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Land court rules for contentious 'buyout' lease  

Estate landlords had every right to set up land leases with third parties that would deprive crofters mounting successful community buy-outs from reaping the full benefit of windfarms.

The Scottish Land Court has ruled that the so-called interposed leases are valid in a crofting context after the thorny issue was referred to it by the Scottish Ministers and the landlords of Pairc Estate on Lewis.

But the Land Court decision is now in effect out-dated, because the Scottish Executive earlier this year brought in new legislation closing the loophole, seen by some as asset stripping.

However, it was unclear if the new rules had come in time to benefit the Pairc crofters.

The crofters, Pairc Trust Limited, in 2005 applied to buy part of the Pairc Estate under the provisions of the Land Reform (Scotland) Act 2003.

The landlords, a company known as Pairc Crofters Limited, which, despite its name, does not represent or comprise of crofters on the estate, had granted a lease over the whole estate to a related company called Pairc Renewables Limited who in turn granted a sub-lease over part of the estate to SSE Generation Limited. (SSEG)

This sub-lease was to allow SSEG to build a windfarm on the common grazings.

In terms of the sub-lease a rent based on the capacity of the windfarm was to be payable to Pairc Renewables Ltd but only a relatively nominal sum of £1,000 per annum was to be passed further up the line in terms of the head-lease between themselves and Pairc Crofters Ltd.

The result of that arrangement, if valid, would be that if Pairc Trust Ltd bought the common grazings they would stand to get only this nominal rent rather than the considerably larger sum to be paid by SSEG to Pairc Renewables.

A Land Court spokesperson said: “Although the problem posed by such leases in crofting community buy-out cases has now been resolved because an amendment to the 2003 Act introduced as part of the Crofting Reform Act 2007 allows crofting community bodies to buy out any lease granted by the landlord, Scottish Ministers felt it important to obtain a ruling from the court as to their validity, and also on the question of what, exactly, such bodies could buy in terms of the 2003 Act.”

The Pairc Trust last night wanted to consider the court decision before commenting, as did the executive.

Patrick Krause, chief executive of the Scottish Crofting Foundation said he was disappointed at the ruling which he said went against the spirit of the Land Reform legislation. He added: “We urge the executive to amend the Pairc Trust application to include the third party leases and approve it without further delay.”

The Press and Journal

18 July 2007

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