Case Study

Question 1

Which section of the Agricultural Holdings Act (Scotland) 1991 refers to rent reviews?

Answer 1

Section 13

Question 2

Which section of the Agricultural Holdings Act (Scotland) 1991 refers to fixed equipment?

Answer 2

Section 5

Question 3

Explain assignation?

Answer 3

Under the 1991 Act tenants provided they get their landlord’s consent, tenants have the right to assign their tenancy to their spouse or civil partner, or to a blood relative, for example a child, sibling, aunt or uncle. The tenant must give the landlord notice in writing, telling them:

who they propose to assign the tenancy to

what the terms and conditions of the assignation will be

the date on which they wish to assign the tenancy

Question 4

What is included in a formal rent review notice to tenants?

Answer 4

A letter stating the date of the rent review (Whitsunday 2024)
Tenant Farming Forum (TFF) guidance (Farm Rent Review – Introduction and Guidance to Good Practice)
Recommends timescales and dispute resolution guidance

Question 5

What is a post lease agreement (PLA)?

Answer 5

Post lease agreements that seek to transfer responsibilities
between the parties, by lack of agreement
over what constitutes fair wear and tear and
lack of agreement over when a repair becomes
a renewal or replacement.

Question 6

What is a tenant amnesty?

Answer 6

It is a once and for all opportunity to agree a definitive list of tenant’s improvements eligible for compensation at waygo signed by both landlord and tenant.

Question 7

What is included in the TFF’s guidance notes

Answer 7

This guidance provides a summary of the TFF’s recommended practice in conducting a rent review.

Question 8

What act pre dates the Agricultural Holdings Act (Scotland) 1991?

Answer 8

Agricultural Holdings (Scotland) Act 1949 and the Small Landholders And Agricultural Holdings (Scotland) Act 1931

Question 9

What is the notice period for rent reviews?

Answer 9

The notice must be given not less
than one year, and no more than two years,
before the date on which the new rent would
take effect (the rent review date)

Question 10

What date must the rent review coincide for carrying out a 91 Act rent review?

Answer 10

The anniversary of the contractual termination date of the lease.

Question 11

What is the preferred hierarchy with regard to the use
of comparables in the establishment of rents
for 1991 Act tenancies?

Answer 11

a. The best source of comparables is open market lettings of similar tenancies but in the case of 1991 Act tenancies it is recognised that these will be few and far between
b. The next best source of comparables is open market lettings of fixed duration tenancies
c. The next best source is rents agreed between landlords and sitting tenants.

Question 12

What are the methods of alternative dispute resolutions ADR?

Answer 12

Arbitration, mediation and expert witness

Question 13

If your client had chosen to go through land court what would the process be?

Answer 13

If our client had chosen we would have filled in an application to the land court. I would then suggest to the client that they contact their solicitor to act on their behalf instead of ‘DIY litigation’ in order to receive the most amical result for both parties

Question 14

Where is the Scottish Land Court?

Answer 14

Edinburgh

Question 15

Explain arbitration and what governs arbitration in Scotland?

Answer 15

Arbritration is a method of resolving a dispute between parties by an independent and neutral arbitrator. Once the arbitrator makes a decision that is final. The Arbitration Act 1996 (UK)

Question 16

What is mediation?

Answer 16

Mediation is when a third neutral party (impartial) where both parties talk through the issues and negotiate and come to a mutual agreement

Question 17

What is LFASS land?

Answer 17

LFASS (Less Favourable Area Support Scotland) Under European Union Rural Development Regulations, people farming in areas facing natural or other specific constraints may be eligible for an annual income support payment. LFASS provides this in Scotland. The scheme funding is intended to support the following aims for less favoured areas in Scotland. LFASS is part of the Scottish Rural Development Programme (SRDP).

Question 18

This tenancy dates back to 1931, are there any differences to what the landlord should provide in fixed equipment if the lease had started 20 years later say?

Answer 18

As stated in section 5 of the Agricultural Holdings (Scotland) Act 1991 upon entering into the tenancy the landlord will put the fixed equipment into a thorough state of repair and will provide buildings and fixed equipment to operate the holding successfully (accompanied by a record of condition)
During the tenancy effect such replace and renew of the buildings or other fixed equipment rendered necessary after fair wear and tear
Tenant would be required to maintain the fixed equipment through the duration of the tenancy.

Question 19

You say in your case study you wrote the notice – which section of the act governs rent reviews?

Answer 19

Section 13

Question 20

Was it within your scope to serve the notice, as opposed to say advising your client to use a solicitor?

Answer 20

As a firm we are competent to carry out this type of work due to the experience we hold within our office. We have a thorough understanding of the code for conducting rent reviews however, I asked the client if he would be happy for us to discuss any points during the rent review with his solicitor if necessary which he agreed.

Question 21

What if any due diligence did you carry out before serving the notice?

Answer 21

I asked the client for any relevant documentation that would be important to our rent negotiations

Question 22

What are the implications if you serve the notice incorrectly? (rent review)

Answer 22

This would be considered a breach of code and the tenant could report this to the Scottish Land Commission.

Question 23

What process did you follow to assess whether you, and your firm, were competent to handle the instruction from your client?

Answer 23

As a firm we are competent to carry out this type of work due to the experience we hold within our office. We have a thorough understanding of the code for conducting rent reviews.
We also hold the correct PII cover in our firm which enables us to carry out this type of work.

Question 24

Can you briefly outline the steps to be taken when conducting a rent review on a 1991 act tenancy?

Answer 24

Formal notice to be served to tenants no less than a year and no more than two years before the rent review date. An inspection/ meeting with the tenants to be arranged no more than 6 months after the notice has been served. 4 weeks to propose a rent allowing 6 weeks for the tenants to offer a counter proposal.

Question 25

You talk about the land capability of this farm, can you briefly tell me a little bit more about the land grading system used in Scotland?

Answer 25

Land in Scotland is graded using the Macauley land classification system which takes into account different physical and biological characteristics which impacts the grade given. Each portion of ground in Scotland is given a grade which determines its suitability for different agricultural activities.

Question 26

What is the purpose of the TFC’s role?

Answer 26

The role of the Tenant Farming Commissioner in Scotland is to promote and encourage good relations between landlords and tenants. Publishing guidance, codes of practice and has the power to investigate alleged breaches of the codes.

Question 27

Is there an RICS code of practice which relates to inspection of buildings, if so, what is it?

Answer 27

There is the professional standards guidance on surveying safely. It contains good practice principles for the management of health and safety for RICS-regulated firms and RICS members. It sets out principles for those engaged in the built environment as property professionals and includes health and safety responsibilities

Question 28

Can you briefly talk me through the process you followed when gathering comparable data for the rent review?

Answer 28

Within our firm we hold data already on rents in the area, so I consulted our own data first and determined which would be a strong comparable for our negotiations. I then contacted other local agents where I did not disclose the client’s holding name just a general location and rough description of the holding.

Question 29

Can you talk me through briefly what steps you took to manage your clients expectations with regard the anticipated rent level?

Answer 29

I arranged an in-person meeting to discuss the rent expectation with the client and outlined all the reasons why we would not be able to increase the rent at a level the client was expecting. Although, an awkward conversation I offered reasoned advice that gave rationale to our approach.

Question 30

Had your client opted to take the rent review to the land court, what process would have been involved?

Answer 30

• Suggested they consulted their solicitor to ensure the correct advice on formal litigation is given.
• A formal application to the land court will need to be made on a form provided by the Scottish Land Court (Can download these forms online)
• You need to make it clear to the Court and to the other parties exactly what the dispute is about. Include any relevant maps, plans or other documents (known as productions) with your application.

Question 31

In addition to the TFC’s guidance on comparable data handling, what is the RICS guidance published on this?

Answer 31

RICS Professional Standard Guidance on comparable evidence in real estate valuation (1st Edition 2019).

Question 32

At the point where negotiations stalled due to the disagreement about the rent per acre, what format did you present the various options to your client? How did you use this to guide discussions and advise your client to the preferred option?

Answer 32

The options were presented to the client over email. It allowed the client to mull over the options and this was followed up with a phone call conversation where the client made us aware of his decision.

Question 33

Had your client opted to go down the route of alternative dispute resolution, what process would you have needed to follow?

Answer 33

If we were to go through the process of ADR then I would have outlined the different methods of ADR to the client which are arbitration and mediation.
Mediation is a process of a third party mediating a conversation between the two disputed parties which is a cheaper of the options (I would have recommended this to the client)
Arbitration is a process of a third party mediating a conversation between the two disputed parties however the decision made by the arbitrator would be legally binding.

Question 34

You note that you used Communication and Negotiation within this project, can you give me an example and how and when you applied this competency?

Answer 34

Notices served formally via letter
Meetings in person to discuss proposals (preferred method of communication for client and tenants)
Emails were frequently used so we could have trail of conversations had
Negotiation was used when we received the counter proposal from the tenants we suggested ‘meeting in the middle’ however the tenants were uncomfortable with this increase.

Question 35

In this case the rent review was not successful, how was the fees agreed on in the terms of business with the client?

Answer 35

50% of the agreed uplift in rent then an hourly rate for any works which exceeded the 28th May 2024.