How might the terms of a Business Tenancy impact the rent?
Term, type of property, repairing obligations, assignment, hold over, security of tenure etc.
Difference between a Lease and Licence
Exclusive Posesesion (Street v Mountford), must have a defined term.
Licence is merely a personal permission granting a licence to occupy or do something on the property.
When granting an FBT do you need to serve any notices
Yes section 1(4) notices, to agree that the tenancy will be agricultural, services the “notice” condition of an FBT. For an FBT to be an FBT it must be (1) primarily or wholey business and either the notice or agriculture condition.
When is a agricultural tenancy an AHA?
Before 1 September 1995
How do you review a rent on an AHA?
The parties can agree a review at any time, but the act steps in if there is a dispute.
Section 12 notice must be served with 12-24 months notice.
What is the rent review formula under Section 12 of the AHA?
“the rent properly payable in respect of the holding shall be the rent at which the holding might reasonably be expected to be let by a prudent and willing landlord to a prudent and willing tenant, taking into account … all relevant factors, including (in every case) the terms of the tenancy (including those relating to rent), the character and situation of the holding (including the locality in which it is situated), the productive capacity of the holding and its related earning capacity and the current level of rents of comparable lettings. “
What is the termination proceedure for an AHA?
The Landlord can serve an unspecified notice on the tenant, the tenant can then serve a counter notice upon when the Landlord must apply to the tribunal for posession under the following grounds:
● In the interest of goof husbandry
● Sound estate management
● To carry out agricultural research, education etc.
● For statutory allotments
● Because greater hardship would be caused by withholding than by giving consent for the Notice to Quit
● For certain non-agricultural uses which do not require planning permission
The tribunal must be satisfied that the landlord is acting reasonable and fairly by insisting on possession.
Or a Landlord can serve notice under the incontestable Notices to Quit A- H
What are the incontestable NTQ under the AHA?
A – retirement of smallholding B – Planning for non ag use C – Certificate of bad husbandry D – Notice to remedy/pay E – Irremediable breach F – Insolvency G – Death H – Ministry Amalgamation
How do you review the rent of an FBT?
By agreement between the parties, section 10 notice to refer the matter to arbitration.
When you can you review the rents of an AHA / FBT
Once every three years
What is the NTQ under an FBT?
Section 5 NTQ, must give 12-24 months notice if agreement is over two years in term.
What are the criteria for an AHA to have succession?
Granted before 12 July 1984
What are the criteria for an applicant to succeed to an AHA?
Qualifying Person - Only a close relative, who must be a spouse, child or sibling of the deceased, either by blood or marriage
Livelihood - For five of the past seven years, the person must have derived their principle source of livelihood from agricultural work on the holding or on an agricultural unit of which the holding forms part - incudes diversifications.
Suitability - the suitability of the tenant will also be taken into account by the tribunal including their fitness to work and their practical experience.
Commercial Unit test - removed by Agriculture Act 2020
Termination options for various tenancies?
AST – s21 notice two months to vacate (currently 6)
AHA – cases
FBT – S6 notice to quit 12-24 months notice
What is the small claims court?
Way of taking legal action for up to £10,000 against a firm or individual
How do you prevent security of tenure on a commercial property?
You contract out of sections 24-28 of the L&T Act 1954. This removes the right for the tenant to renew their contract at the end of the lease.
You do this by getting a tenant to sign a simple declaration 14 days before the start of their lease
If less than 14 days then you need to get a tenant to sign a statutory declaration which is in a similar format to the simple but needs to be witnessed by a solicitor
HoT for FBT?
Landlord, Tenant, Holding, Term, Rent, Rent payment dates, Rent Review, Tenants Obligations, Landlord Obligations, Repair obligations, Termination and Forfeiture, assignment and subletting, dispute resolution
HoT for Commercial Lease?
Landlord, Tenant, Holding, Term, Rent, Rent payment dates, Rent Review, Tenants Obligations, Landlord Obligations, Termination and Forfeiture, schedule of condition, repair obligations, assignment and subletting, dispute resolution
How is the rent reviewed under an FBT?
S10 notice 12-24 months notice not sooner than every 3 years
Freedom of contract
Cant be upwards only
What are the key cases for IHT and farmhouses?
Who can prepare tenancy agreements? Are there any exceptions?
Chartered surveyors, FBT at any length, AST below three years, commercial lease below three years.
Deed anything over 3 years
LR anything over 7 years
What are the repairing obligations under the AHA?
- As per the agreement
- If the agreement is silent the Model Clauses 2015 will take effect.
n.b FBT’s can also adopt the model clauses
What do the Model Clauses 2015 say?
Landlord responsible for:
- externals and structure of houses
- underground pipework, sewerage
- gas and electrical systems (including inspections)
Tenant responsible for:
- House internal space heating (boilers), fixtures and fittings
- fences, hedges etc..
- fixed equipment
- bridges etc.
- maintaining RWG, cleaning and painting, hedges, ditch maintainence
What are the different rent review proceedures under the Agricultural Holdings Act v Agricultural Tenancies Atc?
Rent Reviews in both cases can only be conducted once every three years.
Rent reviews under FBT’s can be agreed on any basis, stepped rent, wheat price, RPI, market etc.. (section 10)
Rent reviews under AHA’s (section 12) are done under schedule 2 which is the statuatory proceedure. This must be calculated as a “rent properly payable”.
What is the Rent “properly payable” under the Agricultural Holdings Act 1986?
“The rent shall be the rent at which a reasonable landlord would expect the holding to let between a prudent and willing tenant and a prudent and willing landlord taking into account the terms of the tenancy, character and situation of the holding, producive capacity of the holding and its related earnings capacity and the level of rents achived for comparable lettings”
What if a rent cannot be agreed ? FBT or AHA?
Where the landlord and tenant cannot agree on an arbitrator to set a rent either party can apply to the President of the Royal Institution of Chartered Surveyors (RICS) or CAAV to make an appointment. The appointed arbitrator will conduct proceedings under the Arbitration Act 1996.
What happens if repairing obligations under the model clauses cannot be agreed?
Refer the matter to arbitration MRICS or FAAV or third party determination
What is Forfeiture
Forfeiture is a landlord’s right to prematurely terminate their tenant’s tenancy for (a) a breach of the tenant’s obligations; or, (b) events specified in the tenancy.
What does there need to be in place for a tenancy to exist?
- A Landlord and Tenant
- Identifiable land
- Exclusive posession (otherwise a licence)
- A grant of defined period
- A lessor who retains a reversion
What is a tenancy at will?
Where someone occupies the land with the landlord’s permission but there isn’t a defined term or rent. There is no defined term and it can be terminated at any time by the landlord withdrawing permission for them to be there.
What is a profit e pendre?
A profit a prendre enables a person to take part of the soil or produce of land that someone else owns. It is a right to take from the land, as in the mining of minerals or taking of grass.
When does section 11 of the LTA 1985 not apply?
Residential which are let for a term longer than seven years, business tenancies and agricultural tenancies.
When is an AHA tenant entitled to sucecssion?
Where the tenant was granted before 12 July 1984 the tenant is entitled to two sucecssions.
What would you advise doing if an AHA tenant died?
Tenant must have notified LL of dead. LL should then serve a NTQ under Case G, tenant can then apply to the tribunal for succession.
What are the requirements of a AHA?
Must have begun before the 1st September 1995, and as per S1(4) must be over land used for agriculture which is so used for the purposes of business or trade.
How many successions is a AHA tenant entitled to?
Two if eligable.
Under an AHA which notice would you serve to get a written tenancy agreement in place?
What happened in Crown Estate v Wakley
Crown Estate had mis-represented a farm to a tenant who tendered, tenant then sued the Crown and was awarded £1.7m
What is the dispute resolution mechanism for an AHA rent review?
Either party can apply for Arbitration to the President of the RICS. However, both parties could agree to appoint an independent expert to reduce costs, etc. The arbitrator will take into account the historical actions
by both parties, acting on evidence submitted by both parties. This may be done by written reps or an oral hearing.
Expected rent for AHA?
£60-£70 per acre = Arable Land
£50-£50 per acre = Pasture
What are the end of Tenancy Proceedures/ claims for AHA 1986 Act?
- Dilapidations (breach of tenants obligations to repair)
- Tenants Improvements (consent granted/ not)
- Tenants Fixtures (right to remove)
- Tenant Right
AHA End of Tenancy - what can the landlord do if there are dilapidations ?
Landlord claim against tenant due to break of tenants obligations to repair.
Usually model clauses govern repairs.
The claim must be submitted no more than 2 months after expiry of the term and agreed no more than 8 months after.
AHA end of tenancy - what claim would the tenant have for his improvements?
Depends if consent was granted for improvement.
If it has, then it would usually be subject to conditions on compensation.
If there are no compensation conditions, assume value to ingoing tenant.
AHA tenancies, what happens to Tenants Fixtures at the end of the tenancy?
Tenant has the right to remove, must serve one months notice prior to date of termination.
Landlord has one month to elect to purchase improvement at ‘Value to incoming Tenant’
If Landlord does not elect to purchase, Tenant can remove before two months after the tenancy has expired.
Assumes that Tenant has complied with all other terms of the agreement
At what age can a farmer retire from Farming AHA?
Historically they must have been at least 65 years old or permanently physically/mentally incapacitated. The Agriculture Act 2020 has changed that age requirement and there is now no minimum age to serve a retirement notice in England.
This applys from 1 September 2024.
A retirement notice must be served.
What are the requirements to success to an AHA?
- The Eligibility Test will require the successor to have a close relationship with the tenant (sibling, spouse, child or treated child.
- ‘principal source of livelihood’ test, so they will still need to derive their only or principal source of income from agricultural work either on the holding in question or an agricultural unit that forms part of the holding.
- The Suitability Test now only requires the applicant to show that they have the ability to farm “commercially to high standards of efficient production and care for the environment”.
From September 2024 there will no longer be a minimum age to serve a retirement notice. Previously a tenant would have to be 65 years or older to serve a notice of retirement on their landlord.
The Commercial Unit Test is also to be removed from the eligibility criteria
What value per acre did land have at the CGT Base Date ( 31 March 1982 )
£1000 per acre
When is a residential tenancy an AAO
When it was granted after 15 January 1989 to a qualifying agricultural worker.
What does an AAO give the tenant?
Security of Tenure, succession to spouse