Agricultural tenancies under the Agricultural Holdings Act 1986

Agricultural Holdings Act

An agricultural tenancy granted before 1 September 1995 will, subject to few exceptions, be an “agricultural holding” and governed by the Agricultural Holdings Act 1986 (“AHA 1986”). To fall under the AHA 1986 the agricultural holding must be let for use as agricultural land for a term of years or from year to year and can be by oral or written lease, agreement or licence.

It is important to establish whether the AHA 1986 applies to an agricultural tenancy as the tenant will enjoy greater statutory protection than if the tenancy is a Farm Business Tenancy granted on or after 1 September 1995.

The tenant of an agricultural holding will benefit from security of tenure which restricts the circumstances in which a landlord can terminate the tenancy and when a notice to quit can take effect, making it harder for a landlord to obtain possession of the land.

In addition, certain agricultural tenancies may also benefit from succession rights if certain statutory requirements are satisfied, enabling relatives of a deceased or retired tenant to apply for a new tenancy (usually where the tenancy was granted before 12 July 1984). As such, terminating agricultural holdings can often prove challenging.

As many agricultural tenancies were entered into orally (i.e. not written down) it is often the case that the terms have not been agreed fully, are vague or have been forgotten over time. Where the agricultural tenancy was made in writing, they are usually short and do not contain the full terms within the agreement. Important terms were often missed as the parties did not understand the full nature of the arrangement and statutory provisions which apply in the circumstances. For example, if the parties have not agreed to restrict alienation of the tenancy agreement, it can be assigned freely which will be of particular concern where the tenancy benefits from succession rights and the tenant assigns the tenancy to a company which can essentially benefit from those rights in perpetuity.

The recent case of OG Thomas Amaethyddiaeth CYF v Turner [2022] EWCA Civ 1446 highlights the risks of oral agricultural tenancies and the importance of ensuring the validity of any notices served tenants to terminate a tenancy. In this case the landlord and tenant entered into an oral agricultural tenancy but had not prohibited assignment of the tenancy.

The tenant subsequently assigned the tenancy to his connected company (he was sole shareholder, director and company secretary) without notifying the landlord and as such, when the landlord served a notice to quit on the original tenant, it was found a valid notice to quit had not been served on the current tenant.

In this particular case, the consideration given by the judge in the Court of Appeal was with regards to service of documents, and whether the contents of the notice satisfied the requirements of the common law, being that the party on whom the notice was served had to be correctly identified. Here, for the notice to quit to be validly served, it should have been served on the company and not addressed to the original tenant.

This recent case law serves as a useful reminder as to the pitfalls of oral agreements and demonstrates the approach taken by the courts in interpreting the AHA 1986. Whilst we cannot rectify terms of oral agreements entered into pre-1 September 1995, we can provide guidance in advising you of your rights and obligations as either landlord or tenant with regards to such agricultural tenancies.   

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