Agricultural Tenancies Act 1995
Encyclopedia
The Agricultural Holdings Act 1995 is an Act of the Parliament of the United Kingdom
which applies to England and Wales. It is in force. The Act reformed and substantially deregulated the law relating to agricultural tenancies, and has had the dual effects of increasing the amount of land available to rent in the agricultural sector, and increasing the average rent per acre charged.
agreements), and by 1994 more than 70% of new agricultural tenancies used this loophole. This held down the term of an agricultural tenancy to less than two years. But most farmland that fell vacant was not available to let at all: the landlords were often hiring contractors to farm it for them, or entering into share farming or partnership arrangements, rather than letting to the small businessman farmer.
In February 1991, the MAFF ("Ministry of Agriculture, Fisheries and Food", the body that later became DEFRA) published a consultation paper. The aim was to deregulate, simplify, and encourage the letting of land. In the proposals as originally drafted, there was to be no security of tenure, the Common Law on Notice to Quit would apply, and there would be near-complete freedom of contract. So for example, contractual provisions could override the statutory compensation due to tenants for improvements to the holding.
There was dissatisfaction from industry groups with this approach, and the detailed proposals published in September 1992 watered down the initial consultation document quite considerably. In December 1993, the National Farmers Union, the Country Landowners Association, the Tenant Farmers Association
and others issued their Joint Industry Statement setting out the consensus proposals for reform. It was this statement that formed the basis of the Agricultural Tenancies Act 1995, which received royal assent
on 9 May 1995. The RICS predicted that it would lead to 1 million extra acres becoming available for letting.
The new kind of tenancy introduced in the 1995 Act is called a Farm Business Tenancy ("FBT") and since 1995, almost all new agricultural lettings have used this framework. However, tenancies created under the 1986 Act remain in force and unchanged by the subsequent legislation. The 1995 Act has been amended somewhat in the Regulatory Reform Order 2006. This has, in a modest way, streamlined, simplified and deregulated Farm Business Tenancies to an even greater extent.
According to Williams et al. 2007, the Agricultural Tenancies Act 1995 changes agricultural tenancies in the following ways:
The 2006 reforms made the following further changes:
Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...
which applies to England and Wales. It is in force. The Act reformed and substantially deregulated the law relating to agricultural tenancies, and has had the dual effects of increasing the amount of land available to rent in the agricultural sector, and increasing the average rent per acre charged.
Background and history
By the early 1990s, it was clear that the Agricultural Holdings Act 1986 was not working. The 1986 Act had given security to agricultural tenants and held down rents, and the effect on landlords was so onerous that the amount of farmland available to let in the UK was declining by more than 50,000 acres a year. A loophole in the law was found that enabled landlords to avoid the security of tenure conferred by the 1986 Act (Gladstone v BowerGladstone v Bower
Gladstone v Bower [1960] 2QB 384 was a 1959 case in the English Court of Appeal, concerning security of tenure in tenancies of agricultural holdings. It arose from what was then thought to be a lacuna in the Agricultural Holdings Act 1948...
agreements), and by 1994 more than 70% of new agricultural tenancies used this loophole. This held down the term of an agricultural tenancy to less than two years. But most farmland that fell vacant was not available to let at all: the landlords were often hiring contractors to farm it for them, or entering into share farming or partnership arrangements, rather than letting to the small businessman farmer.
In February 1991, the MAFF ("Ministry of Agriculture, Fisheries and Food", the body that later became DEFRA) published a consultation paper. The aim was to deregulate, simplify, and encourage the letting of land. In the proposals as originally drafted, there was to be no security of tenure, the Common Law on Notice to Quit would apply, and there would be near-complete freedom of contract. So for example, contractual provisions could override the statutory compensation due to tenants for improvements to the holding.
There was dissatisfaction from industry groups with this approach, and the detailed proposals published in September 1992 watered down the initial consultation document quite considerably. In December 1993, the National Farmers Union, the Country Landowners Association, the Tenant Farmers Association
Tenant Farmers Association
The Tenant Farmers Association is an organisation which represents the interests of tenant farmers in England, it provides advice to its members and lobbies government. The TFA was formed in 1981 and has its head office in Reading, Berkshire...
and others issued their Joint Industry Statement setting out the consensus proposals for reform. It was this statement that formed the basis of the Agricultural Tenancies Act 1995, which received royal assent
Royal Assent
The granting of royal assent refers to the method by which any constitutional monarch formally approves and promulgates an act of his or her nation's parliament, thus making it a law...
on 9 May 1995. The RICS predicted that it would lead to 1 million extra acres becoming available for letting.
Effects
Although the RICS' prediction of 1 million additional acres did not materialise, the decline in the amount of land available to let was halted and indeed there was a modest increase in supply. The 1995 Act seems to have caused land to be let for a shorter term and a higher rent.The new kind of tenancy introduced in the 1995 Act is called a Farm Business Tenancy ("FBT") and since 1995, almost all new agricultural lettings have used this framework. However, tenancies created under the 1986 Act remain in force and unchanged by the subsequent legislation. The 1995 Act has been amended somewhat in the Regulatory Reform Order 2006. This has, in a modest way, streamlined, simplified and deregulated Farm Business Tenancies to an even greater extent.
According to Williams et al. 2007, the Agricultural Tenancies Act 1995 changes agricultural tenancies in the following ways:
- No minimum term.
- Little security of tenure.
- Even if the tenant diversifies away from agriculture to a considerable extent, the tenancy will remain as a FBT.
- Rent reviews every three years, unless the contract says otherwise.
- The tenant can remove tenants' fixtures almost at will.
- Compulsory compensation for tenant's improvements.
- Dispute resolution is to be by alternative dispute resolutionAlternative dispute resolutionAlternative Dispute Resolution includes dispute resolution processes and techniques that act as a means for disagreeing parties to come to an agreement short of litigation. ADR basically is an alternative to a formal court hearing or litigation...
with arbitrationArbitrationArbitration, a form of alternative dispute resolution , is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons , by whose decision they agree to be bound...
as a fallback option.
The 2006 reforms made the following further changes:
- No longer any need for a tenancy successor to earn a living from agricultural work on the holding.
- Strictures on rent reviews and end of tenancy compensation are further relaxed.
- Simplify the restructuring of holdings under a 1986 Act tenancy.
- Removed the need to apply to an Agricultural Land Tribunal under certain circumstances.
- Strictures on tenancy termination procedures are also further relaxed, provided the minimum period of 12 months is observed.