A recent raft of legislative changes is intended to modernise the language and conditions of Agricultural Tenancies. These changes with the most significant coming in the form of financial implications will affect both Landlords and Tenants and the first will come into effect on May 27th this year.

Firstly, the ‘Model Clauses’ covering the Maintenance, Repair and Insurance of fixed items has been updated  to reflect the changes in items found on farms such as reed beds and slurry handling systems etc.

Alex Maclachlan, Chartered Surveyor from H&H Land and Property, explains the financial implications: “Previously a tenant was limited to only being able to recover £2,000 or one year’s rent (whichever was the lesser) where they undertook the repairs/replacements which are the Landlord’s liability. This now been amended to cover reclaiming ‘the reasonable costs’ incurred by the Tenant. This is in-line with what the Landlord could reclaim from the Tenant if the situation were reversed.”

Farmers should study their tenancy agreement before action is taken to make sure theirs is covered as the Model Clauses do not apply to all Holdings Act tenancy agreements. Where they do apply the new Model Clauses will take effect from the 1st October 2015.

Secondly, the regulations governing some aspects of end of tenancy compensation have been removed, so that all claims at the end of a tenancy will be valued at the ‘value to an incoming tenant’. Previously, claims for residual fertility etc. were valued using a strict set of tables that were calculated in the 1970’s and 80’s.

The costs attributed to certain types of fertiliser, for instance, are vastly different to today’s prices. Therefore, the decision has been taken to revert back to the overriding legislation of the Agricultural Holdings Act 1986 to provide for the method of calculating the end of tenancy compensation – i.e. the value to an incoming tenant. However, the current rules are still in force until the 1st October 2015.

Alex comments: “This change will allow the true value of the tenant’s inputs to be compensated for and it should also have the consequential knock-on effect of encouraging outgoing tenants to farm their holdings to their full potential in the last years of their tenancy if, for instance, they are contemplating retiring.”

Finally, under the Deregulation Act 2015 there is new provision for disputes to be resolved by third parties instead of by an Arbitrator. The benefit of this is that the Independent Expert can use their own experiences and knowledge to arrive at an answer, and it should be much faster and cheaper than the current arrangement which requires any disputes to be settled by an Arbitrator.

Such matters that can be referred to an Independent Expert include rent reviews and compensation maters. Disputes arising from a Notice to Quit will still be governed by an Arbitrator. Both parties must agree to the matter being considered by an Independent Expert and the expert’s decision will be final. This change brings the old style tenancies into line with the new style Farm Business Tenancies where parties can agree to refer matters to alternative dispute resolution procedures other than an Arbitrator. This option will become available from the 27th May 2015.

To conclude Alex continues: “These changes will affect the majority of ‘old style’ agricultural tenancies.  If in doubt about the new system the best advice I can give to someone is to seek some professional support to ensure you are protecting yourself.”

H&H Land and Property who have offices in both Carlisle and Durham regularly undertake all Landlord and Tenant matters which is a benefit to both parties as Alex explains: “In working with and supporting both Landlords and Tenants we have a in-depth understanding and appreciation of the workings and issues of the legislation.”