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Agricultural Tenancies reform to support improved productivity

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ADAS took part in a DEFRA consultation this week (22nd May) on options for reform of agricultural tenancy law in England. Hosted by the Agricultural Law Association, the session was one of several being held by DEFRA in conjunction with key stakeholders representing the interests of agricultural tenants and landowners.

Agricultural Tenancies reform to support improved productivity

The Tenancy Reform Industry Group (TRIG), a cross-industry group comprising representatives of leading agriculture sector organisations, published a report in October 2017 with recommendations for agricultural tenancy law post Brexit. The aim of the recommendations were to;

  • Facilitate structural change, to encourage new entrants and next generation farmers.
  • Create the conditions for improved productivity in the sector.
  • Enable investment in the environment and in farm infrastructure.

None of the recommendations were included in the Agriculture Bill but in January 2019, former DEFRA Minister George Eustace announced a consultation on agricultural tenancy reform based on the TRIG report. There are 14 options fully described within the consultation. The key proposals are:

Assignable Agricultural Holding Act (AHA) tenancies – An opportunity for older tenants with no successor to assign their tenancy for payment; unlocking land for new tenants. Landlords would have the right to buy back the tenancy or serve an incontestable notice to quit after 25 years of the assignment.

Changing AHA succession rights – Removing the minimum age for retirement to allow earlier succession if desired and removing the rights of succession after the age of 72. This intends to encourage early succession planning; therefore, unlocking potential productivity through new skills and ideas brought in by younger successors.

Changing AHA succession eligibility – Removal of the commercial unit test that prevents succession by direct family members that farm commercially on another unit and introduction of agricultural business competence to the suitability test, which sets the standards successors should meet in order to succeed. It is intended that these changes would ensure skilled, commercially astute individuals would be able to succeed to AHA tenancies.

Extending succession rights to AHA tenancies – Exploration of extending eligibility to include; co-habiting partners, the children of a co-habiting partner, nieces, nephews and possibly grandchildren. This would widen succession provision to allowing a younger generation to continue the family business.

Introducing short notices to quit for Farm Business Tenancies (FBT) over 10 years – To encourage landlords to grant longer tenancies, it is proposed to introduce short notices to quit for non-payment of rent, death of the tenant and when the land is required for non-agricultural development.

While the consultation is limited by its inability to address the tax implications of changes, this presents an important opportunity for tenants and landowners to provide their view on the proposed changes. The outcome intends to facilitate longer tenancies, introduce new skills and increase the emphasis on business acumen in tenants and this consultation is an opportunity to feed in how the changes would impact on tenants and landowners in practice.

The consultation closes at midnight on 2nd July 2019. More details on how to respond can be found on the official DEFRA consultation web page.

For a discussion on the implications of proposals, please contact Agri-Business Consultant, Kathleen Wolton

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