Insight on the new Scottish Land Reform Bill

Despite getting less media attention than the new community engagement rules and restrictions on large estate sales, the changes to agricultural tenancies brought forth by the new Land Reform Bill are expected to be significant. Here’s a summary of what the Bill could mean for landlords and tenants of farms if passed in its current form.

The Bill passed Stage 1 in March 2025, which means the Scottish Parliament agree with the Bill’s general principles. A detailed line-by-line review is still to come, but with a Scottish election scheduled for May 2026, we can expect the Bill to pass into law before that, although the date when the changes take effect could be after this.

Tighter controls on resumption

• Landlords wanting to take back land will have to give a full year’s notice and inform the Tenant Farming Commissioner (TFC), who will then appoint a valuer to determine compensation
• The landlord must pay the valuer’s fee
• The amount of compensation tenants are entitled to will increase
• Similar to relinquishment, landlords will pay tenants half the difference between the tenanted and vacant land values
• Disturbance and reorganisation payments totalling 5x the rent – previously only paid when the entire lease was ended by the landlord – will now apply to resumed land too (proportionately).

More tenant’s improvements

A fixed list of permitted improvements (attracting compensation at lease’s end and ignored at rent reviews) will be replaced by broad principles, with an increased focus on sustainable and regenerative farming. If an improvement would make it unlikely the land could be returned to agricultural use or have a long-term or significant impact on land management, landlord consent will be required, but a refusal will now have to be justified and may be contested in the Land Court. If the refusal is not intimated on time or is not justified, the improvement can go ahead despite the refusal. In cases where the impact is less, 3 months’ notice will be required, or in some cases no notice. The landlord might object to a notice if the proposed improvement is thought to be detrimental. A new example of a “notice” improvement is hydroponic farming.

Diversification – focus on sustainability

When proposing to diversify their activities on the holding, tenants will now have to include, in their formal notice to the landlord, details of any environmental benefits this will bring. If the landlord objects, the effect on sustainable and regenerative farming will be considered.

Waygoing claims

A new standard procedure for dealing with end-of-tenancy claims will be introduced to address concerns that it takes too long for tenants to receive their payouts. The timescales are to be sped up, with claims notified 9 months before the lease’s end instead of afterwards. The TFC could step in to arrange a neutral valuer if parties can’t agree on one. The Bill introduces a 2-month payment deadline and interest once claims are determined.

Rent review tests

Amendments contained in the Land Reform (Scotland) Act 2016 – but still not in force – brought in “productive capacity” as the basis of rent reviews. Detailed guidance around this is still being worked on. The Bill brings in the additional factors alongside this: rent payable for similar holdings, and prevailing economic conditions in relevant sectors of agriculture. Valuers will therefore need to balance multiple factors when assessing fair rent.

Registering tenant’s right to buy

Secure tenants have a right to buy their farm, but only if they register a formal notice of interest. The need to register was set to be abolished, but that will now be reversed. Registration will continue to be required.

Rules of good husbandry and estate management

These will now include sustainable and regenerative production and the health and welfare of livestock.

Model lease for environmental purposes

The Scottish Government are to produce this in due course. It is expected to enable leases which have environmental activities as their main purpose but include some agricultural activity as part of that – something that’s difficult to fit into existing lease regimes, under which the purpose of the let can only be wholly agricultural, or non-agricultural.

Small landholdings

A less common kind of tenancy, similar in some ways to crofting tenure in the lowlands. The Bill recognises that an update to the legislation on these is long overdue and brings some aspects into line with other tenancies. This includes extending the tenant’s right to buy to these holdings.

How we can help

If you need guidance on any of these issues, speak to accredited specialist tim.macdonald@andersonstrathern.co.uk or a member of our expert team.