Changes to Agricultural Holdings Act 1986 succession rules

Those of you with tenancies under the “old” regime of the Agricultural Holdings Act 1986 (AHA) will know that there is a statutory right for up to two statutory successions to the tenancy.  These successions do not happen automatically. The correct procedure must be followed and certain criteria must be met.

On 1 September 2024 changes to the succession rules came into force in England and Wales following implementation of the Agriculture Act 2020 (AA).  The purpose was to bring the old regime more in line with modern farming practices, improve agricultural productivity and ensure eligibility of the “best” candidates. The hope is to achieve this by altering the tests of suitability and eligibility.

Suitability test for agricultural tenancies

The potential successor must show an ability to take over the tenancy by demonstrating adequate experience, good health and sufficient finances to enable them to run the holding.

In addition they must show an ability to farm the holding “commercially to high standards of efficient production and care for the environment” [s17(8A) of the AA].

This is a harder test to meet than previously but landlords should take comfort that the more rigorous process will result in more progressive tenants.

Eligibility test for agricultural tenancies

The rule that a potential successor could not occupy another commercial unit of agricultural land no longer applies as it was deemed unfair to more business-minded tenants.  Also abolished is the rule that the outgoing tenant must be over 65 years old.

The two remaining eligibility tests are:

• Close Living Relative Test, i.e. a spouse, civil partner, child, sibling, or, in certain circumstances, someone treated as the outgoing tenant’s child
• Principal Source of Livelihood Test i.e. that for at least five of the previous seven years the potential successor’s only or principal source of livelihood has been from agricultural work on the holding.

Conclusion

Statutory time periods still apply for succession applications and service of notices so it remains essential that both landlords and tenants take timely advice on the death or retirement of a tenant.

The new rules mean it may be harder for potential successors to show their suitability but also mean that tenants may be more entrepreneurial than previously.

As before, disputes will be determined by the First Tier Property Tribunal.

If you have any questions about the topics raised in this article then please get in touch.