Significant changes to agricultural tenancies are included in the government’s 2020 Agriculture Bill announced mid-January which should help improve productivity and assist succession.

Following the tenancy reform consultation last year Schedule 3 of the Agriculture Bill proposes several amendments to the Agricultural Holdings Act 1986.

An important improvement is a provision to vary or even over ride some restrictive clauses within Agricultural tenancies which are problematic, especially with the anticipated changes revolving around environmentally-based income.

“Some restrictive clauses currently could prevent farmers improving, for example, water storage systems to comply with water quality regulations or putting up new facilities for a diversification enterprise,” said Eifion Bibby of Davis Meade Property Consultants.

“The new Bill proposes allowing tenants the right to apply through arbitration or third-party determination to resolve such a dispute.”

“Another change in the bill will see arbitrators in the future being appointed not just from the Royal Institution of Chartered Surveyors (RICS) as now but also from the Central Association of Agricultural Valuers (CAAV). 

“This gives CAAV (and also the Agricultural Law Association) statutory authority to act on a unilateral request arising from a rent review, end of tenancy issue or other matter at issue between the parties that are statutorily referable to arbitration.”

With regard to succession, the new bill gives authority to develop an improved Suitability Test relating to the applicant’s capacity to farm the holding commercially to a high production standard and care for the environment. Other criteria might be the applicant’s experience, training or skills in agriculture and business management, health, financial standing and character, as well as criteria relating to the character and condition of the holding and the terms of the tenancy.

The Bill proposes amending the minimum age (currently 65) at which applications to the tribunal for succession on retirement can be made, so that such applications can be made at any age. The age which local authorities can issue tenants a retirement notice to quit (currently age 65) will be replaced with State Pension Age.

“Rent reviews will see demands for arbitration in the rent review process replaced by a notice of determination, which may be followed by arbitration or third-party determination,” Eifion said.

“Also, with the aim of encouraging Landlord investment in Agricultural Holdings, it the tenant has agreed in writing to make payments for improvements that are wholly or partly financed by the landowner, such payments are to be disregarded from considerations of changes to the rent ;and any benefit to the tenant from the improvement should also be disregarded whilst the tenant is still making payment for the same.”

For more information contact Eifion Bibby at the Colwyn Bay office of Davis Meade Property Consultants on 01492 510360, email eifionbibby@dmpcuk.com.