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Agriculture Act 2020 Changes for landlord and tenants

View profile for Natalie Freer
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We know that our farming clients will have been paying close attention to the Agriculture Act 2020 (‘AA2020’), which aims to create a new post-Brexit agricultural framework. There are, of course, a vast number of topics which AA2020 covers, but in this article we focus on the ways in which AA2020 aims to increase flexibility and improve relationships for both landlords and tenants, and make way for the next generation of farmers.
 
A number of changes came into effect on 11 January 2021:
 
Rent review
 
Under previous (poorly-drafted) legislation, it was the case that, if the parties needed to appoint a third-party to determine a rent review, they had to do so at least 12 months before a review date. AA2020 has rectified this, and the appointment of a third-party for this purpose can now be made at any time before a review date. This applies to any rent reviews which take place after 11 January 2021. 
 
Sometimes, parties need to refer rent review disputes to an expert. Under old legislation, they would have to apply to RICS to appoint an arbitrator, but AA2020 has sought to extend the number of professional bodies who can deal with such a dispute, and parties may now apply to the Agricultural Law Association and the Central Association of Agricultural Valuers (in addition to RICS). This applies to both AHA tenancies and Farm Business Tenancies.
 
In terms of determining a rent review, there will often be occasions when a tenant is required to contribute financially to improvements which the landlord pays for. Under AA2020, the person determining the rent now has to disregard the fact the payments are required, and any benefit to the tenant before they finish paying for the improvements (the purpose being to avoid the tenants effectively paying twice).
 
Landlord consent
 
Tenants often need a landlord’s consent to deal in certain ways with their lease. If a landlord refuses to give consent, AA2020 allows tenants to refer the matter to an arbitrator or, in some cases, simply to a third-party.
 
In this context, a “consent” also includes circumstances where a tenant seeks to vary their tenancy in such a way as to enable the tenant to request or apply for relevant financial assistance; or to comply with a statutory duty. There are, of course, certain conditions to these provisions under AA2020, and our team is on hand to advise if you find yourself in this situation.
 
In addition, the Secretary of State and Welsh Ministries have the power to override restrictive clauses to enable tenants to receive funding under the new schemes and comply with their new statutory duties. For example, a tenant may now request a change of use to allow access to government funding.
 
Retirement Age
 
AA2020 removes of the minimum retirement age of 65 from AHA tenancies, instead permitting tenants to serve a retirement notice at any time.
 
County Council Holdings
 
AA2020 replaces local authorities’ abilities to issue tenants with retirement notices when tenants reach 65 with a right to terminate occupation when tenants reach pensionable age i.e. the earliest age the tenant can claim state pension. 
 
There are further proposed changes such as the abolishment of the “Commercial Unit Test” and a new “Business Competency Test” which come into force in 2024 which we will report on at future date.
 
If you would like to discuss any of the points in this article, or any other questions you may have in relation to AA2020, then please do call us and speak to a solicitor within our specialist Agricultural Team.