The latest insight on Agricultural Tenancy Reform 2019
Alastair Paul, Head of Rural Asset Management in the East of England, gives us the very latest insight on agricultural tenancy reform.
3 minutes to read
Back in October 2017 the Tenancy Reform Industry Group (TRIG), an independent body with representatives from the CLA, NFU, CAAV, RICS and others, published a report with recommendations on reforming agricultural landlord and tenant law in a post-Brexit society.
None of the recommendations were included in the Agriculture Bill. However in November 2018, the Defra Minister at the time, George Eustice, announced that Defra were going to consult on agricultural tenancy reform in January 2019.
Although that timetable has slipped, Defra are now drafting the consultation based on the TRIG report. The goal is to get views on reforms that will:
• Provide an enabling environment for productivity improvements and investments
• Facilitate structural change and support new entrants and next generation farmers
• Enable environmental improvements and sustainable farming practices.
The most controversial proposal to be consulted on, and the one with arguably the biggest impact on estate owners, is the suggestion that tenants should have the ability to assign their own Agricultural Holdings Act (AHA) tenancies.
TRIG identified that where AHA tenants do not have a successor and may not have the means to retire, land is locked in tenancy, when it could be farmed more productively. The proposal would mean that tenants could convert their lifetime lease into a 25 year fixed term Farm Business Tenancy (FBT) and assign it to a new tenant, thus realising value from that lease.
The Landlord may only be able to prevent the assignment by buying out the current tenant and taking back occupation themselves.
As well as assignment reform, the consultation will explore the possibility of preventing successions on retirement when the tenant is 5 years over state retirement age; removing the minimum age of 65 for a retirement succession; and repealing the ‘commercial unit test’ to allow family members who successfully farm elsewhere to occupy, all in an attempt to free up land to support new entrants.
To further promote productivity and investment, one proposal is to allow AHA tenants and landlords to put any clause in their lease which imposes a restriction on tenant activity, to dispute resolution. The disputes will be settled according to tests of whether the activity is ‘reasonable’ and will either enable efficient farming or secure an environmental improvement.
When it comes to Farm Business Tenancies, the only proposed reform is to enable landlords that let for at least ten years, without a landlord break, the ability to issue a short notice to quit in certain circumstances such as non-payment of rent or where planning permission has been granted for a non-agricultural use.
With no indication of when the consultation will be opened, landowners and tenants need to be aware of any updates and be prepared to respond to the consultation with their views when the time comes. Even with the outcome of a consultation, the speed at which Parliament may address these matters casts even more uncertainty on any future changes.
If you’d like to discuss your tenancy or succession arrangements, please get in touch. Our Rural Asset Management Team are here to help.