive right that's a very small proportion of the total number of secure tenancies in Scotland and it's clear that the requirement to register is deterring tenants from doing it and we know tenants on many estates who've been told quite simply that if they do register the state won't look at it in a favourable light and even to the extent that they won't have non-secure leases renewed it's rocking the boat it's rocking the boat, yes NFUS, I think, and Sabah? Can I bring in Niall who's been waiting a wee bit and then we'll get the NFU for sure The other issue here is that although the act says existing 1991 act tenancies there are a number of what I will call grey tenancies out there where the landowner isn't potentially an estate with a very good terrier and records going back decades, you know you can have an owner occupy a farmer who for ill health or other reasons lets ground seasonally to a neighbour but because they'll know each other and all good friends they don't have any paperwork between them at all and that agreement continues very amicably until such a point is there's a commercial advantage for the tenant to potentially change their their occupation arrangement so if there's an absence of an agreement and there's no proof of gap periods then the occupier can potentially argue they have a 1991 act tenancy In the mainstream I suspect that those are hopefully minority situations which inevitably crop up and we're talking about trying to deal with the mainstream situation where we'd expect professionally that people have made correct rent agreements registered in a fashion that people can understand and that this special pleading about the numbers of these things we need to pin down, see what this part of the discussion is actually something that's going to materially alter the reasonable suggestion that the tenants don't need to register or write to buy Risk that in those scenarios these people are currently in a limbo as it were and it's at the moment they might not publicly be telling their landlord whoever that may be that they have a 1991 act tenancy which by virtue would give them an automatic registration right to buy and it then means is that landowner potentially prejudiced in the decisions they make for that land because they make them in the assumption that they have a grazing tenant when actually the grazing tenant uses legislation to change that scenario at a later date So how many of these are there then? How many do you think there are? More than you think Professionally I've probably dealt with about three or four cases of that nature in the last three years I'll say So in the penny numbers compared to the we're better here from the NFU about this one to answer a serious question but thank you for that elucidation The general principle for us here is simple that when the land is going to be sold then the tenant should have first refusal so that's what we're wanting to get to and what we want to do is remove obstacles that may stop that happening so at the present time one obstacle that may stop that happening is the need to register I don't know why but I would have thought every tenant would have registered but they haven't for a number of reasons so removing that provision to register to us would be a step forward and that would help the general feelings that exists within the industry I do recognise though that there are problems and I think there are some valid problems that have been brought up because a lot of these tendencies do go back over a huge period of time and you would have thought that was very clear what pieces of land are actually involved but it's not always a case that is clear what pieces of land should be unsurmountable those issues should be dealt with and as we try and modernise the whole relationship that exists here clarity on the leases that are available what this applies to what lands covered by your lease would generally be useful I think one of the issues just picking up on what Niall, David and Andrew have said and I may be going to misinterpret what they've said so they may want to come back is an issue that can often happen is a tenant will have multiple leases so they'll have a lot of different types of leases that cover their farming enterprise so sometimes confusion could reign as to what's actually covered by the right right right to buy but again that I don't see is an unsurmountable problem that would be partly an educational issue and partly maybe even a role for the new commissioner to put in place in terms of providing clarity and guidance to people as to how all this would operate in the future I need to come back on that one I think Sarah is trying to establish about the actual tenant's requirement to register for preemptive right to buy Andrew Howard and then Martin It was really to make a suggestion that might help to quantify the number of problem leases I understand and I'm not I can't remember them all off by heart but I understand that the agricultural census data is collecting information about tenancies and that there's a given percentage of tenants report that they don't know what type of tenancy they have and so it may be that the government itself already holds information that might give a clue to the number of grey areas if you like which would help quantify it seeing it on the table that I have but I suppose we can ask them about that so Martin Most of what I was going to say has been covered but the act of registration is impractically at a practical level which is what I'm involved in is very helpful it makes it absolutely clear and transparent about what the position is I think the issue of hierarchy is very valid that David raised and is particularly in relation to the community right to buy and potentially develop or options but more about which has precedence and priority you want to go on one of the points that was made by the law society you came up with a whole raft of problems that this would create and one of them was that land sales could be affected where there was an option agreed before the bill came into force that's a retrospective issue but the other one I thought was quite interesting is that the development of the tenant may be able to step in and buy the land agricultural value but in another part of the bill we've got people saying that they're really worried that land is going to get taken out of agricultural use because of right to buy so we've got two sets of balances being weighed up in different bits of the bill and I think getting the right solution here is actually quite important there's less a question that's more of a comment having just heard both sides I think we're going to have to reflect on it afterwards because it's not necessarily spot on because also what we don't want to do is get to a position where we start to stifle development within the countryside because nobody quite knows where their legal footing is so I think that was recommendation 18 in the review group was about trying to clarify those trigger points which has not been brought forward into the bill and as such I think it's missing Okay any other points on Sarah have to make just now right well I'm going to have a five minute break comfort break and we'll then go on with the next set of questions which will be start just now thank you if you take your seats again right so we're going to return to questions now and this is about the sale where the landlord is in breach and Graham Day is going to lead this one thank you Scottish Land and Estates has expressed a view and evidence that forced sale is not reciprocal to the landlord's right to obtain a certificate of bad husbandry which of course would result in the removal of the tenant because I quote being forced to give up a tenancy does not equate to being forced to give up ownership the tenant loses a right of occupation the land owner would lose a right of ownership I welcome views on that and seeking the views I'd be interested to hear from the witnesses how in practice the certificate of bad husbandry that system is actually working the sale where landlord in breach chapter 3 in a way that's a counter measure to the ability of a landlord to issue a certificate of bad husbandry and dispossess a tenant I've got a couple of points to make while the sale where a landlord in a breach may result in a landlord losing part of his holding conversely when a tenant is dispossessed through a certificate of bad husbandry the tenant is losing his interest in his lease his livelihood and his home it's actually far more draconian than the consequences of a landlord losing part of say one holding on an estate and the other point I'd make is that sale where landlord is in breach the measures in the bill ensure that the landlord is fully compensated for his losses in stark contrast to the tenant being dispossessed through a certificate of bad husbandry who leaves without any compensation for his interest in his lease though he is eligible for compensation for his improvements so there seems to be strong recognition of the landlord's property rights but very little recognition of the tenant's property rights in his interest in his lease and in reality we don't expect to see any tenant go through the whole process that is in the chapter 3 I know there are some stakeholders have been asking for strengthening as a certificate of bad husbandry and measures to ensure that tenants farm properly and maintain their farm and carry out repairs as far as we're concerned all those tools are there it's quite common for tenants to have notices to carry out repairs or to do maintenance and if there's an accumulation of those notices not acted on then a landlord is entitled to go to the land court for a certificate of bad husbandry which will result in that tenant losing his interest in his lease Andrew Howard Chris that both provisions bad husbandry and the sale where the landlord and the joconian that's what they're supposed to be they're a method of last resort really I don't have a difficulty in principle with the proposal if the landlord has got himself into that position and it's quite a long and robust procedure well you know that's his look out really what is important I guess is that the process the rules surrounding each whether it be a breach by the tenant or a breach by the landlord are appropriate and up to date I think the only observation I'd make about the bad husbandry provisions are that from my own experience having looked at them a few years ago they haven't been updated or reviewed for a long time as I understand it appear really to relate to the sort of technical aspects of the farming that might have felt more appropriate a few decades ago and I'm not suggesting for one minute that they should be strengthened but it may be that they ought to be reviewed to make sure that they remain relevant they're certainly not used very often follow on from Andrew from Scottish land the state's point of view it is a joconian step to have the land removed from you but I think the process as it exists is robust and I think it offers enough protections there for the landowner to be able to be confident in giving them the chance to remedy any breach because we're not here to condone poor land ownership at all it's also making sure that there is cognisance in there that ultimately the person who's going to benefit from this process would be the tenant so that all the safeguards are in there to take fair recognition of that again to reiterate regarding we had looked at it both personally and also within an organisation and generally the feeling is when you speak that people do not use it because it's not fit for purpose it's not the matter of strengthening it they just feel that it's not going to get anywhere and that I think there's been five cases in the last 50 years or something which would suggest that it's not really operating the way it was intended to do because I can't believe that that's the number of cases where it would apply to there are such technical issues within there you don't have a record of condition to compare it back to etc but looking at that at the same time we'd send out a clear, balanced, fair message Let's look at this from a slightly different direction if it's not fit for purpose and it were made fit for purpose we're all in the business here trying to ensure that land is utilising the best interests of all of us so if there were to be changes made to it and it were made fit for purpose would the panellists accept that in that instance we should build a safeguarding there which says that if the landowner is able to reclaim the land it should not be with a view to being brought back in hand when we're trying to ensure that tenancies are protected but with a view to being passed on to a new entrant or with a view to being split up between other tenancies we hear very often that there are a lot of unviable units out there so that they were shared with the other tenancies perhaps on an estate thereby safeguarding the future of those tenancies and securing employment etc etc I think it will top of my head but the simple answer is yes I would have a lot of merit and I can see the logic in ensuring that land effectively stays within the tenancy sector moving on to either a new entrant or different farms there are practical issues to resolve within this because if you've got it from the point of your certificate about husbandry it probably means the farm is going to be in pretty poor order anyway and require a large amount of capital investment to get it back up there but that's the how do we do it, not what we should do and I think that measure has a good deal of merit in it Do you want the second question? Certainly that's not an issue we've discussed with our members in any meetings that we've had so I'm making an assumption here as to what our members would think but I would think that that's a good credible concept and it's one that should be explored and one that they would generally support in principle that would be my assumption Going back to say the four sale part view where we have discussed this with the membership the general view is people don't believe the in four sale would be used but what they'd believe is it's a hugely important tool to strengthen the armory where something isn't going right so that people know that that's the ultimate sanction and therefore it's something that encourages the landlord to put things into practice so within it's an important lever to have there, albeit we wouldn't judge its success on whether it's actually delivers any in four sale in the future Christopher Nicholson Going back to Graham Day's point about what happens to land where a tenant is removed through a certificate of bad husbandry I would have thought it's clearly in the public interest to ensure that that land is relad but on the same terms that it had been let beforehand it would be rather meaningless to relet it on a five-year SLDT and then at the end of the five years it's taken out of the teneted sector so these certificates are more likely to be used in the situations where the security of tenure and we feel that there's a strong public interest argument to continue that security of tenure If I may move on then Cymru again looking at some of the evidence the STFA have claimed at section 38N as it stands would significantly impact on the tenant's ability to borrow in order to facilitate the purchase of the holding due to concerns regarding the size of possible clawback they've also said that the clawback should be limited to the original interest of the landlord in the lease and not include improvements made by the tenant under the tenancies I just again seek the views of the panel as to whether these are valid concerns David Johnson I think it's correct that there should be a clawback underneath there where there's been a massive uplift in value as a result of a forced sale within a reasonable period of time but as Chris has alluded to there shouldn't be a clawback for tenants improvements within the lease and that seems to me to be fair and reasonable As clawbacks have been used in where farms have been sold from estates to tenants before and I'm assuming that those tenants have used bank finance to help support that purchase I would imagine that as long as the provisions of the clawback are clear that the banks will be able to live with that and to take that into account when they're putting together their finance package I think there's a there is an interesting question that comes about in these provisions about who acquires the farm if the tenant doesn't because the market for the acquisition of farms with the tenant in place in Scotland has virtually evaporated certainly as a standalone unit and I think it would call into question whether you could sell the units at all in certain circumstances if there was a history of litigation with the tenant and that there were problems with the fixed equipment or something else on the holding I guess then begs the question what happens if there is no buyer Maybe the Scottish Government would like to buy it Or the local authority Or the local authority, yeah I mean that was one of the ideas that was mooted I think when this was first kicked around as an idea that perhaps rather than the tenant being the purchaser so that you then perhaps create in a small way an incentive to create a problem because they get to acquire I think that that's highly unlikely because the provisions are robust that the new owner if you like would be an arm of Government or local government who would then assume the role of landlord they may not wish that of course Any other thoughts? Again, this is me speaking from sort more a personal view rather than one that's really tested with our membership as a whole but we talked before about the local authority being the purchaser which has got mixed views I've got to say by our membership in different areas of the country as a general concept though the Crown Estate has traditionally been felt as a better landlord you know somebody who has invested in farms so I think as a general concept the Crown Estate might be seen as a more favourable owner should this provision be used Christopher Nicholson I think we're talking about a very critical situation I doubt many cases will get to this stage but in the event that a tenant is not wishing to purchase his holding in that situation then I think it would make sense for Government to take the opportunity to purchase it and create opportunities for new entrants and in the past there's been a clear public interest argument for the small land hold the small holdings after the war and also looking across the border to England there are 3,000 starter units owned by councils in England Scotland's missing something similar Christian Allard I'm quite interesting about what happened to land when there was no buyer and the Scottish Government is one of the ideas put forward I don't think the Crown Estate is another legislation of parts of the Crown that will take it over there is another way that this legislation is about the public good so public interest so common good land could be coming to it anybody would have a suggestion about it becoming common good land that Chris John was raised put it on the table people are not likely to comment at the moment are you? OK, you're not going to comment but thank you for the point any further issues on that we're going to be wanting to rent reviews there's a change to the basis in setting rents for 1991 tenancies that's for sure because first of all at the panel how do you understand what the change means in terms of actually looking at productive capacity do you think that to rents or go up or down what does it mean for the investment in the holding as such Andrew Howard I don't think we know at the moment or they could do both and quite violently as well over a period of time as I understand it one of the policy objectives behind changing the way in which rents are reviewed to productive capacity is to increase transparency and clarity about how the process works and also to reduce conflict I have some pretty serious well I have two concerns the first is that we haven't got the detail of how this will work on the face of the bill that's largely because it's still being worked up between the various representative bodies in the background and for something as transformational as this in terms of a major change I think it would have been extremely helpful to have seen this on the face of the bill the second concern I've got is that I'm not sure that it's going to achieve in fact I'm pretty clear it's not going to achieve the objective of reduced conflict over rents certain things like agreeing what the productive capacity of the farm might be agreeing the nature of the farm the fixed equipment that sort of thing well I don't see that being particularly problematic and in many respects that will aligns with what we do in practice for the current process because you have to agree what farm you're agreeing the rent for but then what's got to happen is that everybody's got to agree what the farming system would be on that farm because we'll be looking at the hypothetical farming of that farm for the hypothetical tenant and it could be that that system is substantially different from that which the tenant is employing which may in itself create or raise some eyebrows the next thing you've got to do is to work out well what will the output from that farm be which again is a potential source of discussion and disagreement because there might be you may for instance be sitting there looking at a hypothetical output for that area that's been derived from wider figures which is substantially exceeding that which the tenant himself is agreeing and then you've got to agree what your pricing is now I think the original intention would be that had been that this could be based on actual figures that had been published but of course the difficulty with that in the modern world is that it's so volatile that producing figures on prices three years ago would result in rent determinations now that would be most unwelcome because they would be inappropriate to the circumstances so you're going to have to use very up to date data now for certain products that's easy to get hold of for others it's a bit more complicated but I think you're also going to have to consider what weight you give to future projections of where prices are expected to go because you're about to set a rent that's going to look forward for three years and if you know that prices are about to fall off a cliff well all parties are going to want to take, certainly one party is going to want to take that into account and that needs to be clear so you've then got a financial output from this hypothetical model which could be substantially in excess of the financial output that the farmer himself is obtaining so he's feeling probably quite concerned about that already and then you have a thorny business of how you divide the profit and I can understand why the Government has given no guidance on that but the parties then have to sit there and say well how are we going to divvy up this profit now this might be a profit of course a hypothetical profit which is substantially in excess of the profit that the actual tenant is generating so the idea that this is going to lead to less conflict between the parties I can only see this being more complex and instead of having really one area over which you might disagree which is the interpretation of some comparable evidence or a series of points in this calculation at which the parties should they wish to that could take issue with each other and some of them over quite fundamental things like and a very personal thing like how do we divide the profit on the farm so I'm afraid I foresee trouble ahead which concerns me a lot that's trouble behind this as well trouble is everywhere Scott Walker and there remains from our tenant members there still remains widespread support for this idea the concept so anytime we speak to members about their like what's being proposed and again it's picking up on the two points that Andrew's touched about they do see it as being providing greater transparency and they do see it as being a means of reducing conflict judge success at this point of time though I would have hoped we've been far further on in the background work that's going on just now and there's a lot of very detailed background work going on people spend a lot of time on it to be able to flesh this out so that we could have proper informed discussions with farmers across the country to say this is the process you're going to have to go through this is what's going to look like this is how we'd apply your scenario therefore let's get feedback and I think it's important that that work gets done as quickly as possible and then that work gets actually road tested with people because if we don't actually get to a situation where there's greater transparency and we don't get to a situation where the conflict's actually reduced then for us to try and achieve here would fail it falls down and just now we can't say how that's actually going to turn out I do know though that everyone that's participating in the work is participating in it in the correct manner and trying to get a productive outcome out of it but it is a detailed complex area The key part of this measure for tenants is the move away from the open market test In the last few years the Land Court and other stakeholders have recognised that the open market test can result in rents levels that are more than viable and that is a wholly unfair situation for long term tenants to be in to have their rent based on what someone else in the market place is prepared to pay for what term lease so we welcome the move away from the open market we believe that going down the road of the productive capacity should ensure that rents for secure tenants and other long term tenants using that test will be set at a viable level we believe it will be much more transparent in that most farmers are pretty familiar with budgets and many organisations publish standard budgets looking forward each year at this time of year for the following year so the evidence is there that is required and we see that having far greater transparency than the current attempts by the industry and the industry has struggled in the last five years mechanisms to deal with scarcity and marriage value and sensibly the review group have recommended that we move away from a test that involves such grey areas in common with what Scott mentioned there is concern that the modelling is is not taking place far early enough on in the process but I believe that we will get there I think new about the concept of the rent being based on the hypothetical tenant using the fixed equipment provided by the landlord and we think that that key principle which has been the principle of rents ever since rent provisions came in that principle should be stated in the bill because it is conveniently forgotten in many rent reviews at present that it is based on the hypothetical tenant using the fixed equipment provided by the landlord so you say to us that you can see the modelling early if at all possible well to ensure that it takes place and is road tested so the phasing in is what you are talking about there in terms of the clauses in the bill once we have seen what is happening but in principle we are heading in the right direction we believe David Johnson the key to this is trying to get a fair rent for both the tenant and the landlord at the end of the day and that is the aim what we are trying to do also to minimise any potential conflict that we have arriving at those fair rents under the new process we feel very strongly that this should be clearly stated within the legislation it is absolutely fundamental key to relationships going forward into the future and the fact that we don't have much to look at at the moment is deeply concerning we are working as Scott alluded to very hard with the civil servants behind the scenes trying to road test it but we have great great concerns that this is not going to result in a simplification that people think it's going to result in and could potentially create more conflict unless it's brought in and road tested absolutely to the nth degree there's also concerns within this bill to do with housing and how the rents for housing is going to be calculated as was mentioned in the Ag Holdings review group it appears that the housing element has been removed out of this so in theory you could have two 200 acre farms one with a house, one with a ladder house which is paying exactly the same rent but there are obligations on the landlord to maintain that house and I think as it's been alluded to under the NFUS's evidence and theory you don't have to sit on the housing you don't have to reside on holding anymore so the tenant themselves could then let that house out which in many instances would an income greater than the rent of the farm in its own right that also goes to the heart of fairness and balance within it so there's a huge amount of work to be done on this to get the situation where we can comment further on it and be comfortable with it if not this then what? if not this a system proposed well we had the review group from TFF look at the old way of doing the rent and they were saying that the system is not perfect but what is required is greater clarity around things like marriage value and scarcity that Chris has alluded to to take away the sort of the greyness of it and in a sense we're seeing the greyness coming back in here so we're going to be split we know not how I think there's for me personally what I'd like to see would be the productive element capacity brought in to section 13 so that's then given weight as part of the evidential process when you're doing a rent review if you like it becomes a sense check at the moment that's not in there it's not included as far as I'm aware so you can't use it as a measure but that would be a simple way of bringing that in there but that doesn't allow problems that there are disputes about the previous parts of the formula that you talk about but in all of these disputes that have gone on are very much part of the clarification of the process of what the previous legislation was meant to do so you end up going back through the line court which clarifies it which gives you case evidence to go forward for the future when we start doing this process again we're going to put that back to year dot so we'll have to end up probably back in the line court seeking to clarify exactly what it's meant and how do we interpret it so there is a risk of greater conflict but I'm quite interested to know if this productive capacity approach will allow rents to become more transparent will it allow rents to become more transparent? I don't know I've got the details in which to comment on that then that's half the problems that we have accepted there's a modelling process going on you're involved in it all of you so this is an ongoing issue which the bill will have to take into account right through to stage 3 so you know this is called process to attempt to get progress it's an approach it's slightly different one than what we've had but we definitely need to have some kind of approach that makes progress yes I mean one thing in practical nature issues for rent will be sent out ahead of 20th November this year for 20th November next year we don't know exactly what the methodology will be it's just uncertainty which isn't helping I'm sure that civil servants will be listening to this Andrew Howard I accept Chris's point that in theory under the current system and I think actually this would apply under the new system as well in theory you could end up with a rent which is beyond that which is viable but I don't think there's any practical evidence that that is the case in fact one of the things that came out from the discussions when the agricultural holdings review group told the country was that there wasn't any evidence that rents were unreasonable the concerns tended to point to a lack of clarity about how certain adjustments were being made and the concerns that some agents weren't adjusting enough in comparing evidence from LDTs to back to 1991 act tenancies but I would certainly argue that the rent pattern and if you look at graphs of rents under the existing system they're stable and any increases have tended to be very steady and they haven't reacted to either volatility in the commodity market or changes in other influencing factors such as the CAP so they provide a pretty steady basis on which both partners in that business can make their decisions one of my concerns about where we're going it may well be transparent and that everybody can see and argue about how the rent has been calculated and Sava can perhaps comment if I've misunderstood what was said at one of the review sessions but I think some calculations have been done based on one of the farms in a recent rent review case and they looked at the potential rents that could be paid under this type of system between I think the years 2006 and 2012 and the figures varied from 8,000 to 80,000 or they're about Martin's nodding so that's encouraging now that isn't in my view a very solid basis on which to create a rent review system which is going to lead to happy relationships and a solid and stable basis for businesses to carry on I think we've requested for Nicholson just one point about rent levels if you look at the average rent levels in Scotland over a 10-year period there is stability but when you start looking at settled rents or rents that have been agreed since the Moonsie decision then you add a huge element of uncertainty and we are seeing rents that are clearly not viable in the arable sector around here you have rents approaching £100 an acre but basic arithmetic of land that grows spring barley with average yields average prices long term you cannot pay a rent of £100 an acre so this is where the number of the argument is about probably thinking of this new approach perhaps being phased in over a period of time that the bill suggests all right we talk about the November time for the rents for the following year but it could well be the case that we suggest that actually we spend more time before the rents in the new system are actually brought in and we hear what you are saying about the difficulties of moving from one to the other Sarah Boyack a quick point of clarification for the record it's right that we're expecting that there's going to be more clarity on this by the end of October isn't it so I think that's one issue that if it's not been agreed yet we've got the general idea that's being floated at the moment that we can come back to this once we see what it actually looks like because that will be indeed those points are made we'll move on to Assychnation and Succession Dave Thompson to lead thanks very much the proposals on the bill will widen the classes of family members who can have tenancies assigned to them quite considerably and the policy memorandum states that to encourage tenants to retire or move on with dignity and confidence it would also help to maintain the number of tenancies so I'd like to ask the panel just initially what they feel about widening the classes as proposed in the bill who's going to start off the Christopher Nicholson Over the last 60 years the ability of a tenant to pass on his interest in his lease through family succession or Assygnation or bequest has been steadily narrowed down so in 1958 the prior to 1958 a tenant could bequest his lease to any person and then it became any family member and then it was narrowed down to near relatives so this is really redressing the balance partly back to where it was before there are other reasons for looking at it there are changes in family structures it's now common for the successor of a farmer to say to his son or daughter to pursue employment elsewhere and there might be a nephew or a niece who's interested in taking over the lease families have changed the job market's more fluid and combined with the ever increasing interest that tenants have through investment in their holdings and improvements it seems only fair and sensible and in public interest that the very narrow definition of near relative has been allowed to widen to include nephews and nieces there are a number of cases where you find cousins farming in partnership because they are descended from a grandfather who held the tenancy and our suggestion is that where you do find cousins in a farming business and there's a connection there one cousin should be able to leave his lease to the other cousin and cousins are not included in the current measure in the bill who's in much, Scott Walker? As we've gone round the country speaking to members on this huge polarised views on the whole issue of asignation and succession I think dealing with things I think are relatively simple to begin with is there are situations where somebody's been actively involved in the farm business but because of the way the laws are written just now they may find that they are not entitled to have that tenancy passed on to them now in many situations the arrangement will come to play between the future tenant and the existing landlord and that situation will be sorted out but there's one or two situations that have been highlighted in recent years and there's been disputes that have happened as a consequence so we've been very clear that in those sort of situations you would want to find some way of accommodating those individuals somebody's clearly been involved in the farm tenancy perhaps as Christopher said in essence been a partner in the business but find that they cannot continue in the business and we'd like to see those sort of situations resolved as you get wider and wider in terms of what you would mean by assignation and succession there's then this balance to be achieved as to what are you actually trying to sort out what are you trying to achieve what's the objectives of the bill for us the vast majority of individuals have somebody to succeed to so we'll be covered by the bill what you're then looking at is a small number of individuals who don't have somebody to succeed to and that's where partly it brings us back to the conversation that we had earlier about secure tenancies conversion to fixed term there's a tool there you've got to bear in mind so there's a whole set of circumstances here that you've got to think about one of the factors that we'd also throw up which has been removed is about the viable unit test now again depending on how wide you wish to take assignation and succession there's maybe a role there for the viable unit test to be brought into play so that individuals can't simply stack up tenancies if what we're trying to achieve here is to perpetuate tenancies and to get them as widespread as possible number of factors at play which we'll maybe let others speak and then come back if I may David Johnson Like Scott I think this is probably one of the single biggest issues that's provided concern to our membership as we look at the proposals as they stand for the widening of succession and assignation they are so broad and so wide that in effect you are creating its perpetuation of the tenancies forever more it's highly unlikely that you're ever going to be able to not find somebody to assign the tenacity or to succeed it under the breadth of which it's going and it's far wider than nephew or niece it's sort of step grandchild and out as far as that so that provides fundamental concerns for us and our membership it goes to the very heart of confidence in letting the sector because this is a major retrospective change to the agreement that we have already in place between tenants and the landlord I totally take on board what Scott was saying about the hardship cases where people have been genuinely working on the farms for a period of time and driving the line and to all the tents and purposes the arrangement and the ongoing daily contact between the estate and the farmers with that person is a way of trying to find a methodology to get them into that tenancy I would also try and understand the public benefit between perpetuating the tenancies the public benefit is to ensure that the farms are farmed well if you're widening succession then nothing happens until a point of that person dies so the person is in the farm right up until that point assignation as it stands and the way I see it you could get situations where a farm with a big farmhouse is assigned to somebody who doesn't particularly wish to farm it farm it well, might have a few horses and a nice way to live it doesn't necessarily mean it can be in the public interest for the productive capability of that farm being used so this here goes hand in hand resorting out the weighing provisions to make sure they're fair for the tenants but also with conversion conversion we see as a much better way of ensuring the churn and the flexibility within the sector to allow the farms to be farmed well so Andrew Howard well like David I'm extremely concerned by this it appears that what this provision is trying to do is to keep land forced land to stay in the tenancy sector rather than creating a positive framework which would encourage anybody that has land who doesn't want to farm it at that particular point to include land in the tenancy sector which I don't think is a very helpful way to try and guide people's sort of decision making I actually think it's going to be counterproductive because for the roughly 20% of tenancies where there doesn't appear to be an identifiable successor I think they're roughly the Scottish Government's figures those particular landlords are going to feel that they've been deprived very immediately of an opportunity to restructure their affairs to consider what they're going to do with that farm going forward because they had legitimate expectations that that land, that tenancy was going to end I think that that increases the chance that the policy would be challenged at some point because their property rights have been infringed and there doesn't seem to be any provision in the bill for recognising that their rights have been infringed I think that increases the chance of landlord intervention so they're going to take the view that well if this lease is being assigned to somebody I'm going to try and do a deal with the tenant so that I can buy it out and it will be lost to the tenancy sector probably because it seems unlikely that having had to go through that process that they're going to go out again and unless it's actually seriously constrained in some way it's not going to help new entrants and aspiring farmers at all it's going to go straight to larger established farms who will pay the substantial price that people would pay to get hold of a secure tenancy now when you're valuing a conversion you would really be valuing a cash flow of future profits because that's what you're getting these tenancies would go for substantially more because I think the acquirer would also be thinking well I've got other rights like a preemptive right to buy the landlords likely to have more stringent liabilities over the fixed equipment on the farm rent may well be that little bit less and they may also think that they're going to get future rights granted to secure tenants in the future so I think these would trade for a substantial sum of money now if the objective is to provide people with an retire then that's exactly what conversion is providing so I'm not quite sure why this policy is necessary particularly if more surgical changes could be made that deal with a small number of cases where hardship would be evident to the aspiring tenant whether they be a nephew or a cousin or something like that because they've clearly been involved in the business for a substantial period of time we've got our supplementary about this and then come back to Dave really this is a question for clarity we use this phrase viable unit all the time what do we actually mean by it because if you look at the if you forgive me a second the formal definition of a viable unit is an agricultural unit which in the opinion of the land court is capable of providing an individual occupying it with full time employment and the means to pay the rent to payable to the unit and for adequate maintenance of the unit is that viability in its true sense in terms of a business because I look at figures from the 2014 Scottish Government survey of tenant farms now one third of tenant farm or say their total turnover in 2013 was more than 100,000 10% are saying that turnover was 50 to 100,000 19% said they were below 50,000 interestingly a third said they didn't know what was going on so I guess my question is what's actually happening out there in the tenant sector do we have a large number of viable units or are they struggling linking it into the viable unit test to succession the process of succession is probably the riskiest period that any family tenancy goes through at present following a succession of a tenant the landlord has I think it's up to two years to object to the successor on the basis of a viable unit rule it's an incredibly risky process and a worry for all all tenanted tenant family farms we welcome the review group's proposals because it removes that risk and it adds simplification of the succession process the viable unit test is judgmental it's a moving target we see it as being unnecessary because it adds too much risk to the succession problem and interestingly looking at the DEFRA future of farming report from England their recommendation is that the equivalent test in England which is called the commercial unit test should be removed and also that the family succession for tenancies should be widened so the DEFRA south of the border are looking at the same measures that the review group have recommended in Scotland so I think there's a lot of sense in removing these unnecessary complexities that add a huge element of risk to succession where I'm coming at from this is that David Johnson makes the point that there is a danger from these proposals that we lock in existing patterns of tenancy if that happens what are we actually locking in are we locking in patterns of tenancy where these farms are actually not successfully functioning that's where I'm trying to get at where a tenancy becomes so small that it's not viable the next generation of tenants will not wish to farm it so we see that happening all the time so it's a significant issue out there at the moment Graham, I think you've hit the nail on the head it's a fundamental problem there are a raft of different farming sizes across the whole both the unarochopyr and the tenancy sector and in the tenancy sector there are farms which are more than two or three man units but there are some which are now no longer viable they were created 10, 20, 30, 40 years ago and the viable unit is still able to support as it's described within that and Chris, we're not seeing them coming back as you were saying when they become because if you widen the succession the way you're talking about it becomes a very nice place to have a house and a few fields and have a few horses it doesn't get to the heart of allowing farms to restructure we're going to be going through a period of lower commodity prices with increased input prices we're going to have probably in 2020 we've got to allow the farming industry to restructure in this period to get it competitive for the 21st century and this is all part of it this is locking in and we're not allowing that competitive restructuring to go on Christopher Nicholson in terms of the smaller units that in the past have been considered non-viable the review group identified those units as being suitable for starter farms because starter farms by definition part-time holdings so that was the argument for removing that side of the viable unit test that those small units should remain some of them should remain as opportunities for new entrants there is the other side of the viable unit test which would allow as a landlord to object to the succession of a tenant if he already is in possession of a viable unit and while we can see some of the arguments for that, we think that that adds a huge level of uncertainty into the process of succession for tenants and we welcome the fact that this bill does not contain that provision We'll come back to Dave's original thread in a minute but Jim Hume wants to wanting a little bit more detail because this is one of the more controversial parts I assume and Dave, if you have said there was a polarisation within its members but said some sort of compromise for the example of the cousins who'd been working in tandem for some time which I think the land and the states seem to agree so it'd be interesting to hear from SDFA if the succession and the assignation to extended family members would be to say that the succession has to be limited to those who have involvement in the holdings because in many cases the holding is not sufficient to support two generations of tenants so that the succession has to be limited to those who have involvement in the holdings because in many cases the succession to support two generations of one family and there may well be the intention of the next generation to farm but they choose not to farm while the previous generation is still there for a number of reasons one is can the holding provide for two families and secondly any young farmer is probably better advised to gain experience from further afield rather than staying on a family holding where he or she was raised so there are many tenant successors who have every intention of returning to farm on the tenanted holding but they're not going to until there is a place for them so I think the review group the bill and the review group the measures there are correct that you shouldn't restrict it to people with the current involvement So Andrew Howard My ability test would be less of a concern if we had some of the other provisions that exist south of the border because Chris has raised the point there the secure tenancies come to an end after three generations so the landlord has if he doesn't have a precise date he knows that he's got a period of an opportunity to take stock to make those changes that Niall referred to earlier which we don't have now it always seemed to me that if you were going to have security of tenure then a reasonable quid pro quo for that was that there were at least some opportunities that the landlord could expect that that farm would come back in hand and one way that that's been achieved is to have a relatively narrow definition of the near relative so that the farm could stay in the immediate family but wasn't able to go out into what would be quite a wide class of successors and assignees and effectively what's been as David's already said here you're creating perpetual tenancies where the owner of the property has virtually no expectation of ever being able to reorganise their affairs now I think that that's a sufficiently large sort of impact on their ability to manage their own assets that it's almost like it's almost certainly going to get challenged by somebody at some point which runs the risk of having the industry in limbo whilst that is resolved there might gas coin of any point here to make about the open to challenge issue I find it quite difficult to repeat myself in this sort of context but the society does not bother itself with Government policy we're here to establish whether the law that you're proposing works but we do not comment on policy, on Government policy okay first of all Christopher Nicholson then David Johnson there are clearly some stakeholders who want to see a greater opportunity to terminate security of tenure and I understand that you see that the increase in the widening of family succession is denying the opportunity in some cases to break that security of tenure however certainly amongst our membership the vast majority of leases predate the narrowing of family succession so we're actually in a position now where family succession from the perspective of a landlord is more favourable than what it was when the majority of leases started David 91 act tenancies were created as fixed term vehicles which were then altered to go on to these perpetual tenancies so we can go back as far or as short as we like to provide different viewpoints we could also perhaps suggest that landlords as I once did, you know how to change every two generations as well but to debate for another day I mean that landlords have changed and landlords have changed dramatically over the last 50 years we've been trying to understand the details that we've seen coming out and we know that as Scott has alluded to that there are various concerns within conversion as to how it fits within the balancing of the interests of both tenants and landlords we've noticed with interest the statements come in with regards to the asset nations succession provisions within here and how they are deemed to be a fair balance between landlords and the tenants interests to be honest we are a little baffled by that because if you're having the ability to convert to a fixed term vehicle and that has problems with landlords interests we're not sure what effectively amounts to perpetual tenancies being created and no chance of them ever coming to an end no means coming to an end landlords interests are not being compromised and compromised quite severely within that we've tried to understand it better with a Scottish Government civil servants but we don't have an answer yet that we can understand so we're looking to try and explore that further take that point in order to wrap this up is there any other final points Dave just a final point yes I just want to tease out one or two other things one or two let's get them into one question it's a very interesting exchange fascinating and it strikes me if I've understood what's been said that SLE etc basically have a fundamental objection to secure tenancies going on and an infinitum and a point was made about smaller ones in relation to the viable unit discussion that a smaller forum would be a nice place for a house and a horse it's a bit of a red herring there are estates in my constituency where this is happening where whole estates are being purchased and are being turned into nice places for a house and a horse with current tenants being pushed off the estates I want to just extend it a little bit because STFA and their evidence mention that there's been 120 secure tenancies lost annually in recent years now the landlord's representatives are saying that extending to these wider range of family assignations would really damage confidence maybe what I'm going to say will damage confidence even more because I wonder if we shouldn't actually be extending it even further and maybe adding a couple of categories STFA have argued for open non-family assignations totally open but if we extended it to consider new entrants being able to have assignations of farms and maybe one or two other categories as well that could be dealt with the detail of that could be dealt with through regulation people who are currently in limited partnerships who are having their partnerships stopped would also be eligible to have such tenancies assigned to them so with the existing proposals and the bill with two or three additions that would allow new entrants and people who are going to lose their farms because of limited partnerships coming to an end if these were added in to the list would that not help us maintain tenancies and otherwise we're going to see a continuing loss of tenancies, secure tenancies and they're going to disappear in time so I wonder what panellists think about extending it to those maybe two or three other categories indeed but in order to get it in perspective we have to ask at the same time whether the grounds for objection to a new tenant are adequate to much or to little in order to be able to see indeed, yes, I mean we've touched on that already and that's fair enough in terms of your question let's see what answers we get so Andrew Howard Mr Thompson's just touched on something which concerns me about the confidence issue and moving forward which is that there seems to be a sort of lack of acceptance that any tenancy whether it be of a or agreement in the case of limited partnerships of a term can come to an end when the tenant doesn't want it to and if we well but that seems to be the implication that's not what I'm suggesting I'm just suggesting that there are people in limited partnerships who are having them come to an end they might be quite good examples of people who should be allowed to bid for an assignation of a tenancy all right okay that's sorry I misinterpreted what was said although I do think that the point remains valid that I sense that there's a real issue going forward if we don't have an acceptance that any agreement for a fixed term can come to an end at that term date because if we don't sort of have a general acceptance about that then in 10 or 15 years time we're all going to be back here because there's political pressure not to let those tenancies come to an end and that will impact on the owners of properties desire to grant long term agreements they'll always try and keep the agreements within the remit of the next parliamentary or review cycle so that they minimise their apparent risk to political change I'm only talking about secure 91 tenancies and extending the list of people who can have them assigned but that comes back down to the point that you cannot view the way 91 act tenancies in the work you do a 91 act tenancies separate from what is going to happen with the MLDTs going forward into the future we accept the 91 act tenancies are tenancies that continue generation to generation and there's no problem with that going to an end what we have here is a situation where there is no successor or there is no air within that and that gives a natural chance to restructure the business of running the estate and margomate them with other farms ensure that they're going forward into the future what you're talking about is removing that entirely from the landlord's perspective to be able to do so effectively these tenancies would continue forever and that sends out a very clear message that in terms of the tenancies you've entered into are being retrospectively altered by a third party to the benefit of the tenant side of it and that gives very little confidence going forward to using MLDTs or anything else so the public interest here for me is in a viable tenanted sector and we've got to be careful that we don't, to the benefit of one kill off the next bit can I just touch on one point that you raised there you're talking about things being changed retrospectively a lot of current 91 tenancies would go right back as far as 1948 potentially so their tenancies were changed retrospectively to their detriment in terms of who they could be assigned to so all we're doing now is looking back and maybe correcting a wrong that happened 40-50 years ago we have ones at home that were issued in 1994 so they're not part of this retrospective we're talking about so there's a whole swath of them how would you differentiate between those individual tenancies possibly going into the detail of that but the point is well made and I think it's understood by everybody here with two more people wanting to comment on this we want to try and complete this within the hour we have about six more questions Martin first of all and then Scott briefly I was just wanting to touch on the question that you were asking about the tests that could apply here and one of our concerns is the tests that you only need to commence on a training course the suggestion really needs to be about a professional farmer which would address David Johnson's point of a lifestyle person with horses in the field asking you to look at that element of it again thank you for that Scott Walker thank you convener I think the committee's got a feeling of some of the polarised views that can be expressed on the subject but I think it's worthwhile just dealing with some of the points of consensus where I do think there is a general consensus within the industry on I think people want the situation sorted out where if people die out of turn they're not allowed to succeed to the tendency I think generally speaking most people say let's try and sort that situation out and another situation where I think there is a consensus is again where there is an existing family member who's actively farming on the farm just now but isn't entitled to succeed people do feel that again that's maybe a surgical type of area that can be dealt with so I think there is some consensus even amongst the huge strong polarised views here so I would hope as the bill progresses certainly those points are captured and are dealt with and sorted out I'm going to go on to compensation for tenants improvements Chris John Hallar your question please thank you very much convener first of all it's regarding the period of two years an amnesty a period of two years and I know that the amnesty principle is agreed by everybody around the table but the NFC came on and written evidence giving us an indication that there may be a period of two or three years and we know that the holding reviews did propose three years to coincide with three years run cycle and if you've got understanding that the idea behind being only two years might be to make sure that improvement dispute could be settled within the three years period so I would like to have your views on that what would you like the bill to be would you be inside two years and the period would be two years to give a year for settlement or should the period be three years as indicated by the review group Christopher Nicholson like NFUS we believe that it should be three years which matches the rent review cycle the main reason being that it's going to be quite a big effort to ensure that all tenants in the country are aware of this amnesty and provisions in the bill and for many tenants the only time they get in touch with professional advisers about tenancies is during a rent review so we feel that if you extend it to three years there's a greater chance that everyone will find out about the measures in the bill that's the point of view I can see the logic in having a three year window to match the rent review cycle I know we proposed originally a one year amnesty when we proposed the amnesty itself but for sake of agreement I think three years is perfectly reasonable we'll move on to the next question which is from Jim Hume that sort of line of question regarding WAGO it has been argued that WAGO can be a disincentive for a tenant farmer to retire and of course if a tenant farmer retires that gives a new entrant at least a chance to enter into the farming world so just wondering on the panel's view regarding the thoughts from some sectors that WAGO should be agreed perhaps before the tenant gives his notice to quit WAGO is hugely important for the tenant it's a reflection of the work investment they've done in the business and the way to view it also is probably their pension for their lifestyle afterwards and it's also one of the situations where people don't have individual experience on they possibly only negotiate WAGO once in their lifetime so what we think would be helpful would be a two stage process and this to be honest while we talk about two stage process this often is best practice which operates in some situations just now and we're looking just to formalise this best practice so it would be the tenant would be able to indicate to the landlord that he wishes to discuss WAGO indications that he may wish to give up the tenancy but that allows them to sort out any disputes that may happen to WAGO also to agree what the WAGO figure should be and if an agreement is reached there then the tenant then would serve his notice to quit and on that basis the sum of money that had been agreed or discussed at WAGO would be ratified and filed through because we generally get the feeling back from members just now that to serve your notice to quit where you've not actually agreed or understood what WAGO is you're giving up a strong negotiating position and you're almost entering into the unknown so to give that sort of two stage process we think would be helpful for all parties can I go back to Christian Allard then for a second point on the submission from the Royal Institute of Shattered Surveys did suggest that there should be a period of 30 years there should be a backstop for a claim for composition and they suggested 30 years for it and they give suggestion as a reason for it that some improvement could be written off I'm not quite sure if anybody wants to comment on this will all improvement be written off after 30 years and is there a good reason to have a backstop for a claim Rex, sorry, Niall The reasoning behind that I think is really to recognise the fact that some improvements that will have been made many many decades ago you know will have potentially exceeded their economic life and there's a question about the worth that they then bring When it comes to the question of value of improvements age is not relevant it's the value of those improvements at WAGO some improvements are permanent for example the removal of obstacles to cultivation and some other land improvements and they should not be excluded from the amnesty simply because they're more than 30 years old even modern farm buildings have an expectancy of over 70 years so they should not be excluded simply because they're over half way through their life expectancy I agree that there will be some improvements coming tenant but the amnesty is not about the valuation the amnesty is about establishing which improvements are eligible so some of those improvements may be eligible but if they've got no capital value at the end of the lease to an incoming tenant then there won't be any compensation paid for them to pick up on the two points the first one is the one that's got made about having to issue the notice to quit first before you end up entering a negotiation for the way going I think it's very sensible what Scott proposes in that to have a discussion about the way goings ahead of serving that notice would be helpful and it would put lesser burden on the tenants so that it's reasonable the other thing about the way goings is that the way goings itself seems to me to be at the very heart of a lot of these concerns that exist between the landlord and the tenant and if we are able to sort out the issues t