Tenancy reform

The Tenancy Reform Industry Group (TRIG) has been meeting over the last few months to develop recommendations for changes that relate to both Agricultural Holdings Act (AHA) tenancies and farm business tenancies (FBTs). The Group picked up on themes from previous reviews, as well as exploring ways to enhance productivity in the let sector. Julie Robinson, partner in our Agriculture team, was part of the Group as a representative of the Agricultural Law Association.

Copies of TRIG’s working group papers, submitted to Defra in October, have now been published and are available here.  

Headline recommendations affecting AHAs and FBTs include:-

• as an alternative to forfeiture, to allow FBTs of 10 years + to be terminated by notice for non-payment of rent, tenant’s breaches or death and (in part) following planning consent for non-agricultural use – the “notice” procedure to follow  broadly the lines of that used in the AHA regime;
• to give an existing AHA landlord and tenant greater freedom to make changes to the holding where there is agreement on  re-organisation and where the parties agree that the new/amended agreement is to remain within the AHA;
• to allow AHA landlords to invest in the holding without impinging on the statutory rent review process (in effect, on terms equivalent to any other provider of finance for such work);
• where there are clauses in AHA tenancy agreements that restrict freedom of movement, to permit either landlord or tenant  to serve a notice referring the clause to dispute resolution with a view to it being modified;
• AHA tenancy clauses prohibiting the erection or alteration of buildings to be subject to a test of reasonableness;
• to introduce a time limit in the AHA for referring Notice to do Works counter-notices to dispute resolution and a counter-notice procedure for other notices to remedy under Case D;
• to amend the timetable for AHA game damage claims;
• to introduce a statutory mechanism for conversion of a year-to-year AHA to a fixed term assignable AHA tenancy;
• in relation to AHA succession, to replace the suitability test with a business competence test and repeal the commercial unit test;
• to limit the availability of succession where the tenant is above a particular age;
• to allow a wider range of AHA successors but with a limited term AHA tenancy being offered, at an open market rent, after which an incontestable notice to quit could be served. 

Taxation

On the tax front, there were several technical recommendations. Notably, however, the majority of the tax working group were not in favour of the TFA’s call for APR to be disallowed for future lettings of less than 10 years.

Recommendations included:

• limited income tax relief on farm land rents to encourage letting and letting for longer. (Evidence from Ireland shows this can have a powerful effect.);
• SDLT – exempt leases of agricultural property, to remove a deterrent to a tenant taking a longer lease;
• CGT Rollover Relief – allow reinvestment in improvements to let farmland.

It remains to be seen how many of TRIG’s recommendations are picked up by Defra (and, where necessary, the Treasury) as candidates for inclusion in the upcoming Agriculture Bill or other legislation. With Brexit very much at the forefront of Defra’s policy agenda tenancy reform may find that it takes a back seat, with opportunities for improvements to the current regimes being overlooked once again.

We have a team of advisors able to assist and act on agricultural tenancy matters. If you are in dispute with your landlord or tenant, contact Sarah Whitehurst or Tim Russ in our dispute resolution team. If you would like “non-contentious” advice on tenancy matters, get in touch with Julie Robinson, Kirsten Rimmer, Tom Foottit or Emma Hill.