There are still many Agricultural Holdings Act 1986 (AHA) Tenancies in force, despite the fact that the standard tenancy in the rural sector is now the Farm Business Tenancy (FBT). For those wishing to terminate an AHA tenancy, or being faced by Notice to terminate the same, careful consideration needs to be given to the action proposed or taken.
Firstly, the general common law will apply. Any notice must therefore meet the common law rules and this may be augmented by the provisions in the Agricultural Holdings Act 1986 (1986 Act). Further, if the fixed term continues (which will be probably unlikely in this day an age), then of course Notice cannot necessarily be served without bringing the fixed term to an end.
Notice to Quit
A general notice to quit can be served at any time. However, this can be challenged by a tenant by service of a counter notice within one month of service of the notice to quit. This is done under Section 26(1) of the 1986 Act which then allows for the reference of the notice to quit to the First Tier Tribunal which then has the ability to decide whether or not to consent to the operation of the notice to quit having regard to the requirement under Section 27(3) of the 1986 Act. More often than not, the Tribunal will not agree and this is especially so where the tenant has complied with the terms of the tenancy.
The issues that the Tribunal will take into account include the following:
- Where it is in the interests of good husbandry for the purpose advanced by the landlord;
- Where it is in the interests of sound management of the estate;
- Where it is in the interests of agricultural research and education for the purpose advanced by the landlord;
- Where it is in the interest for the purpose of the laws relating to allotments;
- Whether there will be greater hardship to the landlord by not agreeing; and
- Whether it is appropriate for non-agricultural use.
There is also a catch all exception that the Tribunal will not consent to the operation of the notice to quit if, in all the circumstances, it appears that a fair and reasonable landlord would not insist on possession. As such, this can often lead to the Notice being thwarted.
Cases for Possession
These are the specified cases for possession set in Schedule 3 of the 1986 Act. These are the main grounds on which the landlord can look to terminate an AHA Tenancy and where the consent of the Tribunal is not required.
These are as follows:
A provision affecting smallholdings affecting local authority landlords.
A provision where the land is required other than for agriculture and planning permission is granted or deemed to have been granted.
A provision whereby the tenant has failed to operate in accordance with the rules of good husbandry and in the 6 months prior the Tribunal has granted a certificate to that effect.
A provision where the tenant fails to either pay rent or remedy a breach of another term of the tenancy.
A provision where there has been an irremediable breach by the tenant and the landlord’s holding has been materially prejudiced thereby.
A provision where the tenant has become insolvent.
A provision allowing for possession where the (sole/ surviving) tenant has died and notice is given within 3 months of notice of the tenant’s death.
A right for the Secretary of State to allow amalgamation or reshaping of units.
However, it is never as straightforward as merely serving a Notice. Indeed, some of the Cases above require the service of two Notices before the tenancy can be brought to an end. For example, with a Case D Notice, there is first the service of a notice to e.g. pay rent, and then a subsequent notice to quit if the tenant fails to comply with that notice.
Further, both of these notices can be challenged in arbitration which can be a complicated and costly procedure. Therefore, it is often the case that the landlords will want to be certain of their position before serving such Notice.
Whilst it is possible to serve notice under one or more of the above Cases, care still needs to be taken due to the availability of Arbitration. Given the value of the tenancy to the tenant, and the fact that rent may be lower by virtue of it, tenants can often fight these matters usually at some cost to themselves and the landlord.
A landlord can always consider negotiating with a tenant. They may be happy to do so for a variety of reasons.
Also, landlords should not forget about the possibility of forfeiture – the right of re-entry. However, this is a heavily regulated area and care should be taken, expecially where the tenancy includes some residential property.
Specialist advice should be sought early to consider the options available and to devise a plan of action accordingly.