Succession to an Agricultural Holdings Act 1986 agricultural tenancy
is not automatic and planning for succession to a tenanted farm is
Jonathan Thompson, an associate at law firm, Smithson Clarke
which has offices in Alnwick and Newcastle and specialises in agricultural
legal matters, highlights the implications of the new agricultural
tenancy legislation relating to succession, due to come into force
later this year:
“One of most significant amendments to the legislation concerns
succession where a tenant has diversified into a non-agricultural
activity,” said Mr Thompson.
“Many farm businesses have diversified in order to survive
and this has been recognised in the new legislation.
“Obtaining your landlord's permission for a diversification
project, however, is key and you should also try and negotiate
succession as early as possible.
“At present there is 100pc relief against inheritance tax
for some agricultural land even in cases where the owner does not
farm it. That exemption does not apply to land that is being
used for non-agricultural activities. A landlord, who agrees
to a tenant carrying out non-agricultural activities, obviously
has to take this into consideration.”
Mr Thompson added: “Another important change in the new
tenancy legislation is that Schedule 11 to the Agricultural Holdings
Act 1986, which sets out an arbitration code unique to that act,
has been removed and normal arbitration rules under the Arbitration
Act 1996 now apply.
“One of the problems with the 1986 Act concerned the grant
of succession tenancies by agreement. As a result,
successors often had to apply to the Agricultural Lands Tribunal,
even when the landlord had agreed to a new tenancy. The amended
legislation will remove this requirement.
Mr Thompson concludes: “These changes are intended to deal
with particular issues of the 1986 Act which have been shown to
cause problems in practice, and are intended to facilitate tenancy
succession, particularly where tenants diversify into non-agricultural
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