People who rent farms will be given an amnesty period to inform their landlords of any work carried out – but what does the Amnesty on Tenants’ Improvements for Farm actually mean?

Improving building

Many farm tenants will have carried out some form of improvement works to their property. And when their tenancy comes to an end, the tenants can claim compensation to cover the improvement works. But only if they’ve followed the correct procedures.

While the majority of tenants will have informed their landlord – whether formally or informally – about the work, many might not have.

Under the previous rules, the tenants that either failed to inform their landlord or who hadn’t followed the specific rules when informing them, could have missed out on the compensation.

The amnesty

Whether tenants were unaware of the rules, failed to follow them correctly or simply forgot to inform their landlord, they now might be able to register their Tenant Improvements.

Under the Land Reform (Scotland) Act, the new Tenant Farming Commissioner, Bob McIntosh, has issued a code of practice allowing tenants to apply for retrospective approval of eligible improvements in order to qualify for compensation at the end of a farm tenancy.

The amnesty runs from June 13, 2017 for three years. It’s hoped the amnesty will help reduce disputes between landlords and tenants.

The amnesty only covers the reporting of such works and doesn’t try to determine any levels of compensation payable, or entitle tenants to immediate payments.

Tenancy improvements have always been important to both parties but they will become even more relevant when farm rent reviews become linked to the productive capacity of a holding.

Landlords have two months to respond to the amnesty notice and have the right to object for a variety of valid reasons listed in the legislation.

Who and what will it cover?

The amnesty provisions apply to 1991 Act Tenancies, Short Limited and Limited Duration Tenancies and will also be available to tenants under the proposed Modern Limited Duration Tenancies.

It is up to the tenants, not the landlords, to apply for amnesty. But landlords should be aware of the amnesty and understand the code of practice.

The rules around tenant improvements are part of the Agriculture Holdings (Scotland) Act 1991. They’re subdivided between 3 sections:

Part 1 - Improvements requiring landlord’s consent

Part II - Improvements requiring notification to the landlord

Part III - Improvements not requiring either consent or notification

In the past, landlords could object to an application to record improvements if, for example, the investment wasn’t reasonable or desirable on agricultural grounds for the efficient management of the holding.

Also, work might not be eligible under the amnesty if it was carried out in a substantially different manner to that which was notified.