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How might changing housing standards affect residential properties on tenanted farms?

Since September 2017, all residential properties let in Scotland, with limited exceptions, have had to meet the “repairing standard”.

The responsibility for making sure a property meets this minimum standard of repair lies with the landlord.

However, houses on tenanted agricultural holdings are, at the moment, one of the limited exceptions: this accommodation only needs to meet a more basic standard known as the “tolerable” standard.

But that’s set to change.

Landlords of agricultural holdings will have to ensure houses forming part of let farms meet the repairing standard from March 2027.

The tenant farming commissioner (TFC) announced the change in 2018 and, last year, the Scottish Government passed regulations which will apply the repairing standard to agricultural tenancies from 2027, with the aim of bringing the quality of agricultural housing in line with other private rented accommodation.

While that’s a few years away, it’s important tenants think ahead now and consider the potential implications and opportunities to improve the condition of the housing on their farms.

What is the repairing standard?

A house meets this level if —

  • it is in a “tolerable” standard of repair i.e. it is fit to live in and has the likes of a kitchen and toilet
  • it is wind and watertight and reasonably fit for human habitation
  • the structure and exterior, including guttering and pipes, are in a reasonable state of repair and in proper working order
  • the installations for water, gas, electricity, sanitation and heating are in a reasonable state of repair and working order
  • any fixtures, fittings and appliances the landlord has provided are in a reasonable state of repair and in proper working order
  • any furnishings the landlord has provided can be used safely for the purpose intended
  • there is satisfactory provision for fire detection/warning
  • there is satisfactory provision for carbon monoxide detection/warning
  • electrical safety inspections are carried out by a qualified electrician at least once every five years

Fixed equipment obligations

Houses on agricultural holdings are part of the fixed equipment so, unless the tenancy began before 1948, the tenant is responsible for maintenance and repair, while the landlord is responsible for replacement and renewal because of natural decay or fair wear and tear.

In some cases, there may be a post-lease agreement which passes the landlord’s obligations onto the tenant. This is likely to bring uncertainty in the coming years as there may be tensions between the obligations imposed on the landlord and tenant under the lease and the agricultural holdings legislation, and those imposed on the landlord in the housing regulations.

Tenants should consider whether or not this might be an opportune time to look at the annulment of any post-lease agreement in place.

Annulment is only feasible if the fixed equipment is in a reasonable state of repair, or in no worse state than when the post-lease agreement was put in place.

Notice of annulment must be given at least six months before the next rent review is due. It is worth bearing in mind too that, if the post-lease agreement is annulled, the rent for the holding will be reviewed and fixed to reflect that responsibility for replacement and renewal has been passed back to the landlord.

Opportunity for engagement

More generally, tenants may wish to use the changes coming down the tracks as a tool to engage landlords about housing improvements and, ideally, come up with a programme of works which will allow an easy transition into the new regime.

The TFC’s Code of Practice for the Maintenance of the Condition of Tenanted Agricultural Holdings makes it clear parties should be prepared to meet regularly to review the fixed equipment and agree a schedule of necessary works.

As such, it should be possible to address the requirements of the repairing standard within the code’s framework.

Landlords will also be considering their position and perhaps looking for opportunities to pass on or share the burden of bringing houses included in agricultural tenancies up to standard.

Where lease arrangements are being re-constituted, perhaps as a result of a request for consent to an assignation, landlords may try to make it a condition of the new lease that the tenant complies with the repairing standard from the outset of the new lease so that, by 2027, the landlord does not have any works to do in order to comply.

Moving target

The requirements of the repairing standard are subject to change and the Scottish Government has already made changes since its introduction in 2017.

More are scheduled to come into force in 2024, including a requirement that all houses have circuit breakers to help reduce the risk of fire and electrocution. It is likely the regulations will be tweaked again before March 2027.

Sub-lets

Lastly, although the repairing standard does not yet apply to houses used for agricultural purposes, it does apply if there is a sub-let for a non-agricultural purpose.

Tenants should therefore bear in mind, if they are sub-letting a cottage, that the property is not exempt from the regulations and they should make sure it meets all the relevant requirements.

In addition, care should be taken to ensure compliance with all other regulatory requirements such as the need to register as a residential landlord with the local authority.

As with all works undertaken, tenants should make sure they follow the appropriate notice or consent procedures before carrying out any improvements, so that compensation is available at waygo.

Lorna Mackay

Lorna is an experienced rural lawyer who acts for clients across Scotland. Accredited by the Law Society of Scotland as a specialist in agricultural law, Lorna handles a range of transactional business including the acquisition and disposals of farms, estates, forestry, sportings and country houses, alongside advisory work on issues such as succession planning, business structures, land reform and agricultural tenancies.

Posted, 10 November 2020 by Lorna McKay
Categories: Insights | Rural