Business Clinic: How should we organise farmworker’s tenancy?

Whether it’s a legal, tax, insurance, management or land issue, Farmers Weekly’s Business Clinic experts can help.

Here Chris Turner, partner, Carter Jonas Rural, advises on organising a farmworker’s tenancy.

See also: Business Clinic – how do planning changes affect use of proposed barn conversion?

Q We have a long-term employee on the farm who has just retired and is leaving their farm accommodation. We let other surplus cottages on Assured Shorthold Tenancies (ASTs) and thought that we’d put the new worker on an AST too. However, we understand there may be a potential change of rules regarding Section 21 notices, currently permits landlords to evict tenants with two months’ notice, without needing a specific reason. Should we be looking at alternative arrangements or is there anything else we should bear in mind?

A You’re right that the government has stated that they are to amend Section 21 rights.

This announcement was made early last year, and in February they renewed the promise and stated they would make the change before the general election – this didn’t happen but Labour has also said in its manifesto that it will do the same.

As you state, under an AST, Section 21 notices allow a landlord to evict tenants with two months’ notice, without needing a specific reason. The proposed change is to ban such “no fault” eviction notices.

Under an alternative arrangement known as a service occupancy agreement, the accommodation provision forms part of the employment contract, meaning that the employee has no right to the accommodation if the employment ceases.

However, an agricultural worker will automatically have assured agricultural occupancy protection once they have worked for more than 91 weeks in agriculture, by any employer.

This means if you recruit someone with experience, they will have protected rights to stay in the accommodation you provide, unless you serve a Form 9 before granting an AST.

Service occupancy agreements therefore don’t work for farm employers because the underlying statue law takes precedence in giving the employee protection because they work in agriculture.   

Service occupancy agreements work for other employees, such as a gardener or cleaner, but there is a risk in using them for someone like a gamekeeper or forester because some of their role/work may be defined as agricultural.

Such agreements are generally written into the employment contract, which means the terms of occupation are limited in detail, meaning less opportunity to impose obligations on the employee/occupier, and less flexibility as to those obligations.

It’s a common choice for a short-term employment but it’s even a risk even for a harvest student, who may have built up 91 weeks on the family farm at home.

Under an AST however, you can be a lot more prescriptive about the tenant’s rights and responsibilities, which many landlords prefer.

Careful drafting of ASTs needed

Equally, ASTs normally detail a lot more of a landlord’s responsibilities, but this shouldn’t be a problem for most good landlords.

Ideally, when the AST agreement is drafted, and definitely before the tenant takes occupation, the agreement would have a clause written into it making it clear that the tenant agrees to a rent increase, to a market level, on the termination of their employment, if they don’t leave the property.

There are other clauses which can be used to remove an agricultural worker but if the ex-employee is paying a sensible rent and maintaining the property, it may be difficult to find a legal way to evict them in due course, if there is no Section 21 notice to rely on.

My advice to you in this situation would be to use an AST agreement, making sure a Form 9 is served in advance of the AST being signed and occupation being taken.

Build into the AST a clause stating that the rent will increase to a market level on the termination of employment, if the employee continues to occupy the property.

That way, there is no misunderstanding about rent, should the employment end.

Minimum AST rent 

Remember that for an AST to be a valid agreement, a minimum rent of £250 a year needs to be paid by the tenant.

That is £20.84 a month, so we normally advise employers to take £25 per month to be sure they stay above the minimum level.

The rent can be taken directly from wages, at source, providing you agree it with the tenant first and state it in the employment contract and AST agreement, so that it is written down and visible.

With an AST, also remember that as a landlord you need to provide the prescribed information and details on a deposit, if taken.

We do recommend that you seek professional advice on all types of occupancy agreements.

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