Landlords and tenant farmers are being advised to acquaint themselves with a raft of legislative changes surrounding Agricultural Holdings Act tenancies.
Due to come into force on May 17, the overhaul of both conditions and terms used within the legislation could have financial implications for many.
Firstly, the model clauses covering the maintenance, repair and insurance of fixed items have been updated to reflect the changes in items found on farms such as reed beds and slurry handling systems.
Alex Maclachlan, a chartered surveyor from H&H Land and Property, said: “Previously a tenant was limited to only being able to recover £2,000 or one year’s rent (whichever was the lesser) where they undertook the repairs/replacements which are the Landlord’s liability.
“This now been amended to cover reclaiming ‘the reasonable costs’ incurred by the tenant.
“This is in-line with what the Landlord could reclaim from the tenant if the situation were reversed.”
Another significant legislative change involves the removal of regulations governing some aspects of end of tenancy compensation, meaning all claims at the end of a tenancy will be valued at the ‘value to an incoming tenant’.
Previously, claims for such things as residual fertility were valued using a strict set of tables calculated in the 1970s and 1980s.
However, a decision was taken to revert back to the overriding legislation of the Agricultural Holdings Act 1986, with the current rules no longer applying from October 1.
Mr Maclachlan said: “This change will allow the true value of the tenant’s inputs to be compensated for and it should also have the consequential knock-on effect of encouraging outgoing tenants to farm their holdings to their full potential in the last years of their tenancy if, for instance, they are contemplating retiring.”
Finally, under the Deregulation Act 2015 there is new provision for disputes to be resolved by third parties instead of by an arbitrator.
The benefit of this is that independent experts can use their own experiences and knowledge to arrive at an answer through a process that should be considerably faster and cheaper.
Matters that can be referred to such experts include rent reviews and compensation matters.
Disputes arising from a Notice to Quit, however, will still be governed by an arbitrator.
Both parties must agree to the matter being considered by an independent expert and the expert’s decision will be final.
This change brings the old style tenancies into line with the new style Farm Business Tenancies, through which parties can agree to refer matters to alternative dispute resolution procedures other than an arbitrator.
This option will become available from May 27.
Mr Maclachlan said: “These changes will affect the majority of ‘old style’ agricultural tenancies.
“If in doubt about the new system the best advice I can give to someone is to seek some professional support to ensure you are protecting yourself.”
H&H Land and Property is H&H Group’s specialist chartered surveyor and land agency division, with offices in both Carlisle and Durham.