Reforming Agricultural Tenancies

Onerous provisions imposed by the Agricultural Holdings Act 1986 (“the 1986 Act”), primarily in relation to security of tenure and succession, resulted in tenants not being offered long term tenancies.

Although the creation of Farming Business Tenancies (“FBTs”) under the Agricultural Tenancies Act 1995 (“the 1995 Act”) redressed issues triggered by the 1986 Act, the Department for Environment Food and Rural Affairs (“DEFRA”) has proposed a wide-ranging reform to agricultural law in England.

The primary aim of the reform is to create opportunities for new entrants to the industry who can bring with them new entrepreneurial drive and generate productivity.

DEFRA has proposed the following changes to the 1986 Act:

The pool of individuals eligible for succession should be extended to include nieces and nephews, grandchildren and children treated as such through cohabitation and civil marriage.

Tenants will be entitled to assign tenancies to unconnected third parties in exchange for landlords receiving an increased rent. Only a single assignment will be permitted, and landlords will have the option to buy back tenancies prior to the assignment, serve an incontestable notice to quit after the 25th anniversary of the assignment, or refuse the assignment on the grounds of suitability.

A proposed change to the 1995 Act is to allow landlords to serve short notices to quit on tenants under specific circumstances, such as on non-payment of rent, the tenant’s death, or the landlord obtaining planning consent for the land to be used for non-agricultural purposes. This proposal is aimed to incentivise landlords to grant FBTs for terms of 10 years or more, as opposed to the common terms granted of 5 years or less. The longer terms for FBTs should provide tenants with greater security and sufficient opportunities to invest in the industry.

DEFRA’s consultation for the reform was released to the public earlier this year to obtain feedback. A government response on the consultation should be published imminently. Until then, all we have is a brief glimpse of what landlords and tenants are to expect in 2020. With a vast proportion of agricultural land being held under tenancies, the outcome of the reform will impact many businesses in the industry. Obtaining proper legal advice will be crucial.