Landlord and Tenant

Question 1

What is the difference between a lease and a license?

Answer 1

A lease provides exclusive possession with a legal interest

License is non-exclusive, often temporary, no legal interest

Question 2

What is a dilapidation and how do you calculate the charge?

Answer 2

Dilapidation = Failure from the tenant to repair or restore the property to its original condition as stated in the lease agreement.

Damages to remedy dilapidations are calculated the reasonable cost to the Landlord of doing the works plus loss of rent for the period until the works have been completed.

Question 4

If you are unsure of whether an applicant can afford a rent, what may you request?

Answer 4

You may request them to provide you with a guarantor, who would be liable for costs if the tenant failed to pay rent, or caused significant damage

Question 5

What is a guarantor and who would make a good guarantor?

Answer 5

A person who gives/acts as a guarantee (agrees to pay rent, repairs if the tenant fails to do so)

Good guarantor should have a good, stable income, good credit rating, and assets.

Question 6

What are the initial checks when considering a new tenant?

Answer 6

Financial check/income, credit check
Right to rent check
Employers reference
Landlord references
Consider meeting the tenant face-to-face during viewings

Question 7

What cant you do when selecting a tenant?

Answer 7

unconscious bias, request information on personal information (e,g. religion, race, sexuality, gender)

Question 8

What does the Landlord/Agent need to do before arranging a new residential tenant and signing the lease?

Answer 8

-Background checks on tenant
-Valid Landlord Registration
-Property insurance
-Property needs to meet the repairing and tolerable standards
-Legionellers, EPC, Asbestos, EICR, Gas safety,
-Compile inventory/RoC
-Advertise for tenant, arrange viewings
-Provide tenant with copy of documentation

Question 9

What are the key changes between an LDT and MLDT?

Answer 9

MLDT introduced in 2016 Legislation
LDT introduced in 2003 Legislation

can contain:

• Mutually agreed break clause for new entrants, 5 years after commencement
  -Landlord can contract out of obligation to renew/replace FE
  -If not terminated, it will continue for another 7 years, on continuous cycle. Whereas an LDT only continues on 3 year cycle.

Question 10

What key changes were introduced from the 2016 Land Reform (Scotland) Act?

Answer 10

-TFC role indtroduced
-MLDT Introduced (min. 10 years)
-Repairing Tenancy (min. 35 years, initial 5 year repairing period
-Tenants right to buy ‘requirement to register’ removed
-Rent review moved away from ‘open market rent’ to show ‘fair rent’
-1991 Act tenants can relinquish their tenancy to the landlord in exchange for compensation (half the difference between the value of the holding with a sitting tenant and the VP value)
-Landlord must provide written notice before undertaking an improvement, the tenant can object.

Question 11

Talk me through serving the appropriate Rent Review Notices for 1991 Act Tenancy?

Answer 11

Initiate RR by serving section 13 Notice in writing to Initiate the RR process (more than one, but less than two years before RR date)

Inspect farm, give indication of new rent (not less than 6 months before RR date)

Written proposal (not less than 4 months before RR date) detailing rent, comparbale evidence

Written response from Tenant (not less than 2 months before due date) either accepting or seeking clarification

If not agreed:

• Further negotiation
• Consider Arbitration and Mediation
• lodge application with land court

Question 12

What is the minimum rent review cycle for Agricultural tenancies?

Answer 12

3 years, or commencement of the new tenancy

Question 13

What must NOT be taken into consideration when compiling a ‘new rent’ at a rent review?

Answer 13

-The ‘scarcity of lets’ which could distort value
-Any increase in value due to tenants improvements on the holding
-Any impact on rent due to the occupation of the tenant on the farm
-Improvements executed by the landlord which see the landlord receiving grants/payments from their improvement
-dilapidations/deterioration from the tenant does NOT bring down the rental value

Question 14

What MUST be taken into consideration when compiling a ‘new rent’ at a rent review?

Answer 14

-Well presented, well analysed comparable data of similar holdings, preferably recently settled rents.
- be able to demonstrate you have made appropriate adjustments for your comparables to reflect FE etc
-Current economic conditions in relevant section of Agriculture
-Terms of the tenancy, relating to rent

Question 15

If a rent review cannot be decided, what is the next step?

Answer 15

Arbitration or Mediation 3rd Party.

Or

Determination by land court, to settle dispute ideally with negotiation rather than litigation

Question 16

What is the difference between Mediation and Arbitration?

Answer 16

Mediation, involved a 3rd party who will help to facilitate discussion and come to a conclusion that all parties agree to. The individuals will still maintain control over the process and final decision. Mediation is less formal.

Arbitration, involves an independent/neutral 3rd party who will assess the data and stories, and will make the final decision, which is legally binding.

Question 17

What is the ‘productive capacity’ of the holding?

Answer 17

The sustainable yield of agricultural products that would reasonably be expected from the agricultural holding when farmed by: a competent, efficient and experienced tenant farmer; with adequate resources

Question 18

When does the rent review date take place?

Answer 18

Anniversary date of the lease commencement

Question 19

Tell me about the different options for managing a conflict in an Agricultural tenancy situation?

Answer 19

• Communication
• Hear both sides of story
• Manage expectations of both parties
• Act as the mediator if both parties agree
• Aim to discuss/hold meeting in person with all members

If all else fails:

-3rd party mediator
-Consider arbitration if the situation is stagnant

Question 20

What legislation created the appointment of the TFC?

Answer 20

The Land Reform (Scotland) Act 2016

Question 21

What is the purpose of the TFC?

Answer 21

To promote and improve relationships between Landlords and Tenants and to provide guidance.

Question 22

If you do not have a physical lease in place, what do you fall back on?

Answer 22

The Agricultural Holdings Legislation

Question 23

What is the minimum term for an MDLT or LDT

Answer 23

A minimum of at least 10 years

Question 24

How does a landlord or tenant terminate a 1991 Act Tenancy?

Answer 24

Tenant can relinquish the lease, and receive compensation.

Landlord can serve a notice to quit, but an incontestable notice to quit from the landlord is extremely limited

Question 25

What are the ways a 1991 Act can form?

Answer 25

The landlord and tenant willingly entered a 1991 lease after the Act came into force The landlord and tenant entered into a lease before the Act came into force, but the Act now applies to that lease The landlord leased an Agricultural holding to a tenant prior to 27th November 2003 without a written lease The landlord and tenant entered into a grazing lease before 27th November 2003, and remained in occupation for 365+ days or cropped the land.

Question 26

How many 1991 Act tenancies are there in Scotland?

Answer 26

4,000 - 5,000

Question 27

What legislation governs each Agricultural lease type?

Answer 27

91 Act Tenancy - 1991 Act and 2003 Act Grazing Let - 2003 Act SLDT - 2003 Act LDT - 2003 Act MLDT - 2016 Act

Question 28

What happens if a tenant has a 5 year SLDT and remains in occupation (agreed) after the expiration date?

Answer 28

The lease convers to an MLDT for a period of 10 years commencing on the START date of the original SLDT.

Question 29

What is defined as a 'new entrant?'

Answer 29

A person who has not, in the 5 years before entering into an MLDT been a tenant under any other Agricultural or crofting lease

Question 30

Give an example of a time when you have had a difficult conversation with an Agricultural Tenant?

Answer 30

I have had difficult conversations with the client and tenant, when erecting a new shed. Difficult discussions on what constitutes to a landlords improvement when erecting a new shed and resultant tenant contribution.

Question 31

Other than MLDT, what other tenancy was introduced in the 2016 Agricultural Holdings legislation?

Answer 31

Repairing Tenancies, which is a tenancy let for a period not less than 35 years, with a repairing period of not less than 5 years.

Question 32

What are the two key conditions of a grazing let?

Answer 32

1. It must only be used for the purpose of Grazing 2. The period of use must last no longer than 364 days and stock must be removed.

Question 33

What are the landlords obligations in regards to FE in 1991 Act tenancies?

Answer 33

- Provide FE to allow a reasonably skilled farmer to maintain efficient production, for the 'use' stipulated in the lease (e.g. arable) -Must be provided at the start of tenancy - Replace and renew FE rendered necessary by fair wear/tear

Question 34

What is fixed equipment?

Answer 34

Equipment which belongs to the landlord but is provided to and used by the tenant for the purpose of farming efficiently.

Question 35

What are the Tenants obligations in regards to FE in 1991 Act tenancies?

Answer 35

Tenant is thereafter responsible for maintaining the FE in that condition, fair wear and tear excepted

Question 36

When must the landlord provide adequate FE in SLDTs, LDTs, and MLDTs?

Answer 36

If not available on the date of entry, must be first 6 months of the commencement of the lease

Question 37

What is the current level farmhouses and cottages need to meet in Agricultural tenancies, and what changes are ahead?

Answer 37

Currently only need to meet the Tolerable standards. However, 2019 update stated: All agricultural properties will need to meet Repairing standard from 28 March 2027, so landlords have had 8 years to implement.

Question 38

When was the tenants amnesty?

Answer 38

2017 - May 2020 but was extended to December 2020

Question 39

What alterations did the 2016 Land Reform Act make to Assignation to 1991 Act tenancies?

Answer 39

Previously, 2003 AHA only permitted near-relatives, but 2016 expanded this to non-near relatives (nephews, brothers in law, spouses or civil partners of near relatives)

Question 40

What justification can a landlord withhold consent for a near relative of a 1991 Act assignation?

Answer 40

1. Person not of good/sound character 2. Person does not have sufficient resources to enable the person to farm with reasonable efficiency 3. Insufficient resource to pay for the rent 4. Lacks the skills/experience to maintain farm in line with good husbandry

Question 41

What can the assignee do if the landlord withholds consent due to lack of experience?

Answer 41

Assignee must begin relevant training within 6 months of the date of the notice

Question 42

If the landlord wishes to withhold consent to an assignation, when do they need to respond to the tenant by?

Answer 42

The landlord has 30 days to respond from the date of receiving the notice of assignation

Question 43

Can you assign an SLDT?

Answer 43

No it is not permitted but it can be inherited

Question 44

If the tenant wishes to sell their 1991 Act tenancy on the open market, who can buy it

Answer 44

1. New entrant to farming 2. Someone who is progressing in farming

Question 45

Under what circumstances can a landlord evict an Agricultural Tenant?

Answer 45

1. If the tenant owes more than 6 months rent 2. If the tenant becomes bankrupt 3. If the tenant breaks an irritancy clause within the lease (unlikely to result in eviction)

Question 46

What are the 3 ways of passing on a 1991 Act Tenancy?

Answer 46

1. Testate Transfer on death (means of a bequest in a Will) 2. Lifetime assignation to an eligible assignee 3. Intestate transfer on death (if tenant died without having bequeathed the tenancy in a will)

Question 47

If the landlord serves a 'notice to quit' what can the tenant do?

Answer 47

Tenant can serve a counter-notice in writing within 30 days of receiving.

Question 48

Who is the New Tenant Farming Commissioner

Answer 48

Robert Black (succeeding Bob Mackintosh)