2007 Chapter 7

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These notes relate to the Crofting Reform etc. Act 2007 (asp 7) which received Royal Assent on 1 March 2007

CROFTING REFORM ETC. ACT 2007

EXPLANATORY NOTES

INTRODUCTION

1.     These Explanatory Notes have been prepared by the Scottish Executive in order to assist the reader of the Act. They do not form part of the Act and have not been endorsed by the Parliament.

2.     The Notes should be read in conjunction with the Act. They are not, and are not meant to be, a comprehensive description of the Act. So where a section or schedule, or a part of a section or schedule, does not seem to require any explanation or comment, none is given.

BACKGROUND

Definitions

3.     Throughout these explanatory notes the following definitions have been used:

"the Act" means the Crofting Reform etc. Act 2007;

"the 1993 Act" means the Crofting (Scotland) Act 1993;

"the 1964 Act" means the Succession (Scotland) Act 1964;

"the Commission" means the Crofters Commission.

The Act

4.     The Act amends the 1993 Act and thus provides for changes to the provisions in the 1993 Act. Anyone considering the detailed legislative provisions will find it easier to understand if the Act is read in conjunction with that legislation. The Act also changes provisions in the Crofters Holdings (Scotland) Act 1886, The Deer (Scotland) Act 1996, the Land Reform (Scotland) Act 2003, the Succession (Scotland) Act 1964 and the Scottish Land Court Act 1993.

PART 1: THE CROFTERS COMMISSION

Section 1: Discharge of functions

5.     This section replaces section 1(3) of the 1993 Act and provides that the Scottish Ministers can give the Commission general and specific directions on the way that they carry out their functions.

Section 2: Equal opportunities

6.     This section inserts new section 59A into the 1993 Act. Section 59A requires the Commission to observe equal opportunities in carrying out their functions.

Section 3: Obtaining Commission approval or consent

7.     This section inserts a new section into the 1993 Act. New section 58A sets down the processes by which the majority of applications to the Commission will be determined. The Commission will no longer be required to determine every application made by crofters and landlords, but will still have a responsibility to intervene where there is an objection or where an application which raised no objections invokes separate criteria requiring the Commission to consider and decide whether the application should succeed. Excluded from these new arrangements are those applications which make substantial change to croft land: decrofting, apportionment and crofter forestry. These will continue in every case to require the Commission's written approval in order to succeed.

8.     Subsection (2) of new section 58A provides that in every case in which the applicant is required to apply to the Commission for consent or approval to make the proposed changes, the form on which the application is to be made and any documentation and fee will be specified by the Commission. This will, for example, allow the Commission to include measures to reduce the risk of fraudulent applications.

9.     Subsection (3) requires the applicant to give public notice of the application and where the applicant is not the landlord or the owner of the common grazing affected by the application, to notify the landlord or owner in writing. This is to ensure that those who may wish to object have adequate notice of what is proposed. Subsection (4) specifies the time allowed for making an objection and who may do so. Subsection (16) provides that the objection submitted in terms of subsection (4) be made in the form described and subsection (17) describes what constitutes an objection in writing.

10.     Subsection (6)(a) provides that the Commission is not compelled to act upon an objection which it considers to be frivolous, vexatious or unreasonable but must otherwise intervene where there is an objection. In addition and in terms of subsection 6(b) the Commission has the discretion to intervene in relation to an objection where it considers that any of the general or specific conditions apply to the application.

11.     Subsection (7) specifies what the Commission must do if they decide not to intervene, or they have no grounds to intervene, to consider an application on the basis of a timely objection. Subsection (8) deals with the effects of the Commission deciding to intervene if one of conditions specified in subsection (6)(b) applies. Subsection (9) lists the general conditions that apply for the purposes of subsection (6)(b)(i). Subsection (10)(a) provides that where the Commission does not intervene it must approve the application and enter it in the Register of Crofts. Subsection (10)(b) deals with what should be done by the Commission, and in which timescales, following a decision to intervene. It requires the Commission to inform those parties with an interest that the application is to be considered by the Commission and why the Commission intervened. It also informs the parties of their right to appeal to the Land Court against the decision by the Commission on the application.

12.     Subsection (11) gives the Commission the power to set up procedures and arrangements for deciding whether or not to approve or consent to an application and makes it clear that a decision to intervene in an application is a decision to determine whether or not the application is to be approved. It is important to note that this provision allows the Commission to delegate the task of making the decision to any person the Commission considers appropriate.

13.     Subsection (12) provides that where the Commission following an intervention decides to approve or consent to the application the Commission will record details of the application they have consented to in the Register of Crofts and notify those who would have been notified if the Commission had previously decided not to intervene in the application.

14.     Subsection (13) provides that Scottish Ministers may issue guidance to the Commission on what constitutes sustainable development of the local crofting community and requires the Commission to have regard to that guidance in considering whether a proposal would adversely affect that sustainable development of the crofting community affected by the application.

15.     Subsection (14) gives Scottish Ministers power to amend the general conditions set out in subsection (9) by means of a statutory instrument. Subsection (15) requires that any such statutory instrument must be approved by means of an order made by resolution of the Parliament.

Section 4: Obtaining of information by Commission

16.     Section 4 amends section 40 of the 1993 Act. It changes section 40(1) to reflect the fact that the Commission will in future have another means of obtaining information about crofts. It changes section 40(1) and (2) so that these provisions of section 40 can also be used to obtain information as specified in the notice from the executor of a crofter. It also inserts new subsections (3), (4) and (5) into section 40. Subsection (3) provides that the Commission can refuse to process any application made to them where information required in connection with that application is not provided. Subsection (4) allows the Commission to alter a requirement to supply information where the original requirement cannot be met although the terms of subsection (3) shall still apply to such modified requirement. Subsection (5) allows the Commission to require the provision of information about a common grazing.

Section 5: Maintenance of and provision of information from the Register of Crofts

17.     Section 5 amends section 41 of the 1993 Act so that a range of information previously not held on the Register of Crofts can be held there. This includes information previously recorded in the Crofters Holding Book. It also qualifies the requirement in that subsection for the Commission to insert, alter or omit entries by stating that the Register is to be kept consistent with the information the Commission has received under the provisions of the Act only in so far as it is practicable. Section 41(3) is replaced by two new subsections which provide for the Register of Crofts to be open to public scrutiny and requires the Commission to supply any person on request with certified extracts from the Register which extracts will be sufficient as evidence of the existence of a Register entry. New section 41(5) provides for the Crofters Holdings Book (previously the responsibility of the Scottish Land Court) to be incorporated in the Register of Crofts.

PART 2: CROFTS

Section 6: New crofts

18.     Section 6 inserts new sections 3A, 3B and 3C into the 1993 Act to allow the creation of new crofts and the extension of crofting tenure beyond the crofting counties. Section 3A(1) empowers the Commission to constitute land as a croft in response to an application to that effect from the owner of the land in question. Section 3A(1)(b) provides that this can only be done outwith the crofting counties in an area specified by an order. Subsection (2) provides that the Commission may also constitute a tenanted holding as a croft where the applicant is a tenant and if the conditions specified in subsection (12) are met. Subsection (4) provides that the Commission may not constitute a holding as a croft in response to an application under subsection (2) until they are satisfied that the owner of the land has had an opportunity to appeal the application and the tenant has paid the owner any compensation agreed or found to be due for the impact of the change. Subsection (3) adds an administrative stage which the tenant of a holding is required to complete before he applies to the Commission. It requires the tenant to first obtain a certificate from the Land Court confirming his existing status under the Small Landholders legislation.

19.     Subsections (5) to (8) specify a process that the Commission are required to follow before deciding whether or not to agree to the application and constitute the land as a croft. Subsection (9) ensures that all or part of an agricultural holding cannot become a croft without the consent of the tenant and that tenant cannot be dispossessed of the tenancy of land as a result of all or part of the holding being designated as a croft. Subsections (10) and (11) provide detail as to the form in which comments by the public on an application (as provided for in terms of subsection (6)) may be made.

20.     Subsection (12) specifies the conditions that must be satisfied before a holding outwith the crofting counties can be constituted as a croft on the basis of an application by the tenant. This restricts this possibility of conversion to ensure that only a holding which is held by a natural person under the provisions of Small Landholder legislation will qualify.

21.     Subsection (13) provides that an order designating an area outwith the crofting counties as an area in which new crofts may be created must be made by affirmative resolution of the Scottish Parliament.

22.     New section 3B makes provision for assessing the amount of compensation to be paid by the tenant to the landlord where an application has been made by a tenant under the provisions of section 3A(2). It specifies that the amount of compensation shall be the difference in the value of the holding under the existing tenure arrangements and its value as a croft. It further specifies that in both instances the value is to be assessed as the market value likely to be realised where there is a willing seller and a willing buyer and the sale is in each case to the sitting tenant. It also requires that the valuer should take account of the known existence of any third party that might be prepared to pay more for the holding, the potential impact on the value of the land of any sporting lease of the land and any representations made by the owner and the applicant. The valuer must make his decision on the valuation within 6 weeks of appointment.

23.     New section 3C makes provision for both the owner or the applicant to appeal an assessment of compensation, made by a valuer under section 3B, to the Lands Tribunal for Scotland and specifies the period in which such an appeal may be made.

Section 7: The statutory conditions

24.     Section 7 makes a number of significant changes to the statutory conditions referred to in section 5 and detailed in Schedule 2 to the 1993 Act including changes to the statutory conditions governing a crofter's use of his croft land and to the ability of crofters and landlords to contract to waive rights conferred on the crofter by that Act. Subsection (1)(a) of section 7 adds a new subsection (1A) to section 5 of the 1993 Act which provides that the landlord can serve notice on the croft tenant where there is a breach of a new condition of tenure (new paragraph 3A of Schedule 2 which is inserted by section 7(2)(b)).

25.     Section 7(1)(b) inserts new subsections (2A) and (2B) in section 5 of the 1993 Act and provides that where a crofter is doing or not doing something in order to conserve the natural beauty, or the flora and fauna of the locality he is not to be treated as in breach of the statutory conditions. Further subsection (2B) provides that any subsidiary or auxiliary occupation undertaken on the croft and continued after the commencement of the Act should not constitute a breach of the statutory conditions.

26.     Section 7(1)(c) adds new subsections (3) to (10) to section 5 of the 1993 Act. New subsections (3) to (6) supersede the existing subsection (3) and provide that any future contract or agreement between a crofter and landlord where it deprives the crofter of certain rights, other than in relation to sections 8, 12 to 19, 21 and 37 of the 1993 Act, is void unless it is approved by the Land Court. Once approved by the Land Court, the Court will intimate the matter to the Commission who will register the matter with the Register of Crofts. Any contract or agreement made under sections 8, 12 to 19, 21 and 37 may be similarly registered on intimation. Subsection (6) provides that where a copy of a contract or agreement is entered in that register it will (depending on the terms of the contract or agreement) be binding on the successors to the croft tenancy. This provision is primarily to allow the creation of binding agreements necessary to facilitate energy developments on croft land. However, it also provides the means by which a tenant of a croft can enter into a binding agreement with the landlord undertaking not to exercise his right to buy or limiting the right to assign the croft. It therefore makes it possible for a landowner to create new crofts without the risk of these crofts being subject to the right to buy or assignation to a person whom the landowner considers to be unsuitable as a croft tenant.

27.     New subsections (7) to (10) of section 5 relate to the modification of paragraph 3 of Schedule 2 to the 1993 Act provided by section 7(2)(a). That modification allows for a croft to be put to a purposeful use other than agriculture. New subsection (7) specifies that a crofter must seek the consent of the landlord to do so before putting the croft to a purposeful use other than agriculture and if that consent is obtained may put the croft to the new use subject to any conditions attached to that consent. New subsection (8) allows the crofter to apply to the Commission for consent to a proposed purposeful use if the landlord's consent has been asked for and has not been obtained in terms of subsection (7) within 28 days of the application to the landlord. New subsection (9) requires the Commission to consult on the application for consent and check whether any planning or other consents are required for the proposed use and, if so, have been granted before it makes a decision.

28.     Section 7(2) amends Schedule 2 to the 1993 Act. Subsection (2)(a) amends paragraph 3 of Schedule 2 (the requirement to cultivate a croft). It provides that a crofter can now cultivate the croft or put it to a purposeful use or do both but must do one or the other on every part of the croft. Subsection (2)(i) inserts a definition of "purposeful use" into paragraph 13 of Schedule 2. In order that the amendment to paragraph 3 has no impact on existing arrangements there is a saving provision at section 7(3) to the effect that existing rights relating to ancillary use are unaffected.

29.     Subsection (2)(b) inserts 2 new paragraphs into Schedule 2. New paragraph 3A is a new condition that requires a crofter to keep his/her croft in a fit state for cultivation. New paragraph 3B defines some of the measures that might need to be taken to ensure that a croft remains fit for cultivation if not being put to some other purposeful use.

30.     Subsection (2)(c) modifies and rewords paragraph 5 to provide a new definition of what constitutes injury to a croft.

31.     Subsection (2)(d) inserts in Schedule 2 a definition of what constitutes "relevant notice" by the landlord to the crofter to stop action which would prejudice cultivation or the continuation of a purposeful use.

32.     Subsection (2)(f) makes a consequential change to paragraph 7 of Schedule 2 to reflect a change to section 9 of the 1993 Act, relating to the division of a croft, which is detailed at section 10 of the Act.

33.     Subsection (2)(h) inserts a new paragraph 11A into Schedule 2 which qualifies the landlord's rights set out in paragraph 11 of Schedule 2 such that the crofter does not have to tolerate unreasonable exercise of such rights.

Section 8: Complaint as respects breach of the statutory conditions

34.     Section 8 inserts new sections 5A and 5B into the 1993 Act after section 5. New section 5A provides a procedure whereby the Commission may take action in place of the landlord where there has been a breach of the statutory conditions (except for non-payment of rent) and the landlord has not taken action. This gives the Commission power to apply to the Land Court to determine sanctions against the crofter concerned, including terminating the tenancy and declaring the croft vacant. This measure provides the means for dealing with the dereliction of crofts in cases where the landlord has no incentive to act.

35.     The legislation continues to allow the landlord to take action against the croft tenant for breach of statutory conditions, but provides an alternative approach whereby the landlord or any other member of the crofting community can complain to the Commission of such a breach. Section 5A(2) provides that if the landlord is not already taking action, then the Commission may apply to the Land Court in connection with the breach. However section 5A(3) requires that the Commission must give the landlord prior notice of an intended application to the Land Court and if the landlord objects in writing within 14 days they may not proceed with the application. Section 5A(4) further requires the Commission to write to the crofter who is alleged to be in breach of the statutory conditions and give that crofter a reasonable time to remedy matters before making the application to the Land Court. Section 5A(2)(b) provides that the application to the Land Court may not be made until that period has expired.

36.     Section 5A(5) specifies what the Land Court may do if it is satisfied that the breach of statutory conditions complained about has occurred. The Land Court can order remedy of the breach by a specific time and payment of compensation to the landlord as it thinks fit. Section 5A(6) provides that if a crofter fails to comply with such an order by the Land Court the Commission may apply to the Land Court to have the croft tenancy terminated, the croft declared vacant, and the tenant removed from the croft.

37.     New section 5B creates provision whereby, if a crofter neglects or misuses a croft he or she can be readily removed from the tenancy.

38.     Subsection (1) makes provisions for the landlord (or the Commission with the consent of the landlord) in cases of misuse or neglect to apply to the Land Court for an order terminating the tenancy, declaring the croft vacant and remove the tenant from the croft. Subsection (2) provides in relation to misuse that prior to making an application to the Court for an order the landlord, or the Commission, must give notice in writing to the crofter of the misuse and offer the crofter an opportunity to end the misuse within 42 days.

39.     Subsection (3) provides that if the Land Court is minded to issue an order the crofter will be notified that the order will be issued within 42 days unless the crofter can satisfy the Court before the end of that period that the misuse has been brought to an end. Subsection (4) ensures that any breach, which constitutes neglect of a croft cannot be readily repeated. It provides that if notice has been previously given in accordance with the requirements of subsection (5) and (6) and remedial action taken but the same neglect is repeated within 5 years from the date of the initial application then on further notice being given the crofter will be allowed 42 days to end the neglect and if he fails to do so the landlord or the Commission may apply for an order to terminate the tenancy. If they do so and the Land Court is minded to grant the order then subsection (6) applies.

40.     Subsection (5) deals with an application to the Land Court by a landlord, or with the landlord's consent the Commission, where it is alleged that there has been neglect of the croft. It provides that if the Land Court is minded to issue an order the Court will notify the crofter that it is there intention to do so. That notice will indicate that the order will not be issued if (a) the crofter agrees that there has been neglect and (b) by the end of a period of one year the crofter is able to satisfy the Court that the croft is being properly managed. Subsection (6) provides that if the Land Court are minded to issue an order in relation to a repeat application in connection with neglect within 5 years the Court will notify the crofter that it is their intention to do so unless the crofter is able to satisfy the Court within 42 days that the croft is being managed to the standard specified. Subsection (7) defines "misuse" and "neglect". Subsection (8) provides that action taken for conservation purposes may not be construed as neglect. Subsection (9) is a saving provision which provides that if a croft was being used for a purpose which was legitimate before these new provisions come into effect continuation of that use cannot be construed as misuse or neglect.

Section 9: Exchange of crofts or parts of crofts

41.     Section 9 closes a loophole in the current legislation, whereby crofters, with the agreement of their landlord, were able to exchange croft land without the approval of the Commission. While on the face of it this existing practice allows ease of arrangements and is deregulatory, there was concern expressed about the longer term effects of such changes. The new section 4A inserted into the 1993 Act by section 9 requires that an exchange of a croft or parts of a croft requires the consent of the landlord and the Commission. It also requires that the crofters exchanging must also have the same landlord who must also be the owner of any common grazing land affected by the exchange. It provides that the Commission cannot consent to the exchange unless the landlord has consented. The provisions in new section 58A of the 1993 Act (inserted by section 3 of the Act) apply as regards the consent of the Commission with the additional criterion for intervention by the Commission in new section 4A(3) of the 1993 Act being that the proposed exchange would be unfair to either (or as the case may be any) of the crofters involved. Subsection 4A(4) confirms that a new croft is not be created by such an exchange.

Section 10: Division of croft

42.     Section 10 of the Act provides a complete replacement for the existing section 9 of the 1993 Act. The principal change is that the landlord's consent to division of the croft is no longer required. In addition the new procedure for obtaining the Commission's consent in new section 58A of the 1993 Act (inserted by section 3 of the Act) applies so that the Commission is required to make a decision only where there is an objection to the application or the Commission's criteria for intervention apply. The landlord has a right to object to the division of the croft by virtue of the provisions of new section 58A(4). New section 9(3) specifies that the division of a croft has no legal effect until details of the division are recorded in the Register of Crofts. The landlord's financial interests are secured by new section 9(4) which provides that the rent for a new croft created by division of an existing croft is to be agreed between the crofter and the landlord. In the event that they cannot reach agreement section 9(5) provides that either party can apply to the Land Court to have the rents determined by the Land Court with the fees payable in connection with the application being paid by the crofter. It should be noted that the term "subdivision" is replaced by the term "division", because the latter term more accurately describes the situation.

Section 11: Subletting

43.     Section 11 modifies the provisions of sections 27 and 29 of the 1993 Act and repeals section 28 of that Act. The main changes to section 27 are to alter subsection (1) to provide that the maximum duration of a sublet shall be for a period not exceeding 10 years and to replace subsections (3) and (4) with a new subsection (3) which provides the special conditions which will apply when the consent of the Commission is required in terms of new section 58A of the 1993 Act (inserted by section 3 of the Act).

44.     Section 11(2) repeals section 28 of the 1993 Act, a provision which, had it ever been commenced, would have given the Commission power to impose a sub-tenant on a crofter.

45.     Section 11(3) amends section 29 of the 1993 Act by inserting new subsections (2A) and (3A). New subsection (2A) provides that it would be a condition of any sublease that the croft tenant must give the subtenant not less than 6 months written notice of an intention by the tenant to assign, exchange or divide the croft and thereby terminate the sublease. New subsection (3A) makes specific provision in relation to the continuation in occupation by the sub-tenant on the death of the crofter.