Scottish tenants could soon have their rent set on the basis of the productive capacity of the land they are renting, rather than a comparison of rents on similar holdings.
A new Scottish Government report, Testing of the Rent Review System, has built on the concept introduced by the Land Reform (Scotland) Act 2016.
The Act has already been implemented in part, but the mechanism for setting a rent which is fair and sustainable to both parties has still to be agreed.
The complex 200-page report was produced by Savills, with input from agricultural law specialist Hamish Lean and land consultant Watson Bell.
Scottish Tenant Farmers Association (STFA) chairman Christopher Nicholson said: “We have been campaigning for over a decade for the replacement of the open market test which has become increasingly unworkable and has always acted against tenant’s interests due to the land market’s inherent imbalance in supply and demand.
“This report shows a rent test based on the physical output of the holding, using only the land and fixed equipment provided by the landlord, can be used to set a fair rent with transparent methodology.
“We believe that the report is heading in the right direction but there is still much work to do on the details.”
Mr Nicholson also urged tenants to keep careful records of all their improvements so they are excluded from the rent calculation.
NFUS President Andrew McCornick said the work was ‘thorough’, but still some way from providing a final solution in calculating productive capacity for 1991 Act tenancies.
“They have looked at a number of methods of calculating the rent. In doing so, several issues have come to the fore, which will require further thought”, he added.
“Some well-used methods, such as how tenant’s improvements are accounted for have been recognised as appropriate, whilst other components, such as standard labour figures, have been singled out as requiring an update.
“Further discussion is also needed around the treatment of surplus residential accommodation, and I expect there to be some debate around farmhouses.”