As of 1st September 2024 changes to the tests required to succeed to a AHA tenancy are being implement to ensure that it is easier for productive land to get into the most suitable hands.
The changes stem from the Conservative governments productivity focus under The Agriculture Act 2020. A three year gap has been given to allow people to plan for such changes which will apply to any agricultural tenancies pre 12th July 1984, which allow for succession rights.
Applications may be made “on death” within 3 months of the tenants death or on retirement.
Who can succeed?
There are two phases to the succession tests; first stage is the eligibility tests (three) which are either a yes or no i.e. you either pass all three or you don’t.
- Are you a close relative? Defined as a spouse/ brother or sister/ child or treated child of the marriage.
- Is your principle source of livelihood derived from the holding in the last 5/7 years.
- Does the land which the applicant currently occupies provide the equivalent to the average wages of two adult male farm workers (calculated using units of production order provided for by DEFRA). The critical figure is usually around £50,000.
If the eligibility criteria are ticked then it is for the landlord to decide if they believe the applicant has:
- the practical experience necessary
- the physical health
- the financial standing
- they believe they are a suitable applicant
Under the new rules the suitability test was to be made much more demanding. In short if you applied for a tenancy would you be shortlisted for it- do you have the capability and the capacity to take on the tenancy irrespective of age.
The new changes have been influenced by TRIG research which fed into the Agriculture Act 2020 which looked to what changes would support improved productivity and farming. It was found that there were two factors covering succession which need to be changed:
- To repeal the commercial unit test as it can exclude better farmers from tenanting land and no longer provides the outcome for what the test was originally designed for.
- Make the suitability test more demanding to ensure an applicant is capable of farming the holding productively and with the environment in mind.
In practice what does this mean?
The suitability test has always been subjective however it is more demanding and requires no different level of application as if an applicant were tendering for a new farm; education/ training/ experience/ financial standing. The landlord cannot consider what rent the applicant would provide, this is solely a test of capability and capacity of the applicant to farm that holding.
It is unknown as of yet how applicants will approach this new stance and how it will be interpreted by the tribunals. With no past case law on this topic it may take a tribunal many months to come to a decision and as such it may be better advised to negotiate a long term Farm Business Tenancy between the parties until we have more knowledge on how the new rules are going to be implemented.
As a result of the changes we may see better applicants come forward to apply, however this may pose a challenge to widows succeeding to tenancies as has previously been allowed.