Should farm subsidies affect the rent?
Posted: Friday 10 February 2012
The Court of Session’s decision on the long-running “Moonzie” case was delivered yesterday, overturning the Land Court’s decision of June 2010.
The case centred on whether the value of farm subsidies going into a farm should affect the level of rent when carrying out a rent review. The Land Court, in 2010, held that the level of subsidy going into a farm should not affect the rental calculations. Our November 2010 E-Bulletin, which can be accessed here, discussed the outcome of that case.
In delivering his decision in the Court of Session, Lord Gill, the Lord Justice-Clerk, stated:
“I regret to say that I differ from the view of the Land Court on the central issue. I am of the opinion that the court misdirected itself in deciding the issue on considerations such as whether the SFP belonged to the farmer or the landowner, whether it was an asset attached to the farm and whether it should properly be seen as part of the earnings of the farm. In my opinion, the true question is to what extent, if any, the prospective tenant’s entitlement to SFP would influence the amount of the successful offer of rent in a letting in open market competition.”
The full decision can be read here.
The decision will be gratefully received by landlords but tenants are unhappy with the outcome, Angus McCall, Chairman of the Scottish Tenant Farmers Association, said:
"The fact that two Scottish Courts have come to such divergent opinions shows a weakness in the legal process which undermines the confidence of farm tenants in a system which has been failing them for some time.”
If you would like to discuss the Court’s decision in more detail, or indeed any aspect of the law surrounding agricultural tenancies, please be in touch with James Rust of our Agriculture and Rural Law team.
