Agricultural tenancies – what legal rights do they give and is reform on the way?

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The 2020 Agriculture Bill, introduced in January, comes in the wake of a consultation on proposals for legal reform to agricultural tenancies in England held last year.

The Bill, which contains measures applicable in England only, proposes to overhaul the rent review process. Measures include the introduction of notices of determination, prior to arbitration or third party determination, and the disregarding of payments by the tenant to the landlord for improvements to holdings when changes to rent are under consideration.

Currently, the opportunity for farm owners to rent out accommodation to employees has many mutual benefits. However, if the time comes when the owner wishes to reclaim the property for another purpose or to sell it, what is the legal position?

The first issue to clarify is whether the tenant is classed as an agricultural worker. As well as workers currently serving under a contract of employment, the term also applies to the widows, widowers or dependants who lived in the property with an agricultural worker now deceased.

The definition of a ‘serving’ worker requires that they worked for a minimum of 35 hours per week for 91 weeks during the last 104 weeks at the time their tenancy with their employer began.

The next consideration will be identifying the type of tenancy they hold which is determined by when it began. Those that commenced before 15 January 1989 are protected tenancies which afford greater safeguards for tenants than those entered into after that date. For example, these tenancies will continue after their employment has ended and the tenant can only be legally evicted if the owner is able to find them alternative suitable accommodation.

A tenancy that began after 15 January 1989 is an Assured Agricultural Occupancy and, whilst these provide similar tenancy rights, they allow landlords to regularly review the terms of the rent.

If the arrangement has not yet been made, establishing a Service Occupancy may be a better option for potential landlords in that they make it easier to regain the property from the tenant. Under its terms, the worker is a granted a personal licence to live in the property for the duration of their duties and which expires when their employment ends.

Alternatively, a Form 9 Notice given to a tenant worker provides them with an Assured Shorthold Tenancy, under which they have no statutory protection. Such tenancies must be granted at the outset and the rent must be above a legally specified threshold.

To add to the mix, the Agriculture Bill includes a number of amendments to the Agricultural Holdings Act 1986 (AHA 1986), which was scrutinised as part of the consultation. If passed, tenants would obtain the right to object if landlords reject changes to allow access to financial assistance schemes or meet new regulations. The intention is to help remove existing barriers which may disincentivise investment by landlords and tenants to improve their AHA rented holdings. The proposals would allow tenants to seek arbitration to resolve any related disputes that may arise.

The commercial unit test which prevented an occupying tenant of a commercial unit from succeeding to an AHA tenancy will be scrapped, thus allowing older tenants with no successors to assign AHA agreements to new tenant farmers on their retirement.