Professional Services Reform is opportunity to cultivate


landlord-tenant relationship • Sweeping changes to tenancy rules • More opportunity for younger farmers • Forward-thinking agreements benefi t


F


arm landlords and tenants are being urged to work to- gether to achieve positive outcomes from a landmark re- form of agricultural tenancy laws in England.


“Changes like this don’t come around often,’’ says land agent Lulu Burton, of Brown & Co, af- ter the Agriculture Act 2020 set out sweeping changes which rep- resent the fi rst agricultural ten- ancy reform for more than 20 years. “It’s certainly not an overhaul of tenancy law but it has made some useful changes – particu- larly to Agricultural Holdings Act 1986 tenancies – to assist forward thinking parties in a post-Brex- it world.’’ The changes are subject to sec- ondary legislation expected later in 2021 before they are enforced. But they provide an important early framework for landlords and tenants.


“These reforms are an oppor- tunity to cultivate landlord and tenant relationships, focus on fu- ture proofi ng farm busi- nesses and remove barriers to productiv- ity and environmen- tal management on holdings,’’ suggests Ms Burton.


A number of key areas of re- form have im-


plications for farm landlords and tenants – and could help ensure both parties know where they stand in relation to one another.


Dispute resolution For the fi rst time, disagreements relating to landlord’s consent and variation of terms can be referred to arbitration or a third party. This could prove particular- ly useful where outdated claus- es in tenancy agreements prevent diversifi cation activities or envi- ronmental land management, Ms Burton advises.


“This was possible by agree- ment before but this change as- sists those who might have met resistance before and sets the tone, in addition to providing a route for dispute resolution where parties cannot agree.’’ It may assist tenants with


diversifi cation, Environmen- tal Land Management (ELM) scheme requirements, and with accessing public money for pub- lic goods and government grants.


Landlord investments When a tenant agrees to make payments towards improvements made by the landlord, these investments will be disregard- ed during rent reviews. The aim of this change is to unlock potential investment from land- lords.


“This matter was not formal- ised or considered at arbitration before and the idea is therefore to encourage landlord and ten- ant investment in long term ten- anted holdings,’’ says Ms Burton.


Succession


The so-called Commercial Unit Test, which was widely regard- ed as a very antiquated test to determine eligibility for succes- sion, has been abolished. Ms Burton says this opens the


The changes pave the way for better


farm business arrangements, says Lulu Burton


door to the prospect of quali- fying successors who may al- ready operate an effi cient, larger farming business of scale to take on the farming of the holding where they may have been prevented from do- ing so before.


Amendments have also


been made to the criteria around suitability for succession – by in- troducing consideration for the capacity of the successor to farm the holding ‘commercially to high standards of effi cient production and care for the environment’. Previously, only the agricul- tural experience of a successor applicant was taken into account but business management, train- ing and skills have been added, while age has been removed as a consideration and replaced with character.


“


These reforms remove barriers to productivity and environmental management


Existing standards around succession are arguably low. This mean there are benefi ts to refi ning criteria to distinguish be- tween forward-thinking commer- cial agricultural tenants looking for growth and those with a more environmental focus.


Retirement age


The abolition of 65 as the mini- mum age at which a retirement notice may be given will encour- age earlier retirement. As a result, there will be op- portunities for young, commer- cially-minded successors to enter the industry at the right time rather than at a time dictated by the ageing legislation, says Ms Burton.


Partnership helps farms measure natural capital Land and property specialist


Strutt & Parker and the Econom- ics for the Environment Consul- tancy (Eftec) have teamed up to help rural landowners enhance and unlock the potential of their natural capital assets.


Collaboration


Natural capital accounting is a way of measuring, monitoring and


28 MIDLAND FARMER • DECEMBER 2020


valuing a farm or estate’s natural capital assets – such as soil, water and wildlife habitat – presenting the information in a similar way to a set of fi nancial accounts. The collaboration will ena-


ble the production of natural capital accounts for farm busi- nesses. This ties in with the forth- coming Environmental Land Management Scheme (ELMS)


which will require farmers to un- derstand the goods they provide.


Huge interest Strutt & Parker head of rural James Farrell said: “There is a huge amount of interest in nat- ural capital at present, linked to concerns about climate change and declines in biodiversity. “The more that landowners


understand about the quantity and quality of their natural capi- tal assets, the better placed they will be to make decisions about how best to manage them. “It will also help to identify where there might be potential to open up new income streams, through the provision of ecosys- tem services such as the genera- tion of carbon credits.”


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