Agricultural Tenancies | Commercial Property

New regulations

The Agricultural Holdings (Requests for Landlord’s Consent or Variation of Terms and the Suitability Test) (England) Regulations 2021 (the Regulations) are now in place and this provides updated rights for tenants who wish to vary their current agricultural tenancy.

There have been some financial assistance schemes introduced under the Agricultural Act 2020 which continue to be rolled out, and some existing agricultural tenancies may prevent the tenant from applying for the new schemes.

Rights to request consent to financial assistance

Tenants will now have the ability to request an amendment to their tenancy, or landlord’s consent to enter into a scheme. The tenant can do so by serving notice on the landlord requesting this specific change and, if this is refused, the tenant can then direct the matter to an arbitrator, who can provide consent to obtaining the financial assistance required. It is, however, important to note that if a notice to quit has already been put in place, any request cannot be referred to an arbitrator.

The request

Any request for an amended tenancy, or consent from the landlord must include the below:

1. Description of the proposed activities;
2. What works would need to be carried out;
3. The change requested;
4. Why the change is requested (this must be either that the tenant needs to apply for ‘relevant financial assistance’ or that the change is needed to comply with a statutory duty relating to the tenant’s use of the land).

Relevant financial assistance can include:

• Financial assistance provided by the Secretary of State in exceptional market conditions;
• Financial assistance provided by the Secretary of State for any of the 12 purposes as defined in section 1 of the Agricultural Act 2020;
• Financial assistance given to creators/operators of third-party schemes which relate to the creation/operation.

It is important to note that there are strict time limits for both the landlord and tenant when following this process.

The process of requesting consent

Stage 1 – Early consultation

The landlord and tenant should begin by discussing the matter. The tenant should ensure that they have full knowledge of the assistance they require.

Stage 2 – Agree on a timetable

The landlord and tenant should discuss when items should be dealt with. This will need to be realistic and reasonable and account for any specific deadlines, such as any deadline relating to the finance assistance scheme.

Stage 3 – Prepare the tenant’s proposal

The tenant should prepare a very detailed business plan/proposal to show to the landlord. This should be proportional to the nature of the proposal, and the tenant should ensure that this includes all possible details.

Stage 4 – Landlord’s consideration

The landlord will then review the tenant’s proposal and provide a written response to the tenant. The landlord will then accept the consent with conditions or reject it. Should the landlord reject the proposal, they will need to provide reasonable grounds for this rejection.

Stage 5 – Written agreement

The consent will then be placed in a written agreement. A professional advisor will need to create this agreement. This agreement will need to ensure that it waives rights to negate the landlord’s consent.

Suitability test

A tribunal would use the suitability when determining whether a tenant would succeed. This would include:

• The terms of the tenancy;
• The tenant’s experience or skills;
• The tenant’s financial standing and character; and
• The tenant’s capacity to farm the land.

It is, however, important to note that this suitability test is due to come into force on 1 September 2024 and would therefore not be relevant to any applications for succession where the death or retirement notice would be before that date.

As the schemes and regulations are still being rolled out, it will be important to ensure that you seek legal advice before proceeding with any matter such as this, as you will need to ensure that you continue to rely on the appropriate, updated regulations.

Frequently Asked Questions

Can a landlord refuse a tenant’s request for consent or variation?

Yes, but the landlord must provide reasonable grounds for refusal. If the tenant disagrees, they may refer the matter to an arbitrator unless a notice to quit has already been served.

What information must be included in a tenant’s request?

A tenant must describe the proposed activities, required works, the exact change requested, and the reason for the change, such as accessing financial assistance or complying with a statutory duty.

What happens if the landlord and tenant cannot agree?

If negotiations fail, the tenant may refer the request to an arbitrator who can decide whether consent should be granted.

Are there deadlines that tenants and landlords must follow?

Yes, the Regulations set strict time limits for submitting and responding to requests. Missing a deadline may affect the tenant’s ability to proceed.

What is the suitability test and when does it apply?

The suitability test, coming into force on 1 September 2024, will be used by tribunals to assess succession applications. It considers a tenant’s skills, experience, financial standing, character, and capacity to farm the land.

Examples

Example A

Tenant seeking consent to enter an environmental scheme

A long‑term agricultural tenant wants to apply for a new environmental land management scheme that provides funding for habitat creation. Their existing tenancy agreement restricts them from altering land use without the landlord’s consent. Under the Regulations, the tenant serves a formal request outlining the proposed environmental works, the funding available, and why the change is required. After early discussions and a detailed proposal, the landlord refuses without reasonable grounds. The tenant refers the matter to arbitration, and the arbitrator grants consent, enabling the tenant to access the scheme.

Example B

The landlord refuses consent because a Notice to Quit has been served

A tenant wishes to apply for a grant to restore hedgerows but has received a notice to quit. Although the tenant prepares a compliant proposal, the Regulations prevent the tenant from referring the request to arbitration once a notice to quit has been served. The landlord refuses consent, and the refusal cannot be challenged.