05 August, 2020
The proposed Agriculture Bill is set to make substantial changes to British farming. The proposals which were originally introduced to the House of Commons back on 16 January 2020 are now being scrutinised in the House of Lords with the intention that they will receive Royal Assent and become law next year.
One area in particular which has the potential significant change under the proposals set out in the Agriculture Bill is the relationship between landlords and tenants of agricultural properties.
Typically, agricultural tenancies, which predominantly take the form of Farm Business Tenancies or tenancies under the Agricultural Holdings Act 1986, contain restrictive provisions prohibiting or requiring the consent of the landlord to carry out alterations to buildings or to change the use of the whole or part of the farm.
This has proved problematic for farmers who have been looking to diversify because diversification usually results in a change of use of at least part of the farm from purely agricultural use. Common diversifications into holiday lets, cafes/eating establishments and farm shops can fall foul of the restrictions in agricultural tenancies and leave tenants at the mercy of their landlords for the necessary consents required to change the use of their farm.
Similarly, the new regulatory framework set out in the Agriculture Bill will make it necessary in some cases for farmers to make alterations to their farms in order to comply with these regulations. One example would be the installation of a new slurry store in order to comply with the water pollution prevention regulations. The Agriculture Bill will also necessitate alterations to some farms in order to allow farmers to gain access to the financial assistance schemes enshrined in the 'public money for public goods' which is set to be established by the Agriculture Bill as the replacement for the Basic Payment Scheme. As with changes of use, such alterations to farm buildings will usually, at the very least, require the consent of the landlord.
Under the proposals set out in the Agriculture Bill, the Agricultural Holdings Act 1986 will be amended to allow the Secretary of State the power to make regulations to enable a tenant to request that their landlord varies their tenancy to allow for such changes of use and alterations. There are also set to be provisions providing an ability to refer such requests to a third party in the form of an expert or arbitrator to determine the position where a landlord and tenant cannot agree.
The proposed changes set out in the Agriculture Bill could well change the balance of power under agricultural tenancies in favour of tenants and such proposals do appear to be key to the success of the new 'public money for public goods' regime. Quite how this will play out in reality is something that will be of keen interest to landlords and tenants across the country.
For more information contact Michael Rutter in our Commercial Property department via email or phone on 0333 207 1147. Alternatively send any question through to Forbes Solicitors via our online Contact Form.