Agricultural tenancy changes edge closer

18/06/2020

A new bill proposing changes to agricultural tenancies has taken important steps forward.

The Agriculture Bill 2020 (Legislative Changes to tenancies under the Agricultural Holdings Act 1986 and the Agricultural Tenancies Act 1995), which started life in the House of Commons on January 16 this year, is progressing through Parliament at some speed despite the Government being pressed to deal with Brexit and the coronavirus outbreak.

Our Agricultural Consultant Steven Corfield explains more:

The Agriculture Bill underwent its second reading in the House of Lords on June 10, having passed through all stages in the House of Commons. It is a possibility that the lockdown of MPs and civil servants mostly working from home through IT has speeded up the focus and concentrated minds to bring forward such an important bill!

This article only considers the agricultural tenancy aspects, which account for nine of the 83 pages. The last chance for any significant changes is at the committee stage of the Lords but, in reality, this is unlikely. The committee stage is the next step in the process but dates haven’t yet been announced. 

The changes to the Bill have seen some of the original ideas put forward for debate by Defra remain. However some original proposals have been omitted or altered – this includes the removal of initial proposals for tenancies to be assigned or provisions for Farm Business Tenancies to be for no less than five-year terms.

What does remain are a number of the core proposals in one guise or another. There can be variations to some restrictions contained in an appropriate tenancy agreement. If a landlord objects to the requested change the tenant can apply for arbitration and seek permission to vary where this enables the tenant to gain entry to financial business assistance or meet new industry regulations. This could see partial diversification from agriculture and enable obtaining grants for development.

There is a present minimum retirement age of 65 for an existing tenant farmer under an Agricultural Holdings Act tenancy at which a nominated successor can apply to take a succession of the holding. There is to be no minimum age in the new bill. 

The criteria of the “suitability test” for a successor has been altered and must reflect the applicants capacity to farm the holding to a high standard commercially with efficient production and care of the environment. The old alternative commercial unit test will also be removed where a potential successor would fail as they already had other land to farm viably.

A more flexible approach to the arbitration process is being brought in. Allied to this, an independent expert can be appointed instead of an arbitrator to determine rental levels if the parties are agreed on this. 

This is a just short overview of some of the changes in the bill that are driven by the Government’s wish to see the modernisation of the industry as it has been 34 years since the last significant changes.

Steven Corfield is an Agricultural Consultant at FBC Manby Bowdler and can be contacted using the details below.

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