Land Reform (Scotland) Act 2025

Chapter 1 Right to compensation

Small landholder’s right to compensation

39 (1) Paragraphs 40 and 41 apply where—

(a) a small landholder is removed from a small landholding,

(b) a small landholder renounces the tenancy of a small landholding (see paragraph 28),

(c) a small landholder enters into a new tenancy, to which this schedule does not apply, of the land comprising the landholder’s small landholding, or

(d) in the case of a tenancy of a small landholding which forms part of the estate of a deceased small landholder, one of the conditions mentioned in sub-paragraph (2) is met.

(2) The conditions referred to in sub-paragraph (1)(d) are that—

(a) the tenancy is terminated by virtue of subsection (3) of section 16 of the Succession (Scotland) Act 1964,

(b) following transfer to an acquirer under that section, the tenancy is terminated by the Land Court under paragraph 33(6), or

(c) following such transfer, the tenancy is the subject of a counter-notice under paragraph 34(2) declaring it to be terminated and either—

(i) no appeal is made to the Land Court within the period permitted for doing so, or any appeal made is withdrawn, or

(ii) the Land Court confirms the counter notice under paragraph 34(5).

(3) Where paragraphs 40 and 41 apply by reason of sub-paragraph (1)(d)—

(a) any compensation that arises under those paragraphs is due to—

(i) where the condition in sub-paragraph (2)(a) is met, the estate of the deceased landholder,

(ii) where the condition in sub-paragraph (2)(b) or (c) is met, the acquirer to whom the tenancy was transferred, and

(b) Chapter 3 applies to the executor or (as the case may be) the acquirer in respect of that compensation as if the person were a small landholder.

(4) For the purposes of sub-paragraph (1)(a) and (b), a landholder is not to be treated as having been removed from a small landholding or as having renounced a tenancy of it if the landholder continues in occupation of it under a new tenancy to which this schedule applies.

Small landholder’s right to compensation: improvements

40 (1) The small landholder is entitled to compensation from the landlord of the small landholding where—

(a) a permanent improvement has been made to the holding,

(b) the improvement is suitable to the holding,

(c) the improvement was made or paid for by the landholder or the landholder’s predecessors under the same tenancy, and

(d) either—

(i) the improvement was not made in order to comply with a specific written agreement, or

(ii) it was made for such a reason but fair consideration (by way of reduction of rent or otherwise) was not received for the improvement.

(2) The amount of compensation payable under sub-paragraph (1) is an amount equal to the value of the permanent improvement to an incoming tenant of the holding after deduction of the value of any consideration or assistance (financial or otherwise) given in respect of the improvement by the landlord, or the landlord’s predecessors in title, to the landholder or the landholder’s predecessors under the same tenancy.

(3) In this Part—

• “permanent improvement” means—

  (a)

  an improvement relating to—

  (i)

  a dwelling-house,

  (ii)

  work carried out in implementation of an HRA action plan included in an HRA designation order made under section 1 of the Housing (Scotland) Act 2006 (Housing renewal areas: criteria),

  (iii)

  farm offices,

  (iv)

  subsoil or other drains,

  (v)

  walls or fences,

  (vi)

  deep trenching,

  (vii)

  clearing the ground,

  (viii)

  planting trees,

  (ix)

  making piers or landing stages,

  (x)

  roads suitable for pedestrian and vehicular traffic from the holding to a public road (as defined in section 151 of the Roads (Scotland) Act 1984) or the sea shore,

  (b)

  any other improvement which the Land Court considers adds to the value of a holding to an incoming tenant,

• “predecessor under the same tenancy” does not include a sub-tenant.

Small landholder’s right to compensation: increase in value due to diversification

41 (1) The small landholder is entitled to compensation from the landlord of the small landholding where—

(a) during the tenancy, the use of any part of the holding, or a change to any part of it, for a purpose other than cultivation has increased the value of the holding from what it would otherwise have been,

(b) the use or change occurred wholly on or after the coming into force of this paragraph, and

(c) the use or change was authorised in accordance with Part 4.

(2) The amount of compensation payable under sub-paragraph (1) is an amount equal to the value of the use or change in question to an incoming tenant of the holding after deduction of—

(a) any benefit which the landlord or the landlord’s predecessor in title has given, or has agreed in writing to give, the landholder or the landholder’s predecessors under the same tenancy in consideration of the use or change in question, and

(b) any grant which has been or will be made to the landholder, or the landholder’s predecessors under the same tenancy, in respect of the use or change in question.

(3) But where an incoming tenant’s ability to use the whole of the land comprised in the holding for the purposes of cultivation is substantially prejudiced as a result of the use or change in question, no compensation is payable under sub-paragraph (1) unless the use or change has an environmental benefit.

Landlord’s right to compensation

42 (1) Paragraphs 43 and 44 apply where—

(a) a small landholder is removed from a small landholding,

(b) a small landholder renounces the tenancy of a small landholding (see paragraph 28),

(c) a small landholder enters into a new tenancy, to which this schedule does not apply, of the land comprising the landholder’s small landholding,

(d) a small landholder abandons the tenancy of a small landholding, or

(e) in the case of a tenancy of a small landholding which forms part of the estate of a deceased small landholder, one of the conditions mentioned in sub-paragraph (2) is met.

(2) The conditions referred to in sub-paragraph (1)(e) are that—

(a) the tenancy is terminated by virtue of subsection (3) of section 16 of the Succession (Scotland) Act 1964,

(b) following transfer to an acquirer under that section, the tenancy is terminated by the Land Court under paragraph 33(5), or

(c) following such transfer, the tenancy is the subject of a counter-notice under paragraph 34(2) declaring it to be terminated, and either—

(i) no appeal is made to the Land Court within the period permitted for doing so, or any appeal made is withdrawn, or

(ii) the Land Court confirms the counter notice under paragraph 34(5).

(3) Where paragraphs 43 and 44 apply by reason of sub-paragraph (1)(e)—

(a) any compensation that arises under those paragraphs is due by—

(i) where the condition in sub-paragraph (2)(a) is met, the estate of the deceased landholder,

(ii) where the condition in sub-paragraph (2)(b) or (c) is met, the acquirer to whom the tenancy was transferred, and

(b) Chapter 3 applies to the executor or (as the case may be) the acquirer in respect of that compensation as if the person were a small landholder.

(4) For the purposes of sub-paragraph (1)(a) and (b), a landholder is not to be treated as having been removed from a small landholding or as having renounced a tenancy of it if the landholder continues in occupation of it under a new tenancy to which this schedule applies.

(5) Where a landholder abandons a tenancy of a small landholding, the tenancy is to be treated for the purposes of this Part as having been terminated.

Landlord’s right to compensation: deterioration etc. of holding.

43 (1) The landlord of the small landholding is entitled to compensation from the small landholder where—

(a) there is dilapidation, deterioration or damage to any part of the holding, or to anything in or on the holding, and

(b) the dilapidation, deterioration or damage is the result of the landholder, or the landholder’s predecessor under the same tenancy, failing to fulfil that person’s responsibility to cultivate the holding or to use it in accordance with a use or change authorised in accordance with Part 4.

(2) The amount of compensation payable under sub-paragraph (1) is whichever is the greater of—

(a) an amount equal to the amount (if any) by which the value of the holding is reduced from what it would have been without the dilapidation, deterioration or damage in question,

(b) the cost, as at the relevant date, of making good the dilapidation, deterioration or damage in question.

(3) For the purpose of sub-paragraph (2), the relevant date is—

(a) where the right to compensation arises due to renunciation or removal, whichever is the later of—

(i) the date of the landholder’s quitting the holding,

(ii) the date of termination of the tenancy,

(b) in any other case, the date of termination of the tenancy.

Landlord’s right to compensation: decrease in value due to diversification

44 (1) The landlord of the small landholding is entitled to compensation from the small landholder where—

(a) during the tenancy, the use of any part of the holding, or a change to any part of it, for a purpose other than cultivation has reduced the value of the holding from what it would otherwise have been, and

(b) that use or change occurred wholly on or after the coming into force of this paragraph.

(2) Sub-paragraph (1) applies regardless of whether or not the use or change in question was authorised in accordance with Part 4.

(3) The amount of compensation payable under sub-paragraph (1) is an amount equal to the amount by which the value of the holding is reduced from what it would have been without the use or change in question.

Recovery of compensation: further provision

45 (1) Compensation is recoverable by a landlord under paragraph 43 or 44 only where—

(a) at least 3 months prior to the termination of the tenancy, the landlord gives notice in writing to the small landholder of the landlord’s intention to claim compensation,

(b) the landholder abandons the small landholding, or

(c) the Land Court agrees that the requirement for notice should be dispensed with in all the circumstances of the case.

(2) Where a small landholder has remained in occupation of a small landholding during more than one tenancy, neither the landholder nor the landlord is deprived of a right to compensation under this Chapter by reason only that the thing which would give rise to the right to compensation occurred during a previous tenancy of the landholder’s.