On the 11th November 2020, the Agriculture Act 2020 (‘AA 2020’) received Royal Assent. The aim of the AA 2020 is to revamp the agricultural system for the next generation of farmers and land managers with the intention for farmers to be more productive and have greater freedom in their business planning. What will the Act mean for agricultural tenancies?
- Rent Review – For Agricultural Holdings Act 1986 tenancies, (‘AHA 1986’) after 11th January 2021 payments by a tenant to a landlord for productivity improvements should be disregarded by any arbitrator or third party in a rent review dispute. This may boost Landlord investment.
- Succession – The minimum age at which an application can be made for succession on retirement of an AHA 1986 tenancy is 65. The AA 2020 removes the minimum age so that applications for retirement can be made at any age.
In addition, the “Commercial Unit Test” will be removed on the basis that it is not compliant with the aim of improving productivity as it hinders growth and progression for succession tenants. The ‘Suitability Test’ has also been removed and replaced with the ‘Business Competency Test’ with criteria which relates to the person’s capacity to farm the holding commercially to high standards of efficient production and care for the environment. It is hoped that the modernisation of the succession tests could help deliver improved productivity through increased professionalism in the sector.
- County Council Holdings – For AHA 1986 tenancies, the Landlord will no longer be able to terminate the occupation of the tenant at the age of 65. The rule will now be that the current pensionable age of the tenant will apply.
- Demand for Arbitration – Landlords and tenants will be able, in the future, to apply for the appointment of an Arbitrator from the President of the Central Association of Agricultural Valuers (CAAV) and the Chair of the Agricultural Law Association (ALA), in addition to the current means of applying through the President of the Royal Institute of Chartered Surveyors
- Tenancy amendments – The AHA 1986 in particular has proved problematic for farmers who have been looking to diversify because diversification usually results in a change of use of at least part of the farm from purely agricultural use. The AA 2020 enables a tenant to request that their landlord varies their tenancy to allow for changes of use and alterations. This will facilitate a tenant’s requirement to diversify and allow tenants to access Government funding and meet regulatory requirements of those schemes.
There are also set to be provisions providing an ability to refer such requests to a third party in the form of an expert or arbitrator to determine the position where a landlord and tenant cannot agree.
The Agriculture Act 2020 is a welcomed refresher to the agricultural regulations albeit further work is required on most aspects especially the new business competency test. The change will not be easy and are likely to have implications on Landlord and Tenant’s relationships.
Baileys and Partners, surveyors based in North Wales have a wealth of experience in Landlord & Tenant aspects of land management. We regularly advice clients ranging from large country estates, to individuals from both a Landlord and Tenants perspective. Should you wish to discuss the implications of the AA 2020 in respect of your personal circumstances please do not hesitate to get in touch.
