Member Article

A secure agricultural tenancy (also known as a ‘1991 Act tenancy’) is a tenancy of a farm which can continue indefinitely, from generation to generation, and the tenant does not have to vacate the farm on any termination date stated in the Lease. 

Conversion to a Modern Limited Duration Tenancy 

As part of its remit, the Agricultural Holdings Review Group, who published their findings last year (and whose proposal we previously commented on) suggested that a tenant farmer should be entitled to convert their tenancy to a new Modern Limited Duration Tenancy (MLDT) for a fixed duration and then to assign it for value to a third party. This proposal was designed to help those farmers who did not have a successor to take over their secure tenancy under the current legislation. It was also aimed at striking a balance between the landlord’s property rights (since the new tenancy would no longer continue indefinitely, but would eventually come to an end on its termination date) and providing means for the tenant to retire with dignity, so enhancing the tenanted sector overall. 

‘Assignation for value’ 

While the Review Group’s widely consulted proposal was originally contained in the first draft of the Land Reform Bill, the Scottish Government has, as a reaction to those who criticised the Bill as not going far enough, proposed an ‘assignation for value’model. This mechanism would permit a tenant under a secure tenancy to assign that tenancy to another party without converting it to a fixed duration tenancy, but with the landlord having the option of buying out the tenancy before it was assigned. 

This proposal has resulted in much comment from both sides of the debate and, policy considerations and personal views aside, it has a number of interesting legal implications - particularly due to its general application. The original proposal to convert secure tenancies to MLDTs was designed to be a means to permit succession where a tenant farmer had no near relative successors. While not expressly limited to those particular circumstances, and therefore freely available to all tenants at all times, this option was unlikely to be used by tenants without good reason - since security of tenure would be lost and the tenancy converted to one of a fixed duration. 

Similarly, the’assignation for value’ proposal also affects any tenant and can be exercised at any time. However, it may be far more attractive as there is no drawback of losing security of tenure. 

A move away from delectus personae 

Historically, secure agricultural tenancies were subject to delectus personae – meaning that the tenant farmer was chosen precisely because of their personal identity - their skills, local knowledge and ability to farm the land. The landowner trusted them with a significant asset, and the particular identity of the tenant was very important. That tenant could therefore not transfer the tenancy to another party without the landowner’s permission. This position was later qualified by the succession and assignation provisions to allow a secure tenancy to be passed on to a fixed class of near relatives. The possible justification for this change was that the same family may continue to farm the land with the same practices and on the basis of previous relationships between the families of the landlord and the tenant (although such relationships may not always have been positive). Indeed, the fact that the same family has often occupied or farmed the same area of ground under a tenancy for a number of generations is often cited, by those calling for further protection of tenants.

Read More Here: http://www.shepwedd.co.uk/sites/default/files/Assignation_of_agricultural_tenancies.pdf