Reforming The Law Of Agricultural Tenancies – Long Overdue?

Agricultural tenancy law is due a review, according to a Law Commission announcement in September. While the process of changing the law takes time, now would be a good opportunity for agricultural landlords to reflect on current tenancy arrangements.

Existing law

There are two main types of agricultural tenancy, each with a separate legal framework.

Tenancies granted before 1 September 1995

These are governed by the Agricultural Holdings Act 1986 and are known as AHA tenancies. It is no longer possible to grant an AHA tenancy, but many remain in place.

This is because most AHA tenancies benefit from succession rights. Succession rights allow a tenancy to be passed down to another, following the death or retirement of the original tenant. The first successor can pass the tenancy down in the same way to a second (and final) successor. There are strict eligibility and suitability conditions to meet.

Tenancies granted on or after 1 September 1995

These fall under the Agricultural Tenancies Act 1995 and are known as Farm Business Tenancies (FBTs). FBTs do not benefit from succession rights. They can include break rights and rent review provisions.

Why now for reform?

The Law Commission notes that the 'balance' is not being struck between landlords and tenants. There is also concern that short FBTs (granted for terms of five or seven years, for example) prevent a farming tenant from undertaking long-term activities. The Law Commission has suggested that this impacts growth.

The wider context

There has been increased attention on agricultural tenancies from different directions in recent years.

For example, the previous government commissioned a review of tenant farming, which was published in 2022 (the Rock Review). It contained 70 recommendations.

The Agricultural Landlord and Tenant Code of Practice ("the Code") followed in 2024. The Code endorses three principles of collaboration, communication and clarity and sets out minimum standards for parties and their advisers.

In addition:

• Supply chains (supermarkets) are encouraging more nature-friendly farming methods such as agroforestry and regenerative agriculture. These methods of farming require specialist long-term planning and often a shared vision between the tenant and the landlord.
• Environmental FBTs (coined eFBTS) – spearheaded by The Crown Estate and the Tenant Farmers Association this year, are a new style of FBT linking farming with environmental improvements. An eFBT will be granted for a 15-year term and record that the parties wish to co-operate on environmental ambitions.

What to look out for

Encouraging the grant of longer terms seems a likely area for the Law Commission to focus on. Strengthening landlord and tenant relationships is also expected to be a priority.

Members of the agricultural sector will have the opportunity to submit their views when the Law Commission launches its consultation. For now, landowners should consider taking the following steps:

• Review existing tenancies as a matter of good estate management practice. Consider whether any need to be re-granted and follow the Code.
• If negotiating a long-term diversification opportunity, such as a renewable energy scheme or property development, ensure the legal documents are flexible enough. Landlords need to be able to manage existing farm tenants and grant new tenancies while the diversification agreement is in place.
• Discuss the advantages and disadvantages of granting longer agricultural tenancies with professional advisers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.