The Agricultural Landlord and Tenant Code of Practice for England – 7 fundamentals

The Agricultural Landlord and Tenant Code of Practice for England (the Code) has been published following the Rock Review and endorsed by industry organisations including the Agricultural Law Association, National Farmers Union and the Royal Institute of Chartered Surveyors, to name a few.

The Code was a key recommendation of the Rock Review and provides guidance to landlords and tenants as to the standards of behaviour expected in connection with agricultural tenancy matters including those expected of their professional advisers with three core principles at its heart: Clarity; Communication; and Collaboration.

This article summarises key areas that landlords and tenants and their advisers should adhere to when marketing and negotiating a tenancy, conducting themselves during a tenancy and terminating or renewing a tenancy.

A full copy of the Code can be found at: https://www.cla.org.uk/library/agricultural-landlord-and-tenant-code-of-practice-for-england/

 1. Grant of tenancy and terms

When marketing:

• Landlords should provide sufficient information to present a fair representation of the farm or land, including any limitations and special or unusual features of the proposed tenancy agreement
• Landlords should outline keys terms of the tenancy including term length, ingoing payments, repairing and insuring obligations, environmental and other scheme obligations, and permitted uses
• Landlords should highlight statutory or local designations, existing third party rights (sporting rights), wayleaves and utility easements, and option and exclusivity agreements
• Landlords should give prospective tenants a full opportunity to view the farm and review the proposed form of tenancy agreement
• Landlords or their agents should provide comprehensive and reliable answers to all reasonable questions asked by tenants, where known
• Tenants should outline their farming proposals, their experience and qualifications to take on the tenancy
• Tenants should outline the rent they are offering and any concerns or proposals they have regarding the state or condition of the land, buildings and equipment
• Tenants should expect to provide references, business plans and evidence of their financial standing and to allow landlords and their advisers to view the tenant’s existing farming operations.

When negotiating the terms of the tenancy:

• Landlords and tenants should be open to negotiating the terms on which the tenancy is offered
• Landlords and tenants should ensure they understand their obligations and limitations under the tenancy agreement
• Landlords or their agents should provide comprehensive and reliable answers to all reasonable questions asked of tenants
• Consider preparing a schedule of condition to record the state of the land and buildings included in the tenancy
• Agents and advisers should do all they reasonably can to support the parties to arrive at a fair agreement which should be recorded in writing

2. Routine engagement

The landlord and tenant should agree suitable and proportionate arrangements for regular meetings and engagement during the tenancy and, if helpful, make a written note of arrangements, matters discussed and the outcomes/further actions required.

3. Rent and rent reviews

• Landlords should make clear to tenants when and how rent is to be paid
• Tenants should notify their landlords if they encounter difficulties in paying the rent in full or on time and landlords should consider the tenant’s representations as to late or incomplete payment of rent
• Landlords and tenants should inform themselves of the rent review procedure and review terms
• The outcomes of rent reviews should be recorded in writing and note anything else agreed as part of the rent review

4. Repairs and improvements

• Landlords and tenants should ensure they understand their respective repairing obligations and review the need for repairs regularly to ensure repairs are made promptly and carried out to an appropriate standard
• Landlords and tenants should collaborate in identifying any remedial or improvement works needed from time to time
• Landlords and tenants should regularly discuss maintenance and improvements that may be needed together with identifying any future needs for investment in the holding.

5. New opportunities and schemes

• Landlord and tenants should be able to discuss environmental, economic and other development opportunities openly and constructively with each other and consents for entry into new schemes should not be unreasonably withheld
• Blanket prohibitions on participating in environmental and other opportunities should be discouraged from being included in tenancy agreements
• Tenants should consider the landlord’s interest in the holding when applying for schemes or other initiatives even when the landlord’s consent to enter such schemes or initiatives is not required by the tenancy agreement
• Tenants should give landlords reasonable prior notice before applying to schemes or other initiatives where the landlord’s consent is not required but the commitments would affect the landlord’s reversion
• Tenants should file applications, approvals, conditions and other records of schemes safely and make them available on request.

6. Termination and renewal

• Landlords and tenants should be as open as is commercially possible with each other about their intentions for future management and letting of the holding
• Landlords and tenants should make their intentions on renewal or quitting clear to the other in good time and negotiation of terms for renewal should proceed in a timely and constructive manner, guided by the Code
• Where the tenancy is being terminated by mutual agreement or by the action of either party, the parties should set out a clear timetable ending the tenancy to allow for inspection of the holding, comparison of schedules of condition and the consideration of records of improvements, environmental and other schemes and cropping and stocking history
• Landlords and tenants should seek early agreement on any payments due on termination.

7. Disputes and the role of professional advisers

• Landlords and tenants should be guided by the Code’s principles of clarity, collaboration and communication when working through their disagreements
• Landlords and tenants should support the dispute resolver or mediator fully where one is appointed to resolve disputes to help them arrive at a fair and balanced conclusion and both parties should seek at all times to minimise the cost of formal dispute resolution
• When awarding costs, dispute resolvers should consider whether the landlord and tenant have acted in accordance with the Code
• Landlords and tenants should seek professional advice on matters outside their own competence and experience and ensure those professionals are aware of the Code and understand it
• Professional advisers and agents should work constructively with their clients and other parties, within their agreed terms of reference and professional obligations.

As you will see, the Code sets out a number of fundamental points for both landlords and tenants to consider both before and during a tenancy, but on the whole these should facilitate better understanding between the parties and a smoother and more collaborative relationship.

For more information on the Rock Review please visit https://www.ts-p.co.uk/insights/tenant-farmers-and-the-rock-review/