The tenanted sector is set to receive a much-needed boost as a comprehensive package of legislative reform begins its belated passage through parliament.
A regulatory reform order, which will amend traditional Agricultural Holdings Act and farm business tenancies to allow greater flexibility and make it easier for tenants to diversify, was laid before parliament last week and should become law by the autumn if it is not opposed.
Included in the RRO, which is part of the recommendations of the cross-industry Tenancy Reform Industry Group formed in 2002, are measures that remove the ban on adding extra land or buildings to existing AHA tenancies, make it easier for tenants and landlords to agree rental terms and put a cap on tenant’s compensation at the end of a tenancy.
Tenant Farmers Association chief executive George Dunn, who sits on TRIG, said:
“We have waited a long time for the RRO to be laid.
The previous target was to have the changes in place for September of last year so we are pleased, subject to parliamentary approval, that there will be no further delays.
“These changes will help to restore some of the balance that is required for a sustainable landlord/tenant system in agriculture.”
TRIG chairman Julian Sayers said he thought it unlikely that the reforms would be opposed, as they had been agreed within the industry.
“Hopefully, more flexible arrangements should be in place by Michaelmas.”
Jim Paice, Conservative shadow minister for agriculture, agreed and said the Conservatives would not be hindering the RRO:
“We support the work of TRIG and think it has done a very good job.”
But Mr Dunn said he was disappointed that the Treasury had failed to adopt another TRIG recommendation that said landlords who allowed tenants to diversify into non-farming enterprises should not lose valuable agricultural property relief on inheritance tax.
“One part of the government (DEFRA) is saying farmers should diversify, but another is hampering one-third of the industry.”
Mr Sayers said the Treasury had asked for evidence that the tax situation was causing landlords to refuse tenants’ requests to diversify.
“But nobody has produced any yet.”
Oliver Harwood of the Country Land and Business Association, another TRIG member, said this was not as easy as it sounded.
“We know for certain that anything that will increase a landlord’s tax burden will affect his views on tenants diversifying, but it’s actually a tricky thing to prove.
If anybody can paint a picture where tax has made a difference we’d like to see it.”