Case Study: Letting of Land to New Entrants – A Roxburghe Estate View
The Roxburghe Estate takes a pragmatic approach to encouraging opportunities for younger farming tenants and to renting Estate land. The 50,000 acre Estate in south-east Scotland includes 50 farms, of which 21 are hill farms averaging 1600 acres and 29 are low ground farms of around 560 acres each. Five farms are managed in-hand with the remaining 45 let.
An analysis of changes of occupation over the last 25 years - effectively over the course of a generation - illustrates very clearly the limited turnover in farms to let over the years. There has been no change of occupation, other than by family succession, on 33 farms or 66% of the total. Some 23 have seen some changes of occupation, including 3 farms which have changed hands twice. Of these 23, 16 were let (including 5 farms which were previously in-hand), 5 were sold and 2 were taken in hand. In total there were only 7 open market lets during this period. Taking the analysis back a further 25 years produced a further 7 open market lets. So over the last 50 years, there have been only 14 open market lettings, representing some 28% of the total.
There are 3 main reasons for such a low turnover of farms to let on the open market:
- Lease Succession
- Farm Re-organisation
- Land Sales
Lease Succession
A secure agricultural tenancy gives an eligible family successor the right to succeed to a lease provided certain criteria relating to financial and business competence are satisfied. Of the 50 farms on the Roxburghe Estate there has been no change of occupation (other than by family succession) on 33 - nearly two thirds.
The Estate's policy is not to wait until the tenant dies, but to admit a son or daughter into the lease at an earlier stage. In the last 10 years, 6 tenants' sons have been brought into the farm lease as a joint tenant. The Estate believes it is good practice for a son or daughter who has gained the necessary experience and is involved in the farming business to become a joint tenant at a young age. In some cases the Estate has been the one to encourage the father to accept the need for change and for additional responsibility for his offspring. While some may not see a tenant's family successor as a new entrant, the Roxburghe Estate certainly does. It actively encourages succession planning in order to provide the opportunity for that successor to become jointly responsible for the business, bring new ideas and often enthusiasm and energy to the farming operation and also to build a working relationship with the landlord. This can be done without the son or daughter being accepted into the lease, but the Estate believes it is important that greater responsibility be recognised by the family successor becoming a party to the lease.
Farm Re-organisation
As the industry's profitability has been squeezed, an inevitable consequence has been for farms to increase in size and for some farms to be amalgamated. It is the Estate's policy to support existing farm tenants and where possible to add land to the existing tenancy to ensure that their particular farms remain viable. This is one reason why a farm which comes in-hand may not be re-let on the open market. Some recent examples where this has happened show why Roxburghe Estate did not favour reletting on the open market in these cases.
- A small low-ground farm of 170 acres with a house but very limited buildings came in-hand following the retirement of the tenant. The adjoining 275 acres farm was fairly marginal with a substantial area of poor grazing land prone to drought. Despite having a hard-working tenant, the larger unit struggled to provide a reasonable living. After very careful review of the options, it was decided to let the 170 acre farm to the tenant, to create a more viable unit of 445 acres. This may not have secured the highest rent but in the view of the Estate it was the preferred option for long term estate management. The farm was let on a 15 year Limited Duration Tenancy under the new 2003 Agricultural Holdings Act.
- A 300 acre farm which again came in-hand following the retirement of the tenant could have been farmed in-hand, sold, re-let on the open market or let to existing tenants. It was decided to let it to three neighbouring farm tenants in order to support their existing businesses.
- A larger hill farm came in-hand in 2002, the year after the Foot and Mouth Disease outbreak. The Estate preferred to await introduction of the new Agricultural Holdings Act (which at that point was going through its Parliamentary stages) before re-letting the unit, so it was farmed on a temporary management contract for around 18 months. The unit was then divided into two holdings and all existing Estate farm tenants invited to offer for the tenancy. The two farms were then let on 15 year LDTs to two existing tenants. The hill farm could have been put onto the open market, but since it was a difficult time coming soon after the Foot and Mouth outbreak, the Estate's first priority was to its existing farm tenants, some of whom were recovering after losing stock because of the disease.
The Estate might have been criticised for not offering these farms on the open market, but it values its relationship with its farming tenants whom it see as partners. Its first priority is seen as being to those tenants where extra land would strengthen and safeguard their existing business.
Land Sales
Over the past 25 years, 5 farms which have come in-hand on the Estate have been sold, all of these on the Estate's periphery. Its policy has been to retain and re-let land within the core Estate but to dispose of some of the outlying farms.
