What options do you have when ending your secure agricultural tenancies?
If you are a secure tenant farmer with a tenancy under the Agricultural Holdings (Scotland) Act 1991 and are considering ending your tenancy, there are several options available to help you plan your next steps and maximise the value of your tenancy.
Farmers who no longer wish to continue farming and or do not have a successor need to surrender their tenancy. The Land Reform (Scotland) Act 2016 introduced the right for tenants to relinquish and assign their agricultural tenancies and sets out the steps required to do so.
Future planning
Before having any conversations with third parties, try and get a plan together as to how you wish to exit your tenancy. Do you have a date you would like to retire by? How will that fit in with cropping or livestock systems?
How are you set for a property to move to? Housing, depending on where you are in Scotland, can take months to complete so are you in a position now to buy? Or do you intend to rent long-term? You also need funds to live off, so a budget would be useful when assessing if the value of the tenancy will meet your future needs.
There is also the cost of agent and solicitor fees to factor into any decisions. And an important note is that ending a tenancy process has time restrictions, so any major life plans are better discussed before starting the process when there is less pressure on you and your family. It is also recommended to have a discussion with your accountant to understand any tax implication or obligations that may arise from future plans.
Relinquishment
The first route available to a secure tenant is the relinquishment of the tenancy. Providing the tenant has not already been served a Notice to Quit from the landlord or has failed to comply with some or all of the provisions of the lease, they can relinquish the tenancy. This is when the tenant offers the tenancy back to the landlord for a compensatory payment. If you are considering this, then your first port of call should be appointing a skilled land agent to navigate you through the process. There is a set procedure, involving serving notices and appointing an independent valuer. How the tenancy is valued is set out fully in the 2016 Act. It’s worth noting that the tenant is responsible for meeting the cost of the valuation. Guidance on this route can be sought on at the Scottish Land Commission where the Tenant Farming Commissioner has published Codes of Practice.
This route can have its issues though, the landlord may not wish to buy back the tenancy, which will then require you to pursue a different option. Also, the valuation has a set formula, differing to a market valuation, so understanding that improvements but also dilapidations will be accounted for. This can prove challenging when a property may be required to be purchased if moving out of the tenanted farm.
Assignation
If your landlord is not in a position to buy back the tenancy or the landlord rejects the valuation or withdraws their acceptance, then your second option as the tenant is to consider assignation where the tenant instead either assigns the lease to ‘new entrant’ or ‘sells’ their lease to a ‘progressing farmer’
A new entrant is defined in the 2016 Act as being an individual who does not hold or have a “relevant interest” in an existing agricultural tenancy and has not done so within the five years immediately preceding the assignation. A progressing farmer is defined as an individual who does not hold two or more “relevant interests” in agricultural tenancies. The tenancy must be assigned within twelve months of the initial valuation following the Relinquishment Notice.
If you don’t have a someone potentially in mind, that would wish to take on the tenancy, you can approach an agency to market the tenancy for you. You will also need to instruct a Solicitor, preferably one with experience in agricultural tenancies.
The advantage of this route is that there is no specific legislation to restrict the sale value of the tenancy, so in theory you could make more of a financial gain compared to relinquishment.
The value at which the tenancy can be sold to a new entrant or progressing farmer is not specified in legislation, so in theory, this allows for greater financial gain compared to relinquishment, although this is a matter of negotiation between the incoming and outgoing tenants.
There are various challenges associated with this however as there are not many financial lenders prepared to risk on agricultural tenancies therefore anyone considering buying a tenancy needs to have capital behind them to be in an eligible position.
The right to relinquish and assign the tenancy can be seen as an opportunity for retirement, while also paving the way for younger entrants into the farming industry. If you are considering a relinquishment or assignation of tenancy or have any questions about agricultural tenancies, it is important to seek appropriate advice before starting the process of relinquishment and assignation.
Five top tips
- Start with a conversation with your landlord or factor to gauge if relinquishment is an option.
- Engage with a qualified land agent to review your options.
- Prepare for the future – housing and pension needs.
- Be aware of time frames once notices are served.
- Try and keep communication lines open with all parties for a smoother transition.
Jennifer Galloway, Senior Consultant, Jennifer.Galloway@sac.co.uk
Posted by SAC Consulting on 17/08/2026
