Agricultural Holdings Act 1986 Tenancies
| Author | Nigel Davis |
| Pages | 51-77 |
Chapter 5
Agricultural Holdings Act 1986 Tenancies
5.1 INTRODUCTION
The law of agricultural holdings is extremely technical and complex. This chapter can only give you a superficial outline of the legislation. Anyone advising in this area of law will need to consult the specialised textbooks, details of which set out in Chapter 11, Further Reading.
In particular, attention must be paid to the prescribed forms and time limits.
5.2 DEFINITIONS
The current legislation protecting agricultural tenants whose tenancies predate 1 September 1995 is the 1986 Act.
This Act provides security of tenure for the tenant, regulates the terms of the tenancy and provides for compensation for the tenant on its termination. Where a tenancy was granted before 12 July 1984 there are also succession provisions which can enable certain close members of a tenant’s family to apply to succeed to his tenancy on either his retirement or his death. Both are considered in more detail in para 5.9.
An agricultural holding is a letting of agricultural land which is used for the purpose of a trade or business (section 1(4)(a) of the 1986 Act).
Agriculture:
includes horticulture, fruit growing, seed growing, dairy farming and livestock breeding and keeping, the use of land as grazing land, meadow land, osier land,
52 Agricultural Tenancies
market gardens and nursery grounds, and the use of land for woodlands where the use is ancillary to the farming of land for other agricultural purposes.
Livestock:
includes any creature kept for the production of food, wool, skins, or fur or for the purpose of its use in the farming of land or the carrying on in relation to land of any agricultural activity.
Grazing of other animals (e.g. horses) by way of business is using land for agriculture,
Buildings can amount to an agricultural holding.
Where land is let for both agricultural and non-agricultural uses it will be either wholly an agricultural holding or not at all. If the actual or contemplated use of the holding at the time of the tenancy agreement and subsequently is predominantly agricultural, it will be an agricultural holding (section 1(2) of the 1986 Act and see Howkins v Jardine
A non-agricultural tenancy will not become agricultural by a change of use contrary to the contract, unless effected with the landlord’s permission, consent or acquiescence (section 1(3) of the 1986 Act).
Agreements under which land is let for an interest less than a tenancy from year to year and contractual licences which confer exclusive possession are converted by section 2 of the 1986 Act into yearly tenancies.
The following are expressly excluded from the definition of agricultural holdings:
(1) Grazing and/or mowing agreements which are for a specified period of the year and limit the use of the land to grazing and/or
mowing only. Any new arrangements which grant exclusive possession will now be FBTs under the 1995 Act.
(2) Ministry consent licences and tenancies for a term certain of less than one year. This provision is now obsolete. A tenancy of less than a year which complies with the agriculture and business conditions granted after 1 September 1995 will be an FBT under the 1995 Act.
(3) Lettings or licences granted to employees during the course of their employment under the landlord.
There are other forms of tenancies which, although they come within the definition of an agricultural holding, did not give the tenant security of tenure:
(1) Gladstone v Bower
(2) Ministry consent tenancies of between 2 and 5 years. There had to be a joint application by the landlord and tenant to the (at that time) Ministry of Agriculture, Fisheries and Food (now DEFRA) for consent to such a tenancy (section 5 of the 1986 Act). The tenancy subsequently entered into had to be granted in accordance with the consent. Any such tenancies will have now expired and there are no longer any such tenancies being created. Again the provisions of any new tenancies granted now for such terms will be governed by the 1995 Act.
(3) Sub-tenancies are not protected as against the head landlord, although there may be protection against the intermediate landlord. However, collusive arrangements between the landlord and the tenant in an attempt to defeat the interests of a sub-tenant will not be upheld by the courts.
If the head tenancy terminates by notice to quit, given by either the landlord or the tenant, the sub-tenancy will automatically terminate.
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However, a surrender of the intermediate tenancy will not determine the subtenancy. In such a case the sub-tenant will, in fact, become the tenant of the landlord.
5.3 THE TENANCY AGREEMENT
Many agricultural tenancies are oral. If there is no written agreement, or if there is one but it does not contain one or more of a list of items set out in Schedule 1 to the 1986 Act, either party may refer the terms of the tenancy to arbitration (section 6 of the 1986 Act). The matters set out in Schedule 1 are:
(1) the names of the parties;
(2) particulars of the holding;
(3) any agreed terms;
(4) the rent reserved and dates on which it is payable;
(5) liability for rates;
(6) a covenant to return the full equivalent manurial value of any crops destroyed by fire;
(7) a covenant by the tenant to insure against damage by fire all dead stock on the holding and all harvested crops grown on the holding for consumption;
(8) a forfeiture clause;
(9) a covenant by a tenant not to assign, sub-let or part with possession of the holding or any part of it without the landlord’s consent in writing.
Before demanding arbitration, the other party must be requested to enter into a written agreement containing the Schedule 1 items. Once such a request is made, the tenant may not, without the landlord’s consent in writing, assign, sub-let or part with possession of the holding or any part of it during the period while the determination of the terms of the tenancy is pending.
In the event of an oral agreement it always makes sense for a landlord to serve a notice under section 6 of the 1986 Act to prevent the tenant from assigning the tenancy to a third party (potentially a limited company). The effect of such an assignment, of course, is that a company never dies and so a landlord would be in major difficulty if he wanted to recover possession of the holding. Any attempted assignment after the service of such a section 6 notice will be void.
5.4 FIXED EQUIPMENT
5.4.1 Maintenance, repair and insurance of fixed equipment
Incorporated into every tenancy agreement, except in so far as the written tenancy agreement provides to the contrary, are provisions allocating the responsibility for the maintenance, repair and insurance of the holding between the parties (section 7 of the 1986 Act; Agriculture (Maintenance, Repair and Insurance of Fixed Equipment) Regulations 1973
These 2015 Regulations have applied with effect from 1 October 2015.
In broad terms the landlord is responsible for repairs and replacements to main structures of buildings, water mains, sewage disposal systems and reservoirs, and to insure the buildings against loss or damage by fire.
The tenant’s obligations are:
except in so far as such liabilities fall to be undertaken by the landlord ... to repair and to keep and leave clean and in tenantable repair, order and condition
most other items of fixed equipment on the holding, including such things as hedges, ditches, roads and ponds.
The regulations allow a party, on the failure of the other to do his repairs, to carry them out himself and recover the reasonable costs from the other, provided one month has elapsed after he has sent a written request to the other to carry out the repairs. The tenant’s right to undertake replacements on the landlord’s default is subject to monetary limits. There is no limit on the cost of repairs.
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Where a written tenancy agreement departs substantially from the model clauses, it is open to either the landlord or the tenant to serve a notice under section 6 of the 1986 Act on the other to seek the appointment of an arbitrator to try and bring the tenancy in line with Schedule 1 of the 1986 Act. The arbitrator has discretion as to whether to vary the terms of the tenancy agreement. If he does, he may also vary the rent (section 8 of the 1986 Act).
5.4.2 Provision of fixed equipment
A tenant may apply to the First-tier Tribunal for a direction that the landlord should provide, alter or repair fixed equipment to enable him to comply with any of his statutory obligations...
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