Government approves significant changes to AHA tenancy rules

Farmers with succession tenancies in England will have greater power to challenge landlords’ decisions under new legislation.

The government has approved a number of changes to Agricultural Holdings Act (AHA) 1986 tenancies via the Agriculture Act 2020.

The new regulations, formally known as the Agricultural Holdings (Requests for Landlord’s Consent or Variation of Terms and the Suitability Test) (England) Regulations 2021, were laid before parliament on Tuesday (25 May).

See also: Find out average farm rents where you live 2021

They will provide recourse for tenants who wish to object to their landlord’s decisions, as well as revising the suitability test.

Requests for landlord’s consent or variation of terms

The introduction of provisions for tenants to object if landlords refuse consent for changes necessary to enter new government financial assistance schemes or meet new regulations is the most significant step, according to the Tenant Farmers Association.

Chief executive George Dunn said: “This will give tenant farmers the confidence they need to participate as they desire in whatever new schemes the government brings forward.”

AHA tenants will be able to refer a qualifying request to arbitration or third-party determination from Monday 21 June 2021, if they have not been able to reach an agreement with their landlord.

A qualifying request is defined as one that requires the landlord’s consent or a variation of the tenancy’s terms.

It must be made for the purposes of enabling the tenant to request or apply for relevant financial assistance – such as public money for public goods, the government’s favoured system for replacing the Basic Payment Scheme – or to comply with a statutory duty.

The tenant must have paid any rent due under the tenancy to which the request relates; have raised the request with the landlord in writing; and not be the subject of a valid notice to quit.

Once the tenant serves the notice, the landlord has two months to consent to the request, consent to the request subject to certain conditions or refuse the request.

If the landlord does not serve a counter-notice, serves a consenting counter-notice that is not acceptable to the tenant or refuses the request, the tenant has four months from the date they served their own notice to refer the request to arbitration or third-party determination.

The arbitrator or third party may order the landlord to partially or fully comply with the request, or make another determination that they consider reasonable.

The arbitrator cannot make a determination that includes a variation to the holding’s rent, or in respect to any compensation payable to the landlord or the tenant.

Suitability test

The criteria for determining a successor’s suitability to become a tenant – “the suitability test” – will change from 1 September 2024.

As of that date, all of the below must be considered:

  • The person’s capability and capacity to farm the holding commercially, with or without other land, taking into account the need for high standards of efficient production and care for the environment in relation to managing that holding
  • The person’s experience, training and skills in agriculture and business management
  • The person’s financial standing and their character
  • The character, situation and condition of the holding
  • The terms of the tenancy.

All offers of rent and the age of the person applying must be disregarded.

For applications after 1 September 2024, where the former tenant died or retired prior to 1 September 2024, the previous statutes will apply.

Review

The new rules also state that the secretary of state must regularly review the regulations and set out their conclusions in a published report.

The first report must be published before 1 June 2026 and subsequent reports must be published at least every five years.

Futures markets and commodity risk management online course:

  • Risk management strategies for a more predictable financial performance
  • Educated conversations when collaborating with your advisors
  • Negotiate better prices with your grain merchants

View course