Leading Organisations Issue Joint Industry Guidance on Limited Partnerships

RELEASE ON BEHALF OF NFU SCOTLAND, SCOTTISH LAND & ESTATES AND SCOTTISH TENANT FARMERS ASSOCIATION

NFUS, SL&E and STFA respond to calls for leadership

Three organisations have responded to calls for them to show leadership on Limited Partnerships.

NFU Scotland (NFUS), Scottish Land & Estates (SLE) and Scottish Tenant Farmers Association (STFA) were challenged in the recent Agricultural Holdings Legislation Review Group (AHLRG) report to take the lead in identifying how Limited Partnership agreements can transition into more stable arrangements.

Limited Partnerships, many of which were created in the 1990s, have reached – or are reaching – the end of their term. In the AHLRG’s recent review of agricultural holdings legislation, concern was expressed about current uncertainty and potential short-termism arising from the number of Limited Partnerships that are still in effect in Scotland, some which have an identified end point whilst others are operating on a rolling renewal basis.

Recognising that the AHLRG recommended industry-led action to address this, the three organisations have together launched guidance that lays out the key steps that should be followed as part of a Limited Partnership review. The guidance asks all limited and general partners who are still in Limited Partnerships to follow a simple step-by-step process in order to develop a mutually beneficial and agreed transition to a new Limited Duration Tenancy (LDT) or suitable alternative arrangement, which may include the limited partner deciding to manage the land in hand.

The process includes provision for professional mediation and emphasises the importance of limited partners adhering to the terms of the SL&E Landowners’ Commitment throughout the process.

Professional support for the guidance will be developed through dialogue with the Royal Institute of Chartered Surveyors (RICS), Scottish Agricultural Arbiters and Valuers Association (SAAVA) and major firms of professional advisers, and will be subject to ongoing review by the three signatory organisations.

NFU Scotland President Allan Bowie said: “Set the challenge by the AHLRG, the organisations have responded quickly to a key area of concern and uncertainty identified in the report group’s work. Our initiative on Limited Partnerships provides robust encouragement and an effective framework to manage the transition to more stable land management arrangements, thus underpinning the productivity of that land for the future and reducing the level of uncertainty which some businesses are currently operating under.”

SL&E President David Johnstone said: "Uncertainty is never good for business and for those Limited Partnerships which are currently nearing or past their term date, certainty for both parties is essential. We hope that the process detailed in the guidance will help to achieve this and are pleased that recognition is being given to the positive steer contained within our Landowners' Commitment. We would encourage all our members who are in this position to have regard to this guidance."

STFA Chairman Christopher Nicholson said: "The Recommended Guidance for Limited Partnership Tenancies is published by the industry in association with the newly appointed Scottish Government's Independent Advisor on Tenant Farming. We already have industry guidance on rent reviews, and we expect more codes addressing core areas to be published in the next year with the assistance of the Independent Advisor.

“For Scotland's 400 remaining limited partnership tenants, this guidance will be welcome news and where tenancies are approaching the end of their term we should see sensible long term arrangements being put in place which will maintain investment and productivity on holdings. There are a number of limited partnership tenants about to start the process of negotiating their future, which will provide an early test of the effectiveness of this guidance.” Ends

Notes to Editors

In compiling its report, the Agricultural Holdings Legislation Review Group (AHLRG) received a number of submissions relating to the growing number of Limited Partnerships now operating on a short term basis, and the negative impact that the uncertainty arising from this is having on investment and agricultural productivity on these holdings. The AHLRG explored the possibility of legislation to convert these remaining Limited Partnerships into Limited Durations Tenancies (LDTs) on a compulsory basis but concluded that retrospective legislative actions of this nature were unlikely to be helpful in relation to wider confidence within the sector. Instead it noted that “this is an area where strong leadership from industry bodies and major landowners would be extremely helpful”, and recommended that “Every encouragement and support should be given to the NFUS, SL&E and STFA to develop a new Joint Initiative on Limited Partnerships setting out clear guidelines as to how and on what basis those landlords and general partners remaining in these arrangements should negotiate their conversion into a modern LDT on appropriate terms”.