New guidance has been published to help tenant farmers and landlords agree and record tenant-financed investments.
The guidance, which is based on existing legislation, has been published by NFU Scotland, Scottish Land and Estates (SLE) and the Scottish Tenant Farmers Association (STFA).
It follows the publication of other guidance by the three farming organisations on issues such as limited partnerships and rent reviews.
The latest guidance is designed to provide advice on what types of investment should be permitted by landlords and how a tenant can claim compensation on some of these investments once the lease on the farm ends.
It states that three types of investment should be permitted.
The first is investment in fixed equipment or land improvement which is reasonable and desirable on agricultural grounds for the efficient management of the holding.
The second is upgrades to living accommodation at a reasonable level compatible with modern standards and expectations.
Lastly, the third is environment enhancement or business diversification where the investment is being encouraged and financially supported through a Scottish Government-promoted scheme.
NFU Scotland president Allan Bowie said the guidance was long overdue and would help landlords and tenants plan farm investments in future.
“Scottish farming needs every pound of new investment that it can get if it is to successfully address the challenges currently facing the industry,” he added.
STFA chairman Chris Nicholson said clarity over future compensation for investments was vital for tenants who often find it very difficult to raise long-term capital.
The new guidance, which was developed in conjunction with the government’s independent adviser on tenant farming, Andrew Thin, was welcomed by Scots farm minister Richard Lochhead.
He said “It is key for agricultural holdings that fixed equipment improvements to tenancies are conducted in a business-like way with changes being properly recorded and tenant farmers and their landlords keeping receipts and paper work for any improvements made.
“This new guidance should also mean improved fairness, greater clarity and less scope for conflict between landlords and tenant farmers conducting rent reviews. I urge all tenant farmers and landlords to use this guidance.”