Most agricultural tenancies which started before 01 September 1995 are governed by the Agricultural Holdings Act 1986 (AHA). These generally included succession rights so that the farm could stay in the family for multiple generations, allowing the security for tenants to be able to invest in the holding, particularly as the rent review provisions usually mean the rents are below market level.
Previously the succession criteria for the applicant included:
- Being a close relative (spouse/brother/sister/child/adopted child)
- Livelihood (principal source of applicants’ income from holding from at least the last 5 out of the 7 years)
- Commercial unit (applicant does not occupy other land and the holding can run commercially)
- Suitability (suitable to run the holding)
However, the Agriculture Act 2020 will introduce the following changes from 01 September 2024:
- Removal of the minimum retirement age, this was previously set at 65
- Change to the Commercial Unit test, meaning the applicant can have an interest in another holding
- Suitability test amended and will require the applicant to prove they have the experience, health and financial stability to ensure they can farm to a high standard
The applicant must still be a close relative and must still meet the livelihood test, meaning they must have derived most of their income from the holding for 5 out of the last 7 years but this can include time in education.
It is envisaged that the changes being introduced in the Agriculture Act will encourage a greater deal of successions on retirement to give younger, experienced applicants who are capable of a farming to a high standard the ability to apply and start being in control of the farm earlier. This will hopefully help to engage both landlords and tenants in early discussions, to focus on the future of the farm for both parties.
If you are either a tenant or landlord and would like advice on AHA successions, please contact the Sworders team who would be pleased to discuss this matter further with you.
Abigail Lewis