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Modernising and updating?
Presumably to give the farming community a break from Brexit, DEFRA has opened a consultation to run until July with the aim of ‘modernising and updating agricultural tenancy legislation’.
The consultation is at an embryonic stage; however, we are already given an indication as to what this may mean – there are fourteen proposals for change, some of which are outlined in detail and evidently have an agenda in mind: to give tenants more security.
Currently, tenancies caught under the Agricultural Holdings Act 1986 (AHA) can pass under succession rights to close relatives, subject to further criteria, on two occasions at most. DEFRA is proposing a new provision so that, on one single occasion, the tenant can assign their tenancy to a new tenant altogether – one that is not subject to succession rights. The landlord is afforded a pre-emptive right to stop the assignment, but only in exchange for buying out the departing tenant.
Any negotiation stance for this pre-emptive right will depend on the circumstances, but one instinctively worries about the difficulties facing a landlord exercising that right, now that a tenant has a broader scope for passing on their tenancy. Any assignment of the tenancy is likely to be for a fee – the landlord would surely have to match that. In addition, this could allow an AHA tenancy to pass on a third occasion.
We are at a premature stage; however, it provides a reminder to landlords and tenants of agricultural property, whether under the AHA or otherwise, to encourage succession planning and organisation for the current generation in the short term and future generations in the long term. Most immediately, it encourages a dialogue between landlords and tenants. What are each party’s intentions, both now and in the future? What are each party’s options? Does the written agreement reflect the day-to-day running of the farm? Is there even a written agreement and, if not, should there be one?
We consider these issues, and more, daily for our clients. If you have concerns about the issues raised in this article, please contact Emma Coke on 01206 217629 to discuss.