18/04/2019

Thursfields warns of changes on the horizon for agricultural tenants

Sarah Denney-Richards - Colour WEB

Agricultural tenants have less than 12 weeks to comment on proposals which could mean far reaching changes, according to experts in the agricultural and estates team at Thursfields Solicitors.

Sarah Denney-Richards, Director and Head of Agricultural law, said that DEFRA has announced a 12 week consultation period on significant reforms to agricultural tenancy legislation.

She said: “The consultation, which ends on 2 July 2019, is seeking views and evidence on two particular issues.

Whether current restrictions on agricultural mortgages are a barrier to landowners wishing to lend land, and whether there is a need to provide additional protections against the repossession of agricultural land for business borrowers who are unable to meet finance repayments under secured loans.”

The main proposals concern:

The ability for an Agricultural Holdings Act tenant to “sell” their tenancy to a third party tenant.  The landlord could offer to buy the tenancy back in order to avoid the sale but if they let it go through then they would have the ability to bring the new arrangement to an end after 25 years.

Relaxing the rules relating to passing an Agricultural Holdings Act tenancy on to the next generation.

Options under consideration include:

Allowing tenants to retire and pass the tenancy on at any age rather than the current 65 year minimum age, but putting a maximum age of 5 years after the state pension age.

Extending the category of persons entitled to apply for succession to include co-habitees, nieces, nephews and grandchildren.

Removing the “commercial unit test” which prevents an applicant who already farms a commercial farm from applying to take a succession tenancy on.

Replacing the “suitability” test with a “business competency test” focused on a wider range of commercial considerations.

Other initiatives under consideration are to:

Provide a dispute resolution mechanism to enable tenants to challenge tenancy clauses which restrict their ability to grow their business.

Encourage landlords to invest in and offer financial support to tenants wishing to grow their business by treating such investing more fairly in rent reviews.

Allow landlords who let their land on farm business tenancies to get the land back sooner, for development or non-agricultural use, following the death of the tenant and when the tenant does not pay their rent.

Sarah said: “Agricultural tenants and landowners need to be aware of these potential changes and the impact they could have. They can react and comment by completing the “Give us your views” survey available here.

Anyone who is concerned about the potential impact on their business and livelihood should take professional advice and ensure they monitor any changes that come into law.”

Sarah Denney-Richards can be contacted at sdenney-richards@thursfields.co.uk or by calling 01905 730486.

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