Agricultural Tenancy Disputes

There are two principal types of agricultural tenancies. Each one is subject to different sets of legislative frameworks:

Full agricultural tenancies, which are subject to the Agricultural Holdings Act 1986 (AHA).

Farm business tenancies, which are subject to the Agricultural Tenancies Act 1995 (FBT).

Historically, disputed AHA Tenancies have been dealt with by the Agricultural Land Tribunal (ALT) whereas those relating to Farm Business Tenancies have been dealt with by arbitration. The ALT was regarded as being both quicker and more cost-effective than arbitration. In this article, agricultural tenancy disputes, we take a look at the process and mechanism involved.

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For a free initial discussion on how we can advise you on an agricultural tenancy dispute, get in touch with us today. We will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or complete our online enquiry form and a member of the team will get back to you.

Definition of an Agricultural business

The 1995 Act defines agriculture as including “horticulture, fruit growing, seed growing, dairy farming and livestock breeding and keeping, the use of land as grazing land, meadow land, osier land, market gardens and nursery grounds, and the use of land for woodlands where that use is ancillary to the farming of land for other agricultural purposes”. Livestock includes “any creature kept for the production of food, wool, skins or fur or for the purpose of its use in the farming of land”.

What happens if a farm business tenancy agreement is not used for an agricultural business?

A lease can remain within the provisions of the ATA 1995 even if the tenant plans to change the use to non-agricultural business after the lease is granted, provided that the correct notices were exchanged before it started. This allows tenants to diversify away from farming.

The Act does not make clear how far diversification may go. In many instances, it will be a matter of opinion as to whether the land continues to be farmed. However, it has become clear that peripheral or additional business operations will not prevent a tenancy from being a FBT.  Any business (or other) activity than farming is likely to require the consent of the landlord in any event. If the tenant does intend to diversify, then the landlord’s permission will have to be sought.

What happens if the tenancy ceases to qualify?

The tenancy will become regulated by the Landlord and Tenant Act 1954 (LTA 1954). The main possible areas of difficulty will be those that the agreement has not covered because it was never intended to be a lease under the 1954 Act.

Farm Business Tenancy rent reviews

Landlords and tenants can negotiate their own rent levels and decide whether or not they want to have rent reviews. Either the landlord or tenant can demand a rent review every 3 years by law. However, landlords and tenants can agree on how often a rent review should take place – this agreement replaces the law. For example, you can agree on a rent review every 4 years. You must not preclude a reduction in rent in your rent review agreements.

Farm Business Tenancy compensation

As a farm business tenant, you’re entitled to compensation at the end of a tenancy for:

• physical improvements you’ve made to a holding (provided the landlord has given consent to the improvements)
• changes that increase the value of the holding (provided they are left behind when the tenant leaves)

You can agree in writing an upper limit on the amount of compensation, usually equal to the tenant’s cost in making the improvements.

What happens if there is a dispute?

The Agricultural Tenancy act 1995 provides a scheme for dispute resolution in respect of farm business tenancies. The following matters must be dealt with by arbitration in accordance with the Act:

• determination of rent pursuant to a statutory review notice
• issues relating to the conditions of eligibility for compensation for tenant’s improvements
• any claim for compensation under ATA 1995, Part III

Any other matter may be referred to arbitration in accordance with ATA 1995 unless:

• the tenancy agreement provides that the dispute is to be resolved by a third party
• the dispute has been referred to such a third party for resolution, and
• the decision of that third party will be binding in law on both parties (this requirement excludes alternative dispute resolution)

The Agricultural Holdings Act 1986 provides three different forums for the resolution of disputes in relation to tenancies that fall within that Act:

• arbitration
• the appropriate tribunal
• the court

Under AHA 1986 certain disputes are compulsorily referred to either arbitration or the appropriate tribunal. Any contractual term to the contrary is of no effect.

Either side may apply the arbitration provisions of the Act on virtually any dispute under the agreement. Arbitration is time-consuming and expensive, but unfortunately, an application to the court is likely to be referred to arbitration as a matter of routine. If possible, the most efficient way to comply with the Act is to agree on the identity of an arbitrator in advance. Mediation may take place by agreement, but either party may still insist on arbitration. Note that the arbitrator must be qualified so that he is able to give a decision that is binding at law.

How We Can Help

Our team is well versed in dealing with all the various aspects of agricultural tenancy disputes, and we are here to help in any way we can.

We will explain clearly the legal issues and provide open, honest and professional advice.

How to Contact our Agricultural Law Solicitors

It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of reducing risk, saving you money and ensuring you achieve a positive outcome.

To speak to our Agricultural Law solicitors today, simply call us on 0345 901 0445, or allow a member of the team to get back to you by filling in our online enquiry form . We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.

Authored by Ben Posted in News Tagged as