Advice on giving notice to quit farm tenancies
© Photofusion/Rex Shutterstock Landlords are increasingly taking land back in order to take advantage of development opportunities like residential or renewables projects. Duncan Sigournay, partner at Thrings solicitors, outlines what tenants and landlords need to know about notices to quit.
It is important that landlords and tenants are aware of how, and in what circumstances, agricultural tenancies can be brought to an end and to know what, if anything, can be done to oppose such notices.
The starting point is to know what type of agricultural tenancy is in place. Most tenancies granted on or after 1 September 1995 will be Farm Business Tenancies (FBTs) and will be governed by the Agricultural Tenancies Act 1995. Earlier tenancies and related succession tenancies will be governed by the Agricultural Holdings Act 1986 (AHA).
Duncan Sigournay
Partner, Thrings
Landlords and tenants should not overlook adopting a more collaborative approach to releasing development potential of tenanted land. Such an approach can be beneficial for the two parties, both financially and in terms of timescales.
Scenario 1
An AHA tenant has been served with a notice to quit. The notice makes reference to an outline planning permission (planning permission with little detail) for various non-agricultural uses, including a small housing development. Is there anything the tenant can do to resist the notice?
Most likely the landlord will have served what is known as a “Case B” notice to quit, which is used where there is planning permission for a non-agricultural use. For these purposes an outline permission can be used.
Dealing with notices to quit
Issuing a notice to quit (landlords):
- Make sure it identifies the land in question
- Is the notice period correct?
- Serve it on the right party
- Seek professional advice
Responding to a notice to quit (tenants):
- Make a note of when it is received – this will dictate when any response is due
- Seek professional advice immediately
- Serve a demand for arbitration and/or counter-notice where appropriate
- Check whether you have any legal expenses cover to assist with funding the case.
But the landlord must be able to demonstrate a specific intention to implement the permission and that all of the Case B criteria are satisfied.
The tenant may be able to contest the notice at arbitration, which is activated by serving a demand for arbitration on the landlord and then seeking the appointment of an arbitrator, either by agreement or via an application to the president of the Royal Institution of Chartered Surveyors.
Scenario 2
An AHA tenant is given a notice to quit which does not give any reasons for the notice being served. It says they must vacate in three months.
There are seven grounds within the AHA 1986 under which landlords may serve a notice to quit. If the notice does not make reference to one of these, the tenant will be entitled to serve a counternotice on the landlord.
The landlord would then have to make an application via a body called the First-tier Tribunal (Property Chamber) Agricultural Land and Drainage for consent to the notice to quit.
Significantly, the tribunal is obliged to withhold consent where it is satisfied that, in all circumstances, it appears that a fair and reasonable landlord would not insist on possession.
That is quite a tough test for a landlord to satisfy, which is why, traditionally, few cases proceed to the tribunal and even fewer result in success for a landlord.
In the absence of anything to the contrary within the tenancy agreement, a notice to quit will usually take effect 12 months after the end of the tenancy year in which the notice was served. Shorter notices are permitted, but only in certain circumstances.
In addition, if the planning permission only affects part of the holding, then there would ordinarily have to be a provision within the tenancy agreement permitting service of a notice to quit part.
Scenario 3
A tenant has a five-year FBT that ran out two years ago. Do they need a new written agreement from the landlord?
The original tenancy remains in force beyond the initial five-year period running thereafter from year to year. Consequently there is no need for a new written agreement to be entered into.
The tenancy will continue until either of the parties serves the requisite notice to end it, which must be given a minimum of 12 months in advance.
Scenario 4
A farmer has a two-year FBT that runs out in one month. No mention has been made of them having to leave then. Presumably the landlord has to give some notice?
FBTs for contractual periods of two years or less do not require any notice in order to bring them to an end and so the tenancy will terminate automatically.
A landlord is allowed to terminate the tenancy earlier, but only if there is a break clause in the agreement.