Agricultural tenancies

The Agricultural Tenancies Act 1995 introduced farm business tenancies to replace the old style agricultural holding. A tenancy of agricultural land created after 1st September 1995 will be a farm business tenancy if it meets:

• the ‘Business Conditions’ and

• • the ‘Notice Conditions’, or

  • the 'Agriculture Condition'

The Business Conditions

All or part of the land must at all times during the tenancy be farmed for trade or business (not necessarily an agricultural trade or business).

The Notice Conditions

Before the tenancy begins, the proposed landlord and tenant must exchange notices saying that the tenancy is to 'be and remain' a farm business tenancy and that its character will at first be primarily agricultural.

The Agriculture Condition

At the relevant time (not necessarily at the beginning of the tenancy) the tenancy must be primarily or wholly agricultural.

Some types of tenancy can be within the Act even if the land is not used for what might normally be considered to be ‘agriculture’. That word is given a particular meaning by the Act and borderline cases can arise which require special care.

Recovering Possession

The Act allows for three situations:

• fixed term tenancies over two years - to terminate the tenancy at the end of the fixed term, the landlord must give at least a year's notice. Otherwise the tenancy becomes an annual periodic tenancy

• fixed term tenancies of two years or less - these end automatically at the end of the fixed term. No notice is required

• annual periodic tenancies - these can be terminated by not less than a year's notice expiring (in general) on the anniversary of the end of the first year

The 'notice' must be:

• in writing, and

• given within two years before the date on which it will expire

Other Special Rules

Special rules imposed by the farm business tenancy regime include:

• rent review - the parties can agree to:

  There is a basic statutory framework which applies if the agreement is silent, allowing three yearly reviews which are settled by arbitration

• • exclude rent review altogether, or

  • fix rent by reference to a formula or to a periodic revaluation of the rent

• fixtures and fittings - fixtures and fittings provided by the tenant remain his property and he can remove them

• compensation for improvements - the tenant will usually be entitled to compensation for improvements to which the landlord has given consent.

  In certain circumstances consent may be implied. If consent is refused an arbitrator can impose it. The lease can prohibit improvements

• compensation for milk quotas - where a tenant adds milk quota to a holding at its own expense, and does so with the landlord's consent, compensation will be payable at the end of the tenancy for the current value of the quota that remains attached to the holding. The amount may, at the insistence of either party, be settled by an arbitrator if it is not agreed

  Compensation may be carried forward if a tenant remains on the holding and takes up a further farm business tenancy immediately after the end of a previous one. Alternatively, they may choose to settle up even though the tenant will remain on the holding under a new tenancy