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New Code of Practice for Tenanted Agricultural Holdings

New Code of Practice for Tenanted Agricultural Holdings

The Scottish Land Commission, through the Tenant Farming Commissioner (TFC), Bob McIntosh, has continued its programme of providing practical guidance to the tenanted agricultural sector by issuing their most recent Code of Practice – in this case, relating to the Maintenance of the Condition of Tenanted Agricultural Holdings.  This is the fourth Code of Practice to be released by the TFC following on from the codes relating to Sporting Rights, Limited Partnerships and the Amnesty on Tenants’ Improvements, all of which are available in full from the Land Commission’s website. 

The latest Code is broadly intended as a roadmap to enable landlords and tenants to navigate what can potentially become an area of conflict during the course of a tenancy and arrive at mutually agreed resolutions if problems do arise.    

The Code is not intended to replace the existing law or overwrite existing arrangements which are working well, but rather it is intended to compliment and sit alongside the existing guidance and best practice already promoted within the industry.

It should be noted that the Code only applies to equipment provided by the landlord and not tenant’s improvements and fixtures which remain the responsibility of the tenant (unless converted to fixed equipment under the amnesty mentioned above).  

Underlying Principles

The TFC reiterates that the philosophy underpinning the Code of Practice is that communication and cooperation between the parties is crucial to maintaining a good working relationship and that all parties should be willing to work together to establish and maintain this.

It should be noted that the underlying statutory responsibilities of the parties are unaffected by the Code. In summary, these are as follows:-

The landlord must:

  •  At the start of the tenancy, provide in a thorough state of repair such land, buildings and other fixed equipment as will enable the farm to be operated efficiently for the purpose for which it was let.
  •  During the tenancy, effect such replacement or renewal of the land, buildings and other fixed equipment as may be rendered necessary by natural decay or fair wear and tear.

The tenant must:

  • During the tenancy, maintain the land, buildings and other fixed equipment provided by the landlord in as good a state of repair (natural decay and fair wear and tear excepted) as they were in at the start of the lease.
  • Maintain any land, buildings and other fixed equipment provided, improved, replaced or renewed by the landlord after the start of the lease in the same condition (natural decay and fair wear and tear excepted) as when they were added.

The obligations on a landlord under a lease entered into before November 1948 are governed by the common law and are less onerous from a landlord’s perspective.  However the rules of good husbandry and estate management continue to apply across the board.

Key Principles

The Code lays out some key principles that the TFC recommends are followed in considering maintenance matters. Broadly speaking these are as follow;

  • Continuing compliance with pre-existing legal obligations by both parties
  • Holding regular meetings should be a priority
  • Accurate record keeping is important, especially in respect of repairs and maintenance
  • A record of condition should be prepared if one doesn’t already exist and it is recommended that this is commissioned at joint expense
  • Constructive discussion about maintenance and even improvement of the holding should be encouraged and take place at least once every 5 years
  • Parties should agree a format or schedule of work following from the above meetings and adhere to specific agreed timeframes for delivery and inspection of the work.

Breach of Obligations

Alleged breaches of obligations by either party may be referred to the TFC in the first instance, in the event that the parties are unable to agree a way forward. Ultimately, continuing failure by landlords or tenants to meet their respective legal obligations may have profound consequences.  In the most severe cases the tenant could be evicted and, once the full provisions of the Land Reform (Scotland) Act 2016 come into force, landlords could be forced to sell the holding. Therefore it is imperative that landlords and tenants seek to reach agreement and to meet their respective obligations wherever possible.

For further information and advice, please contact a member of the Land & Rural Business team.

Posted by Anneli Spence

Senior Solicitor

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