Agricultural Holdings Act 1986 – upcoming changes to the succession rules
In accordance with the Agriculture Act 2020, the eligibility and suitability tests under the Agricultural Holdings Act 1986 (“AHA 1986”) are changing with effect from 01 September 2024.
Overview of AHA 1986
Before considering whether succession applies, the tenancy itself must be governed by the AHA 1986.
If the tenancy conditions are met, a close relative of the tenant of an agricultural holding has a statutory right to apply for a new tenancy in either of the following circumstances (but only two successions are permitted in any AHA tenancy):
- On death of a sole surviving tenant; or
- On retirement of a sole tenant (or all joint tenants)
The current succession rules – Eligibility and suitability conditions for succession
Currently, an applicant to the Tribunal for a succession tenancy on death or retirement must fulfil all the following requirements:
- Eligible Person test – the applicant must be an eligible person at the date of death of the giving of a retirement notice. An ‘eligible person’ is a close relative of the deceased or retiring tenant i.e. a spouse/civil partner, sibling or a child / treated as a child.
- Livelihood Test – the applicant must demonstrate their economic dependence on the holding. Their only or principal source of livelihood must have been derived from the holding for at least five of the seven years preceding the date of the tenant’s death or service of the retirement notice.
- Commercial Unit Test / Occupancy Condition – this condition aims to exclude any applicant who is the occupier of a commercial unit of agricultural land.
- Suitability Test – If the Tribunal is satisfied that the applicant is eligible, they must then determine whether the applicant (or nominated successor) is, in the Tribunal’s opinion, a suitable person to become the tenant of the holding. The following factors will be relevant when considering the suitability test:
- The extent of the applicant’s training in agriculture or practical experience.
- The applicant’s age, physical health, and financial standing.
- The landlord’s views (if any) on the applicant’s suitability.
- All other relevant matters.
The changes to the rules
The following changes come into effect on 01 September 2024 in accordance with the Agriculture Act 2020:
- Commercial Unit Test / Occupancy Condition – this test will be abolished with effect from 01 September 2024. The rationale for the decision was that it was unfairly prejudicial to entrepreneurial tenants.
- Suitability Test – this test is changing and with effect from 01 September 2024, the applicant will need to show that they have the likely capacity to farm the holding ‘commercially to high standards of efficient production and care for the environment’ and may in particular include:
- An assessment of the applicant’s experience, training or skills in agriculture or business management;
- The applicant’s health, financial standing or character;
- The character and condition of the holding or the terms of the tenancy; and
- That if the tenancy was on the open market, whether a prudent landlord would regard the applicant to be of a standard which they would be willing to grant them a tenancy
- Retirement age – the condition that a tenant had to be aged 65 or older before an application could be made for succession on retirement has been abolished. There is now no minimum age.
The rationale behind the changes was to align the criteria to be more reflective of modern farming practices and to align with current agricultural policies within government. Whilst the changes might be welcome to some, there are still hurdles to overcome and this regime remains a legally complex area of law.
Despite these changes coming into effect on 01 September 2024, it is important to note that strict statutory time periods for succession applications and service of notices under the AHA 1986 will still apply so tenants and landlords should not delay in taking legal advice in the event of death or retirement.
Speak to a specialist
For further guidance and advice on the upcoming changes or for any advice relating to any contentious agricultural issues, please contact a member of the team below.
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