Agricultural tenants and landowners face far-reaching changes to the law on mortgages, repossession, apply to vary clauses and passing on tenancies to the next generation.
Defra published a consultation paper this month on ‘Reforming agricultural tenancies in England and Wales’, due to end on 2 July. It asks whether current restrictions on agricultural mortgages act as a barrier to letting farmland, and whether farmers unable to meet their repayments should be given greater protection against repossession.
Sarah Denney-Richards, head of agriculture at Thursfields, said: ‘Agricultural tenants and landowners need to be aware of these potential changes and the impact they could have.
‘Anyone who is concerned about the potential impact on their business and livelihood should take professional advice and ensure they monitor any changes that come into law.’
Key proposals include allowing Agricultural Holdings Act tenants to assign their tenancy for payment to a third party, subject to a landlord’s right both to buy out the tenant at the time and to end the new arrangement after 25 years.
The minimum age of 65 years for succession on retirement applications would be abolished, to encourage earlier retirement and succession planning. There would be a new dispute resolution mechanism for disputes concerning apply to vary clauses, where either party believes they present an ‘unreasonable barrier’ to land improvement or business development.
The consultation proposes extending the category of persons entitled to apply for succession to include cohabitees, nieces, nephews and grandchildren. It also suggests removing the ‘commercial unit test’ which prevents an applicant who already farms a commercial farm from applying to take a succession tenancy on.
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