The Scottish Government has appointed a contractor to conduct rent modelling work for the new rent test being applied to 1991 tenancies and available to Limited Duration Tenancies. The contract has been awarded to a consortium comprising Savills, Hamish Lean and Watson Bell.
The 2016 Land reform Act radically changed the basis on which rents are assessed, moving from a market driven approach to one based on the productive capacity of the holding. Although the basis of the new formula is enshrined in statute, the Act requires it to be tested on the ground to make sure it will achieve its purpose of delivering a fair rent, before the secondary legislation, which will implement the changes, is passed by Parliament.
While the Scottish Tenant Farmers Association (STFA) welcomed the news it has been critical of the delay in getting the rent modelling work underway - as the start date of the new rent review system has now moved from late 2018 to late 2019, which means that the rent reviews may not be determined under the productive capacity until 2020.
STFA Director Angus McCall said: "Tenants will soon be subject to a completely new way of rent test which will, in the longer term, prove to be a fairer, more transparent and less complicated way of calculating rents. This is a major change of direction and it is important that as many potential hiccups are identified in the modelling exercise as possible before it is rolled out for general use."
Mr McCall went on: "Every change in legislation is liable to challenge, but we hope that the industry as a whole will get behind the new rent review system and make sure it is a success. The tenanted sector needs a stable working environment and rent reviews should be seen as a normal business transaction with rents varying as farming fortunes go up or down. Rent notices dropping through the letter box filling tenants with a sense of dread should become a thing of the past."
Andrew McCornick, President of NFU Scotland said: "It is vital the new rent setting mechanism is fit for purpose, and provides landlords and tenants with a fair and transparent system which allows both parties to understand how the rent is determined."
Mr McCornick has been concerned that there is some misunderstanding about when the new system will be in place and stressed: "It is important to note that until the new system is thoroughly tested, the current system of reviews will remain. As we understand, if the provisional timetable is adhered to, the first rent reviews under the new system will not be before 2019 at the earliest. I urge rent discussions between now and then to bear this in mind and for all to agree to good industry practice during rent reviews."
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