Agricultural tenancies have long been in desperate need of reform as the farming industry moves away from subsidies and towards animal welfare, health and the environment, notes Alistair Millar from Tallents Solicitors.
As the future looks towards achieving better harvests which are more environmentally obtained, tenants who wish to diversify away from traditional agricultural land use into agri-environment and non-farming schemes have often been hampered by decades-old legislation which is really no longer fit for purpose in a post-Brexit farming world.
However, there is good news on the horizon as the Tenancy Reform Industry Group (TRIG) recently published its “Code of Good Practice for projects, schemes or works requiring a landlord’s consent in agricultural tenancies” (“the Code”).
Originally published in 2004, the Code has been updated to provide guidance to landlords and tenants of all agricultural tenancies to assist them in reaching an agreement to alter tenancy terms and restrictions.
The Code provides a useful framework and a guide to negotiations for agreeing terms allowing variations to an existing agricultural tenancy under the provisions of either the Agricultural Holdings Act 1986 (“AHA 1986”) or the Agricultural Tenancies Act 1995 (“ATA 1995”) to aid all aspects of agricultural and non-agricultural diversification.
Additionally, the Code offers guidance in relation to The Agricultural Holdings (Requests for Landlord’s Consent or Variation of Terms and the Suitability Test) (England) Regulations 2021 SI 619 (“the Regulations”). The Regulations came into force on 21 June 2021 and allows tenants of AHA 1986 tenancies in England to refer a request for consent or varying tenancy terms to arbitration, where they relate to entry into a financial assistance scheme under the Agricultural Act 2020 (“the 2020 Act”) or fulfilling statutory duties, and where agreement cannot be reached with the landlord.
The guidance offered in the Code takes the form of five steps, which in short are:
- Early consultation: tenants are urged to speak to landlords “at the earliest practicable opportunity” either orally or in writing. AHA tenants should make their requests in writing with the information required by the 2021 Regulations.
- Agree a timetable: all parties should agree and confirm in writing a realistic timetable for the preparation and consideration of the proposal, including taking account of any additional deadlines, such as application for financial assistance.
- Prepare the proposal: the tenant should prepare a sound business case in proportion to the nature of the proposal.
- Consideration of the tenant’s proposal by the landlord: the landlord must “give careful consideration” to the proposal and provide a written response with either approval or refusal of consent (including reasonable grounds for refusal).
- Formal written agreement: this should be prepared by a professional advisor and cover “all matters bearing on the tenancy” and any other rights that may detract from or negate the landlord’s consent.
What happens in the parties fail to agree?
If the tenant’s proposal relates to an AHA tenancy and is subject to the 2021 Regulations, then they can apply for an arbitrator or an expert to review granting consent to a proposal in place of the landlord.
Alistair finishes: “As we can see, the legislation regarding the varying of terms of AHA 1986 or ATA 1995 tenancies is extremely complex so we advise anyone considering this route to speak to an agricultural solicitor first. You are welcome to call us at Tallents Solicitors on 01636 813411 to arrange a convenient appointment to discuss your individual circumstances and tenancy variation proposal with our agricultural specialists.”