Views of Tenant Farmers and Agricultural Landlords on Aspects of the Agricultural Tenancy System

EXECUTIVE SUMMARY

Introduction and Methodology

A Ministerial-led review of Agricultural Holdings legislation is being carried out by the Agricultural Holdings Legislation Review Group. As part of this review, the Scottish Government commissioned Ipsos MORI to conduct surveys of tenant farmers and agricultural landlords in Scotland, to complement three previous surveys of tenant farmers, agricultural landlords and owner-occupier farmers.

The surveys reported here cover specific aspects of the tenant-landlord relationship:

• The size, nature, and length of tenure of leases rented-in and rented-out
• Experience of any change in land tenure since 2000
• The presence of written records for leases
• Perceptions of the relationship between tenant farmers and landlords and between tenant farmers and landlords' representatives
• The types of fixed equipment covered by the lease
• Types of diversification present on tenanted farms
• Experience of disputes between landlords and tenants
• Experience of the waygo process.

A total of 1,002 tenant farmers were surveyed by telephone (with quotas set for region and farm type). The entire sample of 5,581 was called at least once, with 18% taking part in the survey^[1]. There were 821 postal returns from agricultural landlords (34% response rate).

Leases held

Eighty per cent of tenant farmers reported that they rent-in one lease of at least one year. Just over half (54%) of farmers' main lease covers an area of less than 80 hectares. More than two-thirds (69%) of landlords' main tenant lease covers an area of less than 80 hectares.

Tenant farmers are most likely to rent-in a lease for a whole farm rather than land only or land with limited fixed equipment. Landlords were most likely to rent-out land with limited fixed equipment. Both tenant farmers and landlords reported that the Secure 1991 Act tenancy was the most widely-used type of tenancy arrangement.

Tenant Farmers and Landlords

Similar to earlier surveys of both audiences, both tenant farmers and landlords were each generally positive about their relationship with the other and about specific aspects of this relationship. Tenant farmers were also positive about their relationship with their landlord's representatives in cases where such a person exists.

Rent Review

While there was broad agreement between both audiences in terms of when the most recent rent review had been carried out on the tenancy, different pictures emerged in terms of the frequency with which rent reviews occurred. Rents were broadly similar: the median annual rent per acre reported by tenant farmers was £43, while the median annual rent per acre reported by landlords was £38.

Fixed Equipment

Similar proportions of tenant farmers and landlords mentioned that where fixed equipment was included in a lease, the fixed equipment included agricultural buildings (95% and 99% of main leases respectively), farmhouses (83% and 86%), and tenants' improvements (78% and 75%).

However, there were differences in their perception of the fitness for purpose of, and level of investment in, fixed equipment. Landlords were more likely to perceive fixed equipment included in the lease as being fit for purpose (91%) than were tenant farmers (59%). Similarly, landlords were more than twice as likely to consider their investment in fixed equipment as 'satisfactory' or 'more than satisfactory' when compared to tenants' perceptions of their landlord's investment in fixed equipment.

Diversification

Thirty per cent of tenant farmers and 46% of landlords have some kind of diversification activity on their farm business. It was most common for tenant farmers (17%) and landlords (24%) to report having wayleave arrangements on the land they lease.

The majority of tenant farmers and landlords who reported that there was diversification on the tenancy reported that they had not received a Scotland Rural Development Programme or capital grant to fund the activity. The majority of tenant farmers reported that they had sole-funded any diversification on their tenanted farm.

Disputes and Waygo

Only a minority of tenant farmers and landlords had experienced a major dispute with their landlord/tenant. Disputes were most likely to be related to rent review, fixed equipment and other business interests. Tenant farmers who had diversified their business were more likely to have had experience of a dispute than those who had not diversified. Those agricultural tenants and landlords who had had a dispute were most likely to resolve it either by talking to each other directly or by seeking advice from a professional who could help.

Only small numbers of tenant farmers and landlords had experienced waygo on a previous tenancy. Of those who had gone through the process, overall, both tenant farmers and landlords said that the process was easy and that they were satisfied with the outcome.