Commentary on Sections Part 10 – Agricultural Holdings Limited duration tenancies, modern limited duration tenancies and repairing tenancies: rent review Section 102 – Limited duration tenancies, modern limited duration tenancies and repairing tenancies: rent review
571.Section 9 of the 2003 Act provides the basis for the fixing of rent for an LDT. Section 83 amends section 9 of the 2003 Act in relation to rent reviews for LDTs and also makes provision for the new letting vehicles MLDTs and repairing tenancies.
572.Subsection (2) amends section 9(A1) and (1) of the 2003 Act by including provision for MLDTs and, in relation to section 9(A1), repairing tenancies. The effect is that for both these new tenancies, as well as LDTs, a purported term of the lease that states that a rent review may only be initiated by the landlord, or which states that the rent can only be increased, is void. For MLDTs, where the lease makes no provision for review of rent, then the rent due is to be reviewed and determined in accordance with section 9.
573.Subsection (2) also inserts new subsection (1A) into section 9 of the 2003 Act and this states that the rent payable under a repairing tenancy is to be reviewed and determined in accordance with section 9.
574.Subsections (2) to (8) of section 9 are replaced with new subsections (2), (3) and (4) by section 102(2)(c) of the Act. These state that the notice to review rent is called the “rent review notice” and can be initiated by either the landlord or the tenant in writing.
575.Subsection (3) inserts new sections 9A to 9C, after section 9, which set out the new rent review procedures for LDTs and MLDTs and repairing tenancies.
576.Inserted section 9A sets out requirements for the form and content of the rent review notice. Subsection (1) provides that the rent review notice must be dated and sets out the information that is required in the rent review notice, being the names and designations of the parties, the name and address of the land, the current and proposed rent payable, and the date by which the landlord and tenant must agree the rent (“rent agreement date”).
577.Subsection (2) provides that the rent review notice must be accompanied by information in writing which explains how the proposed rental figure was calculated.
578.Subsection (3) provides a power for the Scottish Ministers, by regulations, to make further provision about the form and content of rent review notices and the information that must or may accompany them. These regulations are subject to negative parliamentary procedure.
579.Inserted section 9B sets out how the rent is to be determined.
580.Subsection (1) states that, on review, the rent payable is the fair rent for the tenancy taking account of all the circumstances and having particular regard to the productive capacity of the land, the rent at which surplus residential accommodation might be let, and the rent at which the landlord’s fixed equipment or land which is used for non-agricultural purposes might be let.
581.Subsection (2) provides that for the purposes of determining the open market rent for any surplus residential accommodation or any fixed equipment or land used for diversification for rent calculation purposes, “open market rent” means that which would be expected in an open market by a willing landlord to a willing tenant.
582.Subsection (3) contains a power for the Scottish Ministers, by regulations, to make further provision about the productive capacity of land, including how it is to be calculated. These regulations are subject to affirmative parliamentary procedure.
583.Subsection (4) states that the rent determined is to be payable from the “rent agreement date” (as defined in section 9A(1)(e)).
584.Inserted section 9C explains what is meant by surplus residential accommodation and how this is to be determined.
585.Subsection (1) states that residential accommodation on land comprised in the lease of an LDT, an MLDT or a repairing tenancy is considered surplus if it exceeds the accommodation required for the standard labour requirement (SLR) of the land.
586.Subsection (2) states that in determining whether the accommodation is surplus, consideration may be given as to whether the SLR varies (to take account of seasonal workers for example), and both the sole farmhouse occupied by the tenant and any accommodation that the tenant is prohibited from subletting by the terms of the lease or otherwise (subject to subsection (3)) must be disregarded.
587.Subsection (3) provides that where, in the face of a prohibition against subletting, a tenant has relied on section 39(3) of the 2003 Act to sublet the accommodation then such accommodation may be considered to be surplus accommodation notwithstanding the prohibition on subletting.
588.Subsection (4) provides that, when having regard to the open market rent for surplus accommodation for the purposes of assessing the fair rent, account must be taken of all the circumstances including the condition and location of the property. Where the accommodation is occupied by a retired agricultural worker at a rent that is lower than what the open market rent for that accommodation would otherwise be, then this should also be taken into account. Where the accommodation is not currently let, this must be disregarded.
589.Subsection (5) provides that if, when determining fair rent, regard is given to the open market rent for surplus accommodation under section 9B(1)(b), then such accommodation is not also to be taken into account as fixed equipment or land under section 9B(1)(c).
590.Subsection (6) provides a power for the Scottish Ministers, by regulations, to make provision about the standard labour requirement of land comprised in the lease of an LDT, an MLDT or a repairing tenancy, including how the SLR is to be determined. These regulations are subject to affirmative parliamentary procedure.