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Tenant farmers advised to delay retirement plans for a few more months

Tenant farmers have been advised to seek expert independent advice
Tenant farmers have been advised to seek expert independent advice

Tenant farmers who are intending to retire and benefit from compensation under Scotland’s new agricultural holdings legislation have been urged not to jump the gun.

According to the Scottish Tenant Farmers Association (STFA), a number of tenants are keen to use the new Land Reform Act 2016 in order to retire but association director, Angus McCall has appealed to them to wait for a few months and take good independent advice from experts on tenancy law.

When it becomes live, the new Act will mean improved compensation for a retiring tenant, for not only the improvements he has carried out during his tenancy, but also for the value of his interest in the lease. Currently a retiring tenant is only bound to receive compensation for agreed improvements he has made to the farm on top of traditional compensation, for example for crops in the ground.

STFA says the current compensation represents a paltry sum in many cases and is no incentive for a tenant to retire early and make way for the next generation. However the new Act is not yet active and is expected to be implemented in stages over the next two years.

STFA director Angus McCall said tenancy law became more complicated with every act of parliament and there was currently a lot of misunderstanding and misinformation, and even confusion among some professional advisers.

“Tenants should be patient and wait a few months until various parts of the Act are active before taking action,” he said.

“Although the principle of compensating a tenant for transferring his interest in the lease back to his landlord has been agreed, the valuation process is still to be finalised. It is thought the tenant’s share of the value of the tenancy may be about 25% of the open market value of the farm, but this will vary according to the individual’s circumstances.

“It is also vitally important that informed expert advice is sought.”

Mr McCall advised tenant farmers to take advantage of the show season to speak to representative organisations.

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