The proposals of the Tenancy Reform Industry Group (TRIG) for legislative change have now been incorporated into the Regulatory Reform Order (Agricultural Tenancies) (England and Wales) Order 2006.
The Order was first laid before Parliament on 30 March 2006 and came into force just over 3 months ago on 19 October 2006. In essence it makes amendments to the AHA 1986 and the ATA 1995 – promoting a healthy and competitive tenanted sector without removing tenant protection, or disrupting the landlord and tenant balance.
To achieve its objectives the Order includes a number of legislative, fiscal, and structural recommendations but in particular it will:
• enable a successor to an ’86 Act tenancy to include income from diversified activities in the Principle Livelihood Test, where the landlord consents in writing after 19th October 2006,
• make it easier for landlords and tenants to restructure holdings held under a 1986 Act tenancy,
• remove the need for unnecessary applications to the Agricultural Land Tribunal where both landlord and tenant agree on the successor to the tenancy,
• enable landlords and tenants to agree the length of a notice period to suit their particular circumstances, providing it is longer than the minimum period of 12 months.
• enable landlords and tenants to reach their own agreements on rent reviews and end of tenancy compensation,
Essentially, these changes will assist tenant farmer diversification and enable landlords and tenants to adapt to the modern agricultural climate.
The issue of ‘Surrender and Regrant’ is pertinent when considering TRIG’s changes to the AHA 1986. It appears to have left an opportunity for landlords to agree a surrender and re-grant with their tenant without risk of the tenant falling out of the old AHA 86 protection and increasing the landlord’s APR from 50% to 100%.
This legislation allows that landlord and tenant may specifically agree that the AHA 1986 shall continue to apply where an existing 1986 Act tenancy is surrendered and a new tenancy of “the whole or a substantial part” of the holding comprised in the old tenancy is granted.
Any new tenancies granted after 1st September 1995 can claim 100% APR, subject to satisfying the other criteria.
The government were not keen to take on board the fiscal proposals designed to overcome the disparity between the AHA 86 and the ATA 95 and this appears to have slipped through unintentionally.
Andrew Ranson, a partner in Fisher German’s Banbury Office advises that landlords should look to take advantage of this loop hole without delay, but warns that a retrospective fix could leave landlords with just 50% relief.
For further advice on this complicated area of tenancy law please contact andrew.ranson@fishergerman.co.uk
