The Regulatory Reform (Agricultural Tenancies) (England and Wales) Order 2006

Citation, extent and commencement

1.—(1) This Order—

(a) may be cited as the Regulatory Reform (Agricultural Tenancies) (England and Wales) Order 2006,

(b) comes into force on the day after the day on which it is made, and

(c) subject to paragraph (2), extends to England and Wales only.

(2) The amendment, repeal or revocation by a provision of Schedule 1, 2 or 3 to this Order of an enactment which extends to Scotland or Northern Ireland also extends there.

Amendments to the Agricultural Holdings Act 1986

2.  Articles 3 to 9 amend the Agricultural Holdings Act 1986(1).

Arbitration of rent

3.  In section 12, in subsection (2), for the words from “date of the reference” to “arbitration” there shall be substituted “next termination date following the date of the demand for arbitration and accordingly shall, with effect from that next termination date”.

Meaning of “substantial part”

4.—(1) In section 34, after subsection (2) there shall be inserted—

“(3) Where this Act applies in relation to a tenancy by virtue of section 4(1)(g) of the Agricultural Tenancies Act 1995(2), the reference in subsection (1)(b)(iv) above to a substantial part of the land comprised in the holding means a substantial part determined by reference to either area or value.”.

(2) In section 35, after subsection (2) there shall be inserted—

“(3) Where this Act applies in relation to a tenancy by virtue of section 4(1)(g) of the Agricultural Tenancies Act 1995, the reference in subsection (2) above (in the definition of “related holding”) to a substantial part of the land comprised in the holding means a substantial part determined by reference to either area or value.”.

(3) In section 49, after subsection (3) there shall be inserted—

“(4) Where this Act applies in relation to a tenancy by virtue of section 4(1)(g) of the Agricultural Tenancies Act 1995, the reference in subsection (3) above (in the definition of “related holding”) to a substantial part of the land comprised in the holding means a substantial part determined by reference to either area or value.”.

Succession on retirement or death of tenant - meaning of “eligible person”

5.—(1) In section 36, after subsection (5) there shall be inserted—

“(6) The reference in subsection (3)(a) above to agricultural work carried out by a person on the holding or on an agricultural unit of which the holding forms part includes—

(a) agricultural work carried out by him from the holding or an agricultural unit of which the holding forms part, and

(b) other work carried out by him on or from the holding or an agricultural unit of which the holding forms part,

which is of a description approved in writing by the landlord after the commencement of this subsection.”.

(2) In section 41, after subsection (6) there shall be inserted—

“(7) The references in subsections (1) and (6) above to agricultural work carried out by a person on the holding include—

(a) agricultural work carried out by him from the holding, and

(b) other work carried out by him on or from the holding,

which is of a description approved in writing by the landlord after the commencement of this subsection.”.

(3) In section 50, after subsection (4) there shall be inserted—

“(5) The reference in subsection (2)(a) above to agricultural work carried out by a person on the holding or on an agricultural unit of which the holding forms part includes—

(a) agricultural work carried out by him from the holding or an agricultural unit of which the holding forms part, and

(b) other work carried out by him on or from the holding or an agricultural unit of which the holding forms part,

which is of a description approved in writing by the landlord after the commencement of this subsection.”.

Compensation on termination of tenancy

6.—(1) In section 69, in subsection (1), after “in the holding” there shall be inserted “, or in any agricultural holding which comprised the whole or a substantial part of the land comprised in the holding,”.

(2) In that section, after subsection (1) there shall be inserted—

“(1A) Where this Act applies in relation to any tenancy referred to in subsection (1) above by virtue of section 4(1)(g) of the Agricultural Tenancies Act 1995, the reference in that subsection to a substantial part of the land comprised in the holding means a substantial part determined by reference to either area or value.”.

(3) In section 73, the existing provision shall be renumbered as subsection (1).

(4) In that section, in subsection (1) (as renumbered by paragraph (3) above), after “on the holding” there shall be inserted “, or on any agricultural holding which comprised the whole or a substantial part of the land comprised in the holding,”.

(5) In that section, at the end there shall be inserted—

“(2) Where this Act applies in relation to any tenancy referred to in subsection (1) above by virtue of section 4(1)(g) of the Agricultural Tenancies Act 1995, the reference in that subsection to a substantial part of the land comprised in the holding means a substantial part determined by reference to either area or value.”.

(6) In paragraph 5 of Schedule 9, in sub-paragraph (1), after “in the holding” there shall be inserted “, or in any agricultural holding which comprised the whole or a substantial part of the land comprised in the holding,”.

(7) In that paragraph, after sub-paragraph (1) there shall be inserted—

“(1A) Where this Act applies in relation to any tenancy referred to in sub-paragraph (1) above by virtue of section 4(1)(g) of the Agricultural Tenancies Act 1995, the reference in that sub-paragraph to a substantial part of the land comprised in the holding means a substantial part determined by reference to either area or value.”.

(8) The amendments made by this article do not apply in relation to compensation payable on termination of a tenancy where that tenancy was granted before this article comes into force.

Arbitrations

7.—(1) In section 84, in subsection (1), the words from “in accordance with” to the end of the subsection shall be omitted.

(2) In that section, for subsections (2) to (5) there shall be substituted—

“(2) The arbitrator shall be a person appointed by agreement between the parties or, in default of agreement, a person appointed on the application of either of the parties by the President of the RICS.

(3) If the arbitrator dies, or is incapable of acting, a new arbitrator may be appointed as if no arbitrator had been appointed.

(4) No application may be made to the President of the RICS for an arbitrator to be appointed by him under this section unless the application is accompanied by such fee as may be prescribed as the fee for such an application; but once the fee has been paid in connection with any such application no further fee shall be payable in connection with any subsequent application for the appointment by him of a new arbitrator in relation to that arbitration.

(5) Where by virtue of this Act compensation under an agreement is to be substituted for compensation under this Act for improvements or for any such matters as are specified in Part II of Schedule 8 to this Act, the arbitrator shall award compensation in accordance with the agreement instead of in accordance with this Act.

(6) In this section “the RICS” means the Royal Institution of Chartered Surveyors.”.

(3) In section 94, in subsection (2)—

(a) after the words “section 22(4)” there shall be inserted “, 84(4)”, and

(b) the words “or paragraph 1(2) of Schedule 11” shall be omitted.

(4) In that section, in subsection (3), for the words “paragraph 1(2) of Schedule 11 to this Act” there shall be substituted “section 84(4) above”.

(5) In paragraph 2 of Schedule 4, for “paragraph 1 of Schedule 11 to” there shall be substituted “section 84(2) of”.

Frequency of arbitrations under section 12

8.  In Schedule 2, after paragraph 6 there shall be inserted—

“7.— (1) This paragraph applies in any case where—

(a) a tenancy of an agricultural holding (“the new tenancy”) is granted to a person who, immediately before the grant of the new tenancy, was the tenant of the holding, or of any agricultural holding which comprised the whole or a substantial part of the land comprised in the holding, under a contract of tenancy (“the previous tenancy”),

(b) this Act applies in relation to the new tenancy by virtue of section 4(1)(g) of the Agricultural Tenancies Act 1995, and

(c) the rent payable under the new tenancy is unchanged from that payable under the previous tenancy, disregarding any increase or reduction in rent solely attributable to an adjustment of the boundaries of the holding.

(2) The reference in sub-paragraph (1) above to a substantial part of the land comprised in the holding means a substantial part determined by reference to either area or value.

(3) In any case to which this paragraph applies—

(a) paragraph (a) of sub-paragraph (1) of paragraph 4 above shall be read as referring to the commencement of the previous tenancy, and

(b) references to rent in paragraphs (b) and (c) of that sub-paragraph shall be read as references to the rent payable under the previous tenancy,

until the first occasion following the commencement of the new tenancy on which any such increase or reduction of, or direction with respect to, the rent payable under the new tenancy as is mentioned in paragraph (b) or (c) takes effect.”.

Repeal of arbitration provisions

9.—(1) Schedule 11 is repealed.

(2) Paragraphs 7 and 15 of Schedule 13 are repealed.

Transitional provision for arbitration

10.—(1) Nothing in this Order affects an arbitration under the Agricultural Holdings Act 1986 or the Agricultural Holdings Act 1948(3) which commences before this Order comes into force.

(2) For the purposes of paragraph (1) an arbitration commences when an arbitrator is appointed.

Amendments to the Agricultural Tenancies Act 1995

11.  Articles 12 to 17 amend the Agricultural Tenancies Act 1995(4).

Exclusion of the Agricultural Holdings Act 1986

12.—(1) Section 4 is amended as follows.

(2) In subsection (1), after “except”, there shall be inserted “(subject to subsection (2B) below)”.

(3) In that subsection, in paragraph (e), at the end, “or” shall be omitted.

(4) In that subsection, in paragraph (f), for the words “(“the previous tenancy”)” to the end, there shall be substituted—

“, and is so granted because an agreement between the parties (not being an agreement expressed to take effect as a new tenancy between the parties) has effect as an implied surrender followed by the grant of the tenancy, or”.

(5) In that subsection, at the end there shall be inserted—

“(g) is granted to a person who, immediately before the grant of the tenancy, was the tenant of the holding, or of any agricultural holding which comprised the whole or a substantial part of the land comprised in the holding, under a tenancy in relation to which the 1986 Act applied, and is so granted by a written contract of tenancy indicating (in whatever terms) that the 1986 Act is to apply in relation to the tenancy.”.

(6) In subsection (2), at the end of paragraph (a), “and” shall be omitted.

(7) In that subsection, for paragraph (b) there shall be substituted—

“(b) the current tenancy is granted to a person (alone or jointly with other persons) who, if the tenant under that previous tenancy (“the previous tenant”) had died immediately before the grant, would have been his close relative, and

(c) either of the conditions in subsection (2A) below is satisfied.”.

(8) After that subsection there shall be inserted—

“(2A) The conditions referred to in subsection (2)(c) above are—

(a) the current tenancy is granted to a person (alone or jointly with other persons) who was or had become the sole or sole remaining applicant for a direction of an Agricultural Land Tribunal for a tenancy, and

(b) the current tenancy—

(i) is granted as a result of an agreement between the landlord and the previous tenant, and

(ii) is granted, and begins, before the date of the giving of any retirement notice by the previous tenant, or if no retirement notice is given, before the date of death of the previous tenant.”.

(9) After subsection (2A) there shall be inserted—

“(2B) The 1986 Act shall not apply by virtue of subsection (1)(f) or (g) above in relation to the tenancy of an agricultural holding (“the current holding”) where—

(a) the whole or a substantial part of the land comprised in the current holding was comprised in an agricultural holding (“the previous holding”) which was subject to a tenancy granted after the commencement of this subsection in relation to which the 1986 Act applied by virtue of subsection (1)(f) or (g) above;

(b) the whole or a substantial part of the land comprised in the previous holding was comprised in an agricultural holding (“the original holding”) which was at the commencement of this subsection subject to a tenancy in relation to which the 1986 Act applied; and

(c) the land comprised in the original holding does not, on the date of the grant of the tenancy of the current holding, comprise the whole or a substantial part of the land comprised in the current holding.”.

(10) After subsection (2B) there shall be inserted—

“(2C) The references in subsections (1)(g) and (2B) above to a substantial part of the land comprised in the holding mean a substantial part determined by reference to either area or value.”.

(11) In subsection (3)—

(a) at the end of paragraph (a), “and” shall be omitted;

(b) at the end of paragraph (b), there shall be inserted—

“, and

(c) “retirement notice” has the meaning given by section 49(3) of that Act.”.

(12) The amendments made by this article shall not apply in relation to any tenancy granted before this article comes into force.

Notice to terminate the tenancy

13.  In sections 5(1), 6(1)(c) and 7(1) the words “but less than twenty-four months” shall be omitted.

Application of Part II of the Agricultural Tenancies Act 1995

14.—(1) In section 9—

(a) at the end of paragraph (a), “or” shall be omitted;

(b) at the end of paragraph (b), there shall be inserted—

“, or

(c) does not contain any provision which precludes a reduction in the rent during the tenancy, and—

(i) expressly states that this Part of this Act does not apply, or

(ii) makes provision for the reference of rent reviews to an independent expert whose decision is final.”.

(2) In section 28(5)—

(a) at the end of paragraph (b), “or” shall be omitted;

(b) at the end of paragraph (c), there shall be inserted—

“, or

(d) any dispute relating to rent review, in any case where Part II of this Act is excluded by virtue of section 9(c)(ii) of this Act.”.

(3) The amendments made by this article shall not apply where the provision in the instrument creating the tenancy referred to in section 9(c)(i) or (ii), as inserted by paragraph (1) above, is made before this article comes into force.

Factors to be taken into account on rent review

15.  In section 13(2) for the words “relating to the criteria by reference to which any new rent is to be determined)” there shall be substituted “which (apart from this section) preclude a reduction in the rent during the tenancy)”.

Agreement to limit tenant’s compensation

16.—(1) In section 20(1), at the beginning there shall be inserted “Subject to subsection (4A) below,”.

(2) After section 20(4) there shall be inserted—

“(4A) Where the landlord and the tenant have agreed in writing, after the commencement of this subsection, to limit the amount of compensation payable under section 16 of this Act in respect of any tenant’s improvement, that amount shall be the lesser of—

(a) the amount determined in accordance with subsections (1) to (4) above, and

(b) the compensation limit.

(4B) In subsection (4A) above, “the compensation limit” means—

(a) an amount agreed by the parties in writing, or

(b) where the parties are unable to agree on an amount, an amount equal to the cost to the tenant of making the improvement.”.

Application of agreed limit on resumption of possession of part of holding

17.—(1) In section 24(2), for “(4)” there shall be substituted “(4A)”.

(2) In section 24(4), after “shall apply”, there shall be inserted “(subject to subsection (4A) below)”.

(3) After section 24(4) there shall be inserted—

“(4A) Where—

(a) the landlord and the tenant have agreed in writing, after the commencement of this subsection, to limit the amount of compensation payable under section 16 of this Act in respect of any tenant’s improvement not consisting of planning permission,

(b) that improvement is provided for both the relevant part and the land comprised in the tenancy after the termination date,

(c) the case falls within paragraph (a) or (b) of subsection (1) above,

(d) the tenant has already received compensation in respect of the improvement, determined in accordance with subsection (2) above, and

(e) further compensation in respect of the improvement is payable under section 16 of this Act on termination of the tenancy,

the compensation limit referred to in section 20(4A) of this Act shall, for the purposes of determining that further compensation, be reduced by an amount equal to the amount of compensation already received by the tenant in respect of the improvement.”.

(4) In section 24(5), for “(4)” there shall be substituted “(4A)”.

Consequential amendments, repeals and revocations

18.  Schedule 1 (which contains consequential amendments), Schedule 2 (which contains repeals) and Schedule 3 (which contains revocations) shall have effect.

Jeff Rooker

Minister of State

Department for Environment, Food and Rural Affairs

18th October 2006