| Allan Wilson:
I am pleased
to open the debate. I have a sore throat, but will continue my Satchmo
impersonation.
This is the
first opportunity for the Parliament to discuss the Agricultural Holdings
(Scotland) Bill. The Executive is committed to a mixed system, with a healthy
tenanted sector performing an important and distinctive role alongside
the owner-occupied sector. The bill aims to revitalise the tenanted sector
for the benefit of our agriculture industry and rural Scotland as a whole.
In doing so, it reforms current legislation, which essentially dates from
the immediate post-war period and is recognised by tenants and landlords
alike as being badly in need of updating.
The strength
and breadth of support for the bill cannot be overstated, but are probably
too easily forgotten, because attention has focused on one element of the
bill, which is the tenant's right to buy. That is certainly an important
element of the bill, but for the industry as a whole, other features that
will introduce new tenancy options, extended rights for tenants and simpler
and cheaper dispute resolution arrangements are even more important.
I read with
interest the evidence on the bill that was presented to the Rural Development
Committee and I am delighted that the committee endorsed the bill's objectives.
The committee also made several recommendations. In the limited time available
to me, I will focus on the committee's recommendations and will perhaps
respond to other points in summary as they arise.
The bill will
introduce new tenancy options that will exist alongside current types of
tenancy. The short limited duration tenancy will have a maximum life of
five years, and the limited duration tenancy will have a minimum term of
15 years. The new options will provide tenants with strong security of
tenure throughout an agreed term and will give landlords the means to reclaim
the land at the end of the term.
We also welcome
the committee's broad expression of support for the bill's diversification
proposals. The committee expressed concern about the fact that a landlord's
grounds for objecting to a tenant's proposal to diversify might not strike
the right balance between the respective rights of landlord and tenant.
The important point is that section 35(9) sets out a landlord's grounds
for objecting to a proposed diversification, but will not give the landlord
the power to block a tenant's proposal, and no landlord will be able to
withhold consent unreasonably. The grounds for objection have to be broad
to remain relevant against a wide range of potential non-agricultural uses,
particularly as the bill deliberately does not constrain the types of non-agricultural
activity into which a tenant will be able to enter. If a landlord objects
to a tenant's proposal, we intend to make it clear that the tenant will
be able to ask the Scottish Land Court to approve the proposal nevertheless.
Mr Mike Rumbles
(West Aberdeenshire and Kincardine) (LD): Is
it not the case that any landowner who objected could put in a written
objection under section 35(9)(iii)? That was the committee's point. The
description is wide so they could object almost automatically.
Allan Wilson:
Yes. The bill now includes provisions that
allow the landlord to grant consent subject to conditions. We intend to
make it clear in the bill that the Land Court will be able to strike out,
modify or insert conditions, which will be an important way of ensuring
that restrictions on a tenant's freedom to diversify will be proportionate
to a landlord's reasonable grounds for objection. I am sure that we will
be able to come to an agreement with the committee on that particular point.
As members will
know, our most recent consultation on the draft bill revealed many tenant
farmers' dissatisfaction with the operation of the Agricultural Holdings
(Scotland) Act 1991. In giving evidence to the Rural Development Committee,
Mr Finnie acknowledged those concerns and said that we were considering
ways of dealing with them. The first concern relates to the practice whereby
landlords ask tenants to conclude an agreement that quickly writes down
the amount of compensation the tenant is entitled to at waygo for the value
of improvements made by the tenant to the farm. I can confirm that we intend
to lodge amendments at stage 2 that will prohibit landlords and tenants
from concluding write-down agreements in future, in relation to both existing
and new leases. We continue to consider whether and how action might be
taken in relation to current write-down agreements, but potentially complex
legal issues would need to be overcome.
Fergus Ewing
(Inverness East, Nairn and Lochaber) (SNP): I
fully accept that the issues are complex, but does the minister agree that
the mischief to be corrected relates to past agreements? Will he advise
whether the amendments he will propose will have retroactive effect? If
they will not, I believe that we will not address the problem that he has
correctly identified.
Allan Wilson:
I understand Mr Ewing's point but, to a certain
extent, he answered it himself when he referred to complex legal issues.
I suspect that those are, indeed, the issues that will concentrate our
minds at stage 2.
Tenants have
complained about landlords who have demanded that they enter into post-lease
agreements that transfer responsibility for renewing fixed equipment from
landlord to tenant. As with write-down agreements, we propose to render
as void any post-lease agreement entered into in future that purports to
transfer responsibility for renewals, and we are considering how we might
allow tenants to revoke existing agreements.
We are also
considering sympathetically further issues surrounding the correlation
between rental values and the profitability of farms.
John Scott (Ayr)
(Con): Does the minister accept that the Agricultural
Holdings (Scotland) Bill is likely to lead to a reduction in the value
of land in Scotland? As that value currently underpins the borrowings of
the Scottish agricultural sector, does he accept that the bill will lead
to increased hardship for Scottish farmers, particularly owner-occupiers?
Allan Wilson:
No. I will come to the issue of blight when
I come to the absolute right to buy, which is supported by some but not
by others.
I have been
struck by the enthusiasm of the industry to find solutions to the issues.
Bodies representing tenants, landowners and other interests have worked
together in an effort to resolve the outstanding issues quickly. We are
liaising closely with the industry and will continue to do so. I recognise
that, if Parliament approves the principles of the bill, we will need to
move fast, because time is not on our side. However, the bill has been
built on consensus and I would like that to continue with regard to the
outstanding issues.
That brings
me to the aspect of the bill that has attracted most interest: the pre-emptive
right to buy, which is a right for tenants under the Agricultural Holdings
(Scotland) Act 1991 to buy the farm they rent when it is offered for sale.
I am pleased that the majority of the committee stated its support in principle
for a pre-emptive right to buy.
The right to
buy in the bill operates whenever a landowner wants to sell the land. It
provides a guaranteed right for the tenant to buy the land at market
value. In effect, that gives a statutory basis to a procedure from which
the tenant and the landlord both benefit. It is usually cheaper for a tenant
to buy the farm that they rent than an equivalent farm elsewhere, while
landlords can usually expect to receive a higher price by selling land
to a sitting tenant than to a third party. However, at present, some landlords
not only sell land to a third party without giving the tenant the opportunity
to bid, but sometimes do not even alert tenants to the change of landlord.
That is why it is important that we create a statutory pre-emptive right
to buy. That will mean that it will no longer be possible for land to be
sold over the head of the tenant. Everybody should welcome that.
Crucially, the
right-to-buy provisions in the bill are entirely consistent with our aim
that the bill should revitalise the tenanted sector in Scotland. The bill
extends tenants' rights but does so in a way that does not prejudice the
legitimate rights of landlords. We have provided a right that tenants want
and which the Scottish Landowners Federation has stated that landlords
can live with.
There is, of
course, a body of opinion that believes that tenants should have an absolute
right to buy, which they could exercise against the will of the landlord.
Regardless of the way in which an absolute right to buy was introduced,
it would undermine our efforts to revitalise the tenanted sector in Scotland.
[Applause.] I thank the Conservative members for that applause, even if
it came from strange quarters.
Those of us
with a brain in the chamber can see that those who advocate an absolute
right to buy and suggest that it should apply only to tenants with tenancies
under the 1991 act have completely failed to explain why they believe that
an absolute right to buy would be right for those tenants but would not
be justifiable for other tenants. Tenants who would not share the right
to buy would, I am sure, be interested to know why the distinction is appropriate.
So, too, would landlords, who would not let land if there were a risk that
they would be unable to reclaim the land at the end of the lease. That
is why the introduction of an absolute right to buy, even if only for tenants
under 1991 act tenancies, is likely to affect the availability of agricultural
land for let. Indeed, it could depress confidence in letting in other non-agricultural
commercial sectors, too. I would argue that it has implications across
the commercial sector and in retail and other areas.
Murdo Fraser
(Mid Scotland and Fife) (Con): Will the minister
give way?
Allan Wilson:
I would like to, but I am out of time.
I have much
more to say, but I will say it in my closing speech. The bill is fundamentally
about much more than the tenant right to buy. It contains several important
elements that work together to stimulate the tenanted sector. I have attempted
to outline a few of those in the time that is available to me. The Executive
will be happy to consider other points at stage 2. I look forward to that
process.
I move,
That the Parliament
agrees to the general principles of the Agricultural Holdings (Scotland)
Bill.
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