Relinquishment and Assignation of Secure Tenancies – Have all the information ready before proceeding

In his latest blog, the Tenant Farming Commissioner, Bob McIntosh, discusses the considerations should tenant farmers be thinking of giving up their lease.

The new Relinquishment and Assignation provisions will be making many tenants, particularly elderly tenants, consider whether this is the time to give up their lease. Tenants who have been thinking about relinquishing a tenancy will know it requires a lot of careful consideration. Circumstances will be different on every farm, as will the financial outcome. I would advise tenants to seek professional advice pertinent to their own particular situation at the start of the process to ensure that they are taking the right step and that they have assembled all the necessary information.

It’s becoming increasingly clear that, once a decision has been made to look into relinquishing a tenancy, a good deal of paperwork has to be in order to actually proceed.

The new relinquishment and assignation provisions also set strict limits on the time allowed for the Tenant Farming Commissioner to appoint a valuer and for the valuer to complete the valuation. There is no provision for these timescales to be extended and the clock starts ticking when a competent notice of intention to relinquish has been lodged by the tenant.

It is therefore essential that a notice includes all of the information that the valuer requires in order to carry out the valuation. The following is the minimum requirement: the notice of intention to relinquish must be made on the official form; names and addresses given for the tenant and landlord must be the legal entities, which may not be the names by which the landlord and/or tenant are referred to on a daily basis; the rent currently payable and the date on which it was last reviewed whether or not that resulted in any change to the rent; a copy of the written lease, where one exists, and any subsequent legally enforceable variations to the terms of the lease – where no written lease exists, tenants should ensure that the names of the landlord and tenant are as agreed between landlord and tenant and that the plan of the leased area has been agreed between landlord and tenant as accurately showing the extent of the land and buildings within the tenancy; a map or plan which clearly shows the extent of the land and buildings within the tenancy and at a scale that allows the  position of the boundaries to be fixed accurately; and a list of tenant’s improvements with an indication of which have been agreed with the landlord.

Each piece of information is essential as the valuer has to make four valuations – the value of the holding if sold with vacant possession, the value of the holding with the tenant in place, compensation to the tenant for eligible tenant’s improvements, and compensation due to the landlord for dilapidations. The job of the appointed valuer is to put a value on these components which make up the valuation of the compensation that is payable to the tenant. It is not the job of the valuer to negotiate a settlement between landlord and tenant where there are differences over issues such as the extent of the leased area or the schedule of agreed tenant’s improvements eligible for compensation.

Tenants should make every effort to avoid submitting information that is likely to be contested by the landlord and should ensure that the information submitted has been agreed with the landlord. The amnesty process has demonstrated just how long it can take to agree a schedule of tenant’s improvements, so if this is not dealt with before a notice of intention to relinquish is submitted, it will be difficult for the valuer to complete the valuation within the timescale allowed.

While the TFC has no powers to extend the time limits set out in the legislation, I can – and will – reject any notice which does not come with the required information, and the process of appointing a valuer will not commence until a competent notice has been received.

I shall be issuing further guidance on the requirements for the information required to be submitted with a notice of intention to relinquish, but I’m also happy to talk through any issues if you would like to get in touch. You can also find further information on the process in my Guide to Relinquishment and Assignation.