Part 4: security of tenure

The Valuation Office Agency's (VOA) technical manual relating to Inheritance Tax.

Basic provisions

By s.25 AHA 1986 the landlord must give at least twelve months notice to quit, expiring on the anniversary of the tenancy. The tenant then has one month in which to serve a counter notice. The landlord then has one month in which to apply to the Agricultural Lands Tribunal (ALT). The ALT can consider the following grounds for possession (s.27 AHA 1986): good husbandry; sound management; agricultural research etc or for the purposes of the enactments relating to small holdings; for the purposes of allotments; greater hardship; non-agricultural use.

Ss.24 & 25 Agricultural Holdings Act 1948 (later ss.2 & 3 Agricultural Holdings (Notice to Quit) Act 1977) provided for notices to quit under certain circumstances to be incontestable, viz:-

Case A Prior Tribunal consent

B Non-agricultural use C Certificate of bad husbandry D (a) Failure to pay rent

(b) Failure to remedy a breach of the tenancy

E Irremediable breach of tenancy F Insolvency of tenant G Death of tenant (see below) H Ministry holdings amalgamations I Statutory smallholdings.

Sch 3 AHA 1986 now provides that the incontestable cases are:-

Case A Small holdings (retirement at 65)

B* Non-agricultural use C Bad husbandry D (a) Failure to pay rent

(b) Failure to remedy a breach of tenancy

E Irremediable breach of tenancy F Insolvency of tenant G Death of tenant (see below) H Ministry holdings amalgamation

*Note: Case B has been amended by the Agricultural Holdings (Amendment) Act 1990 - see Part 1 of this Practice Note.

Case G - Death of tenant

With effect from 14th November 1976, the Agriculture (Miscellaneous Provisions) Act 1976 gives on the death of the original tenant, a right to one successor from a limited class of relatives. This takes the form of a new tenancy, which also carries the right to one successor, i.e. a total of two successors from the original death.

This right of succession is not applicable to new tenancies created after 12th July 1984 (originally AHA 1984, now AHA 1986), but new tenancies created under the 1976 succession rights retain their right of one further succession.

“Gladstone v Bower” agreements

The Agricultural Holdings Act 1948 left a loophole in its provisions on security of tenure which was confirmed by the Court of Appeal in the case of Gladstone v Bower (176 EG 403 - 27 Aug 1960). The effect is that a tenancy for a term certain of more than one but less than two years is not converted into a tenancy from year to year by operation of s.2 or s.3 AHA 1948 (now ss.2 and 3 AHA 1986). Accordingly when such a tenancy comes to an end by effluxion of time the landlord is entitled to recover possession. This may not apply however if a landlord seeks to circumvent the security of tenure provisions by granting a series of such tenancies without resuming possession of the farm in between.

Ministry consent tenancies

S.5 AHA 1986 empowers the Minister to give prior consent to the grant of a tenancy of an agricultural holding for a term of between two and five years which will then not confer any security of tenure on expiration of the term. Consent must be obtained before the grant of the tenancy.

The Minister has discretion in the exercise of his powers and there is no right of appeal. The tenancy must be in writing and it must be endorsed to the effect that s.3 AHA 1986 shall not apply (ie no conversion into a tenancy from year to year on expiration of the fixed term). Minister’s consent will only be granted on joint application by the landlord and prospective tenant and in general will be granted where there is a good reason for the landlord to seek exclusion from the security of tenure provisions. Examples might include a short term reorganisation of the cultivation of the land or a desire to secure possession at a future date when a son or daughter might be in a position to take over the farm.

Effectiveness of Notice to Quit

If it is established that the property is occupied under an agricultural tenancy within the scope of the Agricultural Holdings Acts (AHA) 1948, 1984 and 1986, a Notice to Quit served on a tenant would become effective only in the circumstances set out in the consolidated provisions of ss.2-5 of the Agricultural Holdings (Notice to Quit) Act 1977, ss.5-7 AHA 1984 and ss.25-33 AHA 1986.

In the case of Newman & Another v Keedwell & Another (233 EG 495 - 5 November 1977) the High Court held that a Notice to Quit served by a landlord was effective because of the failure of one of the joint tenants to join in serving a Counter Notice.

Newman v Keedwell is not necessarily regarded as applying to the situation where a landlord lets to himself together with others and then fails in his capacity as one of the joint tenants to serve a Counter Notice in respect of a Notice to Quit served by him in his capacity as landlord. The availability of vacant possession should not be assumed where a landlord has let to himself together with others and the tenancy constitutes a partnership asset. See Sykes v Land (271 EG 1264 - 29 September 1984).