1 Agricultural Holdings and the Landlord and Tenant Act 1954
5.89 In some cases, it may not be immediately apparent whether a tenancy is properly (i) an agricultural holding within the meaning of the 1986 Act or a farm business tenancy or (ii) a business tenancy falling within the scope of Part I of the Landlord and Tenant Act 1954.
The 1954 Act excludes from the protection of the business tenancy code all farm business tenancies and tenancies of agricultural holdings, including those tenancies (principally grazing/mowing agreements and tenancies with Ministry consent) which were not technically tenancies of ‘agricultural holdings’ because they were outside the scope of Section 2 of the 1986 Act.197 It should be noted that neither the 1986 Act itself or the Agricultural Tenancies Act 1995 exclude from their scope a tenancy that would otherwise qualify as a business letting within the Landlord and Tenant Act 1954. If a tenancy qualifies under both codes, therefore, the Agricultural Tenancy legislation prevails – a logical conclusion, in that an agricultural holding or farm business tenancy simply involves a more specialised form of business user than those otherwise protected under the 1954 Act. Agricultural land only qualifies for protection under the farm tenancy legislation if used for the purpose of a trade or business198 – all tenancies covered by the 1986 or 1995 Acts would, therefore, be within the 1954 Act in the absence of the special protection afforded by the Agricultural Tenancy legislation.5.90 Whether a tenancy is in law an agricultural holding, as opposed to a business tenancy simpliciter, is of importance for a number of reasons:
(a)Tenancies at will
5.91 A tenancy at will of agricultural land is a letting ‘for an interest less than a tenancy from year to year’. If granted before 1 September 1995, it will have been caught by s 2 of the 1986 Act and will be converted into a fully protected annual tenancy.199 A tenancy at will of business premises simpliciter is not, however, within the protection of the Landlord and Tenant Act 1954.200 More generally, the 1954 Act does not apply to licences, and has no provision corresponding to s 2 of the Agricultural Holdings Act 1986.201 There was a correspondingly greater risk of statutory protection having been inadvertently conferred, therefore, if property let before 1 September 1995 comprised an agricultural holding.
This anomaly has no relevance to farm lettings on or after 1 September 1995, as a tenancy at will cannot be a farm business tenancy within the meaning of the Agricultural Tenancies Act 1995.202(b)Compensation for improvements and disturbance
5.92 If a tenancy is of business premises, compensation for improvements will be governed by Part I of the Landlord and Tenant Act 1927. Agricultural holdings and Farm Business Tenancies are excluded from the scope of the 1927 Act203 and compensation falls to be determined in accordance with the special rules in Part V of the Agricultural Holdings Act 1986 or Part I of the Agricultural Tenancies Act 1995.204 The distinction between the two codes is important, as the consent procedures applicable to obtain permission prior to carrying out works of improvement (and so to lay the basis for a subsequent compensation claim) differ in material respects.205 The procedures for making a claim on termination of the tenancy are also markedly different.206 The compensation for disturbance provisions also differs in marked respects: in the case of business lettings disturbance compensation is calculated by reference to the rateable value of the premises multiplied by the appropriate multiplier.207 In the case of agricultural holdings, disturbance compensation is calculated by reference to the annual rent payable at termination208. No disturbance compensation is payable on the termination of a farm business tenancy.
(c)Recovering possession
5.93 The grounds for the recovery of business premises are considerably more favourable to a landlord than those applicable under the Agricultural Holdings Act 1986. In particular, Sch 3 of the 1986 Act has no provision corresponding to s 30(1)(f) and (g) of the Landlord and Tenant Act 1954, which allows for repossession of business premises where a landlord wishes to carry out works of reconstruction or demolition, or wishes to occupy the premises himself for business purposes.
(d)Change of user
5.94 The principles applicable where agricultural use ceases have already been considered.209 One issue merits further discussion. If an effective abandonment of agricultural user is established, and the premises continue to be used for business purposes, does it necessarily follow that the tenancy will move automatically into the protection of the Landlord and Tenant Act 1954? This will clearly be the result if the landlord acquiesces in the change of use, with knowledge, and in a manner that enables the court to infer a variation in the terms of the tenancy.210 Section 23 of the 1954 Act requires occupation merely ‘for the purpose of a business’, and not (unlike the 1986 Act) that the business user be substantial. So if business user is not de minimis the business tenancy code will, in principle, apply. Thus, had an effective abandonment of agricultural user been established in Short v Greeves211 the tenancy there would have fallen to be determined under the 1954 Act.
5.95 The interaction of the two protective codes does, however, give rise to anomalies. Firstly, if the landowner is unaware of a change of business use away from agriculture, or refuses to recognise it, Agricultural Holdings Act protection will be lost unilaterally by abandonment. The tenancy will not, however, move into the 1954 Act, thus leaving the tenant with no security of tenure.212 Further anomalies arise where the tenancy ceases to be an agricultural holding, not because the substantial user has changed, but because agricultural activities have ceased to be carried out in connection with a trade or business213). Could the 1954 Act protect such a tenancy in these circumstances? If the tenancy is vested in individuals it clearly cannot, for the 1954 Act here requires business user in the form of a ‘trade, profession or employment’. However, where the tenant is a body of persons (whether a company or unincorporated association) business user is defined differently to include any ‘activity’ that is an occupation as opposed to a pleasure.214 The latter has been held to be wider than merely a trade, profession or employment, and can cover purely charitable activities by unincorporated associations.215 Where the tenancy is held by a body of persons, such as a farming company, it follows that the 1954 Act may well apply where land is converted from agricultural use to some non-commercial activity – but not in other cases, and not (anomalously) if the tenancy is vested in an individual.