To Buy or Not to Buy?

Buy your croftCroft tenants have enjoyed, since 1976, a right to purchase (1) their croft house and (2) their croft land. These rights differ significantly in that a crofter is ENTITLED to a conveyance of the site of her* croft house, and has a slightly qualified right to purchase her croft land. It is important to distinguish between these two rights during the negotiation of terms and conditions and also the conveyancing to reflect, for example, the different purchase prices for each type of land, and the fact that a landlord can request a security in respect of future claw back and a lease of the sporting rights, over croft land but not a croft house site.

It is interesting to note that the exercise of the right to purchase has differed widely according to geography. The Western Isles, for example, have seen proportionally far fewer croft purchases than on the mainland. These figures are borne out yet again in the latest Crofting Commission Annual Report & Accounts 2013-14.

Reasons to Purchase – 2009

Myself and some other members of the Crofting Law Group delivered a series of lectures to students of Strathclyde University in 2009. I lectured on, amongst other topics, croft purchase, and the reasons I gave at that time for purchase were as follows:-

  1. To remove an uncooperative landlord.
  2. To facilitate the development of the croft – eg. to sell a house site on the open market it is necessary to (a) decroft and (b) obtain a title deed to the site.
  3. Some crofters feel that they have a greater voice politically as owners rather than tenants (although many tenants would use the same argument).
  4. To simplify transferring a croft either within the life of the crofter, or in a crofter’s will:
    a. In a crofter’s lifetime, a croft can be transferred without the consent of the Crofters Commission (as it was in 2009 but now, of course, the Crofting Commission) in respect of the proposed new crofter. The provisions of the Act will still apply, and the Crofters Commission will still regulate in much the same way, but their consent is not required to a transfer.
    b. After death, a croft tenancy can only be left to a single natural person, whereas a croft on a title deed (an owner-occupied croft) can be bequeathed in the same way as other heritable property. Many wills are drafted incorrectly, which could mean (arguably) that the croft in question will fall in to intestacy.

Update for 2015

These reasons still apply, although the development of a croft at (2) above is less significant than it once was, due to both the stance taken on decrofting by the Crofting Commission (who have indicated in the clearest possible terms that they wish to radically reduce the amount of land being decrofted), and also to the extension of the period (to ten years from the date of purchase) during which a former croft landlord can claw back financial benefit obtained by the former crofter by the sale of his croft land.

Furthermore, the 2010 Act provided that a croft tenancy could be left to one person or to more than one person, and so that reason is perhaps less relevant than it once was. That said, I still advise clients to bequeath a tenancy to only one person (or if they wish to bequeath to more than one person, to purchase the croft), because if the Crofting Commission refuse an application by the executor to divide the croft to effect the bequest, the tenancy falls in to intestacy, which is a problem for discussion another day.

For 2015, I would also add that I now find myself advising an increasing number of crofters to purchase to preclude their landlord granting servitude rights over tenanted croft land, in favour of third parties. I cannot account for the increase in landlords doing so, other than to speculate that it is perhaps caused by the ever-increasing value of land in the crofting counties, and perhaps also the increasing financial savvy shown by some landlords.

A landlord can grant servitude rights over tenanted croft land; that much is clear. Suppose a landlord was approached by a third party who owned an area of land adjoining a tenanted croft, and that third party requested the grant of a servitude right of drainage for their septic tank, or perhaps a servitude right of wayleave for a water or electricity supply, over the croft land. The landlord should, of course, seek the consent of his tenant crofter, and perhaps most do, but there is no doubt that some landlords (in my experience an increasing number) either do not seek consent, or they ignore a refusal of consent and grant the servitude regardless.

The crofter’s remedy is then to seek a reduction in her rent. However, every crofter I know would rather retain their original croft, unsullied by the digging of trenches and the uncertainty of whether the neighbour will maintain his septic tank, than a slight reduction in an already low rent. Make no mistake: large areas of croft land could be rendered useless for many months (in the case of a badly maintained septic tank, semi-permanently or permanently) in the event that a landlord grants such rights.

An owner-occupier crofter (and an owner-occupier who is not an owner-occupier crofter) does not have to simply hope that his landlord respects his rights, because she is the one who will be approached by the third party for the grant of the servitude and she may, like any other heritable proprietor, refuse for any reason or for none.

Servitude rights of access carry an even higher degree of risk for a tenant crofter. Perhaps a landlord grants a right to construct a new access road to serve a new residence over tenanted croft land; or perhaps grants a right of access to a third party to use an access road which has been constructed at some expense to the crofter. Both of these actions are grossly unfair to crofters.

Reasons not to Purchase – 2009

The reasons I gave in 2009 against purchasing a croft were as follows:-

  1. Availability of grant assistance.
  2. Feeling of loyalty to the original system of crofting tenure.

Update for 2015

Both of these reasons, to some extent may still influence a crofter’s decision to purchase or not to purchase. Certainly I am aware of a continuing feeling of loyalty to the old system of tenure and this is of course understandable. Whether that explains the lack of take-up in the Western Isles I cannot say, however!

The availability of grant assistance requires a little more explanation, and indeed has inspired its own blog post: Did the 2010 Act Equalise Availability of Crofting Grants? In 2009 grant assistance was certainly a factor in deciding whether to purchase (and indeed may have been the principal factor in deciding whether to do so), but is it still a relevant factor in 2015? After all, the 2010 Act was intended to equalise owner-occupier crofters and tenant crofters, both in terms of the regulatory framework to which they were subject, and also the financial assistance which was available to them.

In short, financial assistance from CCAGS is now available for owner-occupier crofters as well as tenant crofters, but the position with CHGS has not yet been equalised, and crofters purchasing their crofts can only claim this grant within seven years of purchasing their croft – no change from the pre-2010 position. For more discussion on this topic see my separate blog post: Did the 2010 Act Equalise Availability of Crofting Grants?

Conclusion

As ever, the decision whether to purchase will depend largely on an individual crofter’s circumstances. If the crofter has already availed herself of the CHGS, it is difficult to see how purchase could disadvantage her. If the crofter wishes to purchase and is confident of applying to the CHGS within the seven year period, there may be no prejudice. But if a crofter has not yet applied to the CHGS and the building of a croft house is on the back burner for financial or other reasons, yet there is a worry that her landlord may grant servitude rights to third parties, the decision becomes more complex.

*Just to be different, the use of the feminine article is deemed, for the purposes of this blog post, to include the masculine.

Eilidh Ross MacLellan

3 thoughts on “To Buy or Not to Buy?

  1. Terry Swainbank

    A recent situation we have hit might have some bearing on your comments. We bought a croft in 2007, from a woman who was defined as a Landlord of a vacant croft; previously her son had tenanted the croft for 3 years but wanted to move away, so he relinquished the tenancy and she sold the croft to us free of a tenancy. We had bought the decrofted house which was at one time part of the croft from her previously. Nervous of the status of ‘Landlord of a Vacant Croft’ and wishing to work the croft, we made application to change the status to ‘Owner Occupier’ providing detailed plans of what we proposed. We were successful and the then Crofting Commission confirmed the status change in writing. Or not! As I found out a couple of days ago the change had not been recorded due to administrative oversight. That is bad enough but the Crofters Commission are now ignoring that decision and are saying that we cannot possibly be Owner Occupiers of a croft that was a one time tenanted, so that they are only able to show our status as ‘Landlord of a vacant croft’ and any work we do on the croft is invisible to the regulator. This point seems to be rather profound and if I have understood their decision correctly could have more widespread consequences. Naturally I have contacted my lawyer to give advice on the administrative error but also the more fundamental issue.

    Reply
  2. Eilidh Ross MacLellan

    Thanks Andrew for your positive comments.

    Terry – unfortunately your situation is far from unusual. Indeed, the only part of it which I thought to be unusual is that you say you made an application to the Commission to have the status altered. Good luck and do please email me if you wish to discuss privately.

    Reply

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