Sometimes referred to as a “lifetime or generational” tenancy by our clients, AHA farm tenancies have been around for generations, and, likely to continue into this next century. Recently, we saw what could be said to be the most radical change to this legislation to have ever been implemented.
An AHA tenancy that was granted before the 12th July 1984 provides succession rights. This can be on death or retirement (note that the minimum age of 65 to give a retirement notice was removed before these changes were introduced.)
To succeed to an AHA tenancy, the proposed successor must have previously shown (amongst other things) that they are both “eligible” and “suitable”. There was a complex array of rules, tests and evidence which the proposed successor must have met. First to be adopted by England, followed then by Wales, these changes have taken effect from 1st September 2024.
The Commercial Unit Test has been revoked. Applicants who occupy other agricultural units, who may have failed in the previous tests, no longer have this requirement to meet.
Another radical change is that of the Suitability Test. The previous test was often seen as a low bar for candidates to meet and did not necessarily provide the best applicant to take on a long-term tenancy of a holding.
The new rules still contain two tests of “eligibility” and “suitability”. The eligibility test remains unchanged: 1) The ‘close relative test’ and 2) The ‘principal source of livelihood test’.
However now, there is a new and more stringent test which asks whether the landlord would consider the applicant a candidate they would be willing to grant the tenancy to. A subjective question, therefore, if the parties can’t agree, the case goes to the First Tier Property Tribunal (or Agricultural Lands Tribunal for Wales) for a decision.
Considerations of the Tribunal will be:
a) the person’s likely capability and capacity 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,
This turns the new suitability test into more of a farm tender scenario, albeit that the only applicant being considered is the candidate themselves and of course without a rent tendered!
It is proposed that these changes will carve the way for the best tenants on farm holdings and nervous landlords will be given the comfort that those taking on long term tenancies will have demonstrated their attributes in a more rigorous process.
What defines this suitability test is likely to be clarified as cases go through Tribunal over the next year or so. There will inevitably be points of disagreement as there remains subjectivity around whether someone is suitable.
It must always be remembered that strict statutory time periods for serving notices under the AHA remains as it always was, tenants and landlords should not delay in taking professional advice in the event of a death or proposed retirement.
If you are looking to apply to succeed a Tenancy agreement please do not hesitate to contact us on 01829423183.