6 Change of user

5.18 In what circumstances will a tenancy lose the protection of the Agricultural Holdings Act 1986 if the user by the tenant changes from agriculture to some other user? Similarly, if property ceases to be an agricultural holding, does it then come automatically within the protection of the Rent Act 1977 or the Landlord and Tenant Act 1954 if the new user is residential, or for business purposes? The principles that have been applied by the Courts distinguish between those cases where the change is from a non-agricultural to agricultural user, and where an initial agricultural use is subsequently abandoned.

It is therefore convenient to consider them separately. It should also be appreciated, that where a change from a non agricultural use to an agricultural use took place on or after 1 September 1995, the question will be whether the tenancy in question has become a farm business tenancy (and not a tenancy of an agricultural holding).

(a)Abandonment of agricultural use

5.19 It was decided by the Court of Appeal in Hickson and Welch Ltd v Cann³⁵ that if agricultural use is abandoned by the tenant, either with or without the consent of the landlord, then notwithstanding the terms of the tenancy the land will cease to be an agricultural holding. A tenant can unilaterally abandon the protection of the Agricultural Holdings Acts, although given the serious consequences that follow for the tenant, the criteria required for effective abandonment clearly need to be closely defined. The following principles were laid down in Wetherall v Smith³⁶:

1.The period to which attention must be drawn when deciding whether a tenancy has ceased to be an agricultural holding, where a notice to quit has been served, is the period leading up to the service of the notice to quit.

2.The change in the legal status of the property cannot be brought about by abandonment of agricultural user for a matter of days or weeks.

Evidence of a serious intention to abandon is required. Abandonment of agricultural user for a period of at least two years prior to service of the notice to quit would normally be required.³⁷

3.The consent of the landlord to cessation of agricultural use is not necessary for the tenancy to cease to be that of an agricultural holding.

‘It is in my judgement right that the protection of the statute should be lost if agricultural activity is wholly or substantially abandoned during the course of the tenancy, even without the consent of the landlord. The object of the legislature is to maintain continuity in the conduct of farming and horticultural operations rather than to put people who have at some time in the past acquired a particular type of tenancy in a privileged position’.³⁸

4.An agricultural holding can cease to be within the protection of the Act if it is still used for ‘agricultural’ purposes, but it is not used as such in connection with a trade or business in the period leading up to service of a notice to quit. This follows, of course, from the fact that use for a trade or business is an integral part of the statutory definition.

5.Conversely, an agricultural holding can cease to be within the protection of the Act if it is still used for the purpose of a trade or business, but the character of the business itself ceases to be substantially ‘agricultural’, viz. the activities generating the income of the business cease to be agricultural. This is the most problematic situation. In Short v Greeves³⁹ the Court of Appeal endorsed the presumption, derived from the principles in Wetherall v Smith, against a holding which is clearly agricultural at the outset ceasing to be such, without clear evidence of its substantial user ceasing to be agricultural. It was there held that the proportion of business turnover derived from agricultural, as opposed to non-agricultural, activities was relevant to determine whether a tenancy was an agricultural holding.

Notwithstanding, in Short v Greeves the development of a 60% non-agricultural turnover was not sufficient to deprive a tenancy of its existing status as an agricultural holding. In Lord Monson v Bound,⁴⁰ on the other hand, it was held that a tenancy of a florists shop was not an agricultural holding where only 10% of horticultural sales from the premises were of flowers grown on the holding. To outweigh actual agricultural user on the land demised, therefore, it would appear that turnover from non-agricultural sources must be high. In borderline cases, moreover, the terms of the tenancy may also reinforce the presumption that it is an agricultural holding eg in Short itself the tenancy contained the usual terms as to good husbandry commonly found in agricultural leases. Ultimately, whether agricultural use is the substantial or predominant user, taking the land demised as a whole, is a question of fact, not law. Where cesser of a pre-existing agricultural user is claimed, one obvious anomaly arises from the approach endorsed in Wetherall v Smith and Short v Greeves; a tenancy which was once an agricultural holding may still qualify as such under the cesser rules even if, on the facts as found, it would not have qualified as such ab initio.⁴¹ Where the character of the tenant’s business user has changed it will, therefore, be necessary to show on the facts that a sufficiently high proportion of turnover is derived from non-agricultural sources for a considerable period (of probably two years or more) prior to notice to quit.⁴²

(b)Change to agricultural use

5.20 The position where the tenant adopts an agricultural user at some time subsequent to the commencement of the tenancy is more problematical. Dicta in Godfrey v Waite⁴³ and Wetherall v Smith⁴⁴ indicate clearly that land that was not an agricultural holding at the outset can only become such if there has been consent by the landlord to the change of use.

The problem is to ascertain when and how such consent needs to be given. If the change in use, with consent, took place on or after 1 September 1995, moreover, the question will be whether the tenancy has become a farm business tenancy.⁴⁵ If it took place prior to that date, then the question will be whether the tenancy has come within the protection of the 1986 Act.

5.21 Different considerations will apply according to whether or not the tenancy agreement itself specified the intended use of the land.

‘The first place to ascertain [the parties] intention is in the lease itself. If that does not provide an answer you look at all the surrounding circumstances to see what must have been in the contemplation of the parties; if that yields no solution, you must look to the nature of the premises and the actual user at the relevant time.’⁴⁶

5.22 The terms of the tenancy agreement itself are the primary consideration, and if they clearly express the intended use of the property to be non-agricultural (for instance, as a dwelling) then this is conclusive. Moreover, the normal rules of construction will apply, with the result that oral evidence will be inadmissible to add to or vary the terms of the lease. In this situation the tenant must establish that there is a new contract of tenancy providing for the changed use, or that the original agreement has been validly varied.

‘The user prescribed in the terms of the lease is what counts. If it is departed from through the parties making a new contract or varying the existing contract so as to permit or provide for a changed user, then the new user may... be treated as the material one; but nothing short of a new contract or variation of the contract will suffice.’⁴⁷

5.23 For a variation to take place it is settled law that the landlord must have actual knowledge of the change of use, and have consented to the new user. Mere acceptance of rent with knowledge of the changed use will have no effect ‘unless it can be inferred, as a matter of fact, that the landlord has affirmatively assented to the change of user.’⁴⁸ It is expressly provided by s 1(3) of the 1986 Act that any change in user which involves a breach of the terms of the tenancy must be disregarded, when determining whether a contract which was not originally an agricultural tenancy has subsequently become one, ‘unless it is effected with the landlord’s permission, consent or acquiescence’.⁴⁹ If there is no express provision in the lease then one can look at the circumstances of the letting to ascertain the intention of the parties.

If this gives no indication then one can look to the actual user at the material time.⁵⁰

5.24 The principles of the general law were reformulated into five specific propositions in relation to the law of agricultural holdings by Slade LJ in Russell v Booker⁵¹:

1Where the terms of the tenancy agreement provide for the use of premises for some particular purpose (for instance as a dwelling or for agricultural use) then that purpose is the essential factor in deciding whether it was let ‘as a separate dwelling’ (within the Rent Act 1977 or Housing Act 1988) or as an agricultural holding.

2Nevertheless, where the agreement provides for the use of the premises for some particular purpose, but that agreement is superseded by a subsequent contract providing for a different user, that subsequent contract can be looked at.

3If the tenant changes the user of the premises, and this fact is fully known to and accepted by the landlord, it may be possible for the Court to infer a subsequent contract to let the premises for the new purpose, even though this would be a contract different in essentials to the original tenancy. Constructive knowledge of the change of use is not sufficient for this purpose, however.

4Unless a contract of this nature can be made out, a merely unilateral change of user will not enable the tenant to claim the protection of the Agricultural Holdings legislation in a case where the terms of the tenancy agreement itself provide for, and contemplate, the use of the premises for some other purpose, eg a shop or dwelling.

5Where a tenancy agreement does not provide for or contemplate the use of the premises for any particular purpose, actual subsequent user has to be looked at to determine whether the property was let as an agricultural holding, as a dwelling within the Rent Act 1977, or as business premises.

(c)Impact on Protected Status of Tenancy

5.25 The combined effect of the decisions in Wetherall v Smith and Russell v Booker outlined above is that a tenant may lose his protection under one statutory code (for example the Rent Acts⁵² or business tenancy legislation⁵³) by unilateral abandonment, without being able to prove the existence of a new contract which would bring him within either the Agricultural Holding legislation⁵⁴ or the Agricultural Tenancies Act 1995.

Russell v Booker itself provides an example. Land and a house were there let under a tenancy which explicitly contemplated agricultural use. The tenant ran a bed and breakfast business and also kept poultry and cows on the land, but both business and agricultural activities ceased when he reached old age. His successor claimed the tenancy had become that of a dwelling protected by the Rent Act 1977. The Court of Appeal held that the property was not an agricultural holding because agricultural user had been unilaterally abandoned. A new tenancy protected by the Rent Acts had not, however, come into being because the landlord had no knowledge of the change of use. The only relevant agreement was the original tenancy, and as agricultural use had been abandoned it was no longer protected by the Agricultural Holdings Acts. Moreover, while the original tenancy subsisted the tenant had no protection under either statutory code. Similarly, where property let as a dwelling is adapted to agricultural use it may lose its Rent Act status without acquiring the status of an agricultural holding or farm business tenancy.

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Source: Rodgers Christopher. Agricultural Law. Bloomsbury Publishing,2016. — 914 p.. 2016

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