The Agriculture Act 2020 made provision for amendments to be made to the law relating to both types of agricultural tenancies with those amendments requiring Regulations to be implemented by the Senedd as to how they would exactly apply in Wales. These Regulations have now been laid and this article serves to summarise the main changes that they make.

Landlord’s Consent and Variation of Terms

The Regulations make provision in respect of both, Agricultural Holdings Act tenancies and Farm Business Tenancies, for a tenant to be able to make a reference to arbitration (or third party determination by agreement) in relation to a request for

1. a landlord’s consent to a matter which under the terms of the tenancy requires such consent, or
2. a variation of the terms of the tenancy

if they are necessary in order for the tenant to be able to access financial assistance (which would include the Sustainable Farming Scheme) or to comply with a statutory duty that applies to the tenant, where the Landlord and Tenant cannot agree on that consent or variation. This means that if the terms of a tenancy agreement prevent a tenant from getting access to government funding (within the definition provided in the Regulations) or that they cannot get consent from a Landlord to make improvements to the holding that are necessary to adhere to legislation, they will be able to make this request to the Landlord to enable them access this financial support or make those changes.

There is a strict procedure that must be followed when making requests and it is important for all parties to obtain advice in relation to the process as it requires that requests are made in writing, are substantiated in full and also a response from a Landlord must, even in the case of a refusal, provide detailed reasons for that decision.

 

Succession applications under the Agricultural Holdings Act 1986

From 1^st September 2024, the eligibility and suitability criteria for succession has changed. In terms of eligibility, the commercial unit test will cease to apply and therefore the successor tenant will only need to be a close relative and satisfy the principal source of livelihood test to qualify. This means that any other land owned or rented by the successor tenant will no longer be considered by the Tribunal when determining applications for succession.

In terms of suitability, a revised test is introduced which will require a number of relevant criteria to be considered by the Tribunal which include:

“(a)the person’s likely capability to farm the holding commercially, with or without other land, taking into account the need for high standards of efficient production and care for the environment in relation to managing that holding;

(b)the person’s experience, training and skills in agriculture and business management;

(c)the person’s financial standing and their character;

(d)the character, situation and condition of the holding;

(e)the terms of the tenancy”

In addition to considering all relevant matters the Tribunal also has to be satisfied that if the successor tenant applied in an open competition for the tenancy that a prudent and willing landlord could reasonably be expected to have been willing to grant the tenancy to that successor tenant.

It will be important for any applicants for succession to consider these updated criteria in advance and what evidence they will be able to bring forward in to support each element.

Landlords will also have to consider how they assess the eligibility and suitability of succession candidates in light of these changes.

For advice and guidance as to the impact of these changes on your Agricultural Holdings Act tenancy please contact Agri Advisor on 01558 650381.