3 Compensation for Improvements

4.55 The provisions of Part III of the 1995 Act, which govern compensation for improvements, are more straightforward than the rules for ‘old’ tenancies contained in the 1986 Act.¹⁴³ The 1995 Act avoids the use of fixed lists of compensateable improvement – a prominent feature of previous tenancy legislation¹⁴⁴ – and the only improvements for which compensation can be claimed are those ‘tenant’s improvements’ defined in s 15 of the 1995 Act.

(a)Tenant’s Improvements

4.56 Only those tenant’s improvements defined in s 15 will qualify for compensation at the end of a farm business tenancy. ‘Tenant’s improvements’ are defined to mean:

(i)any physical improvement which is made on the holding by the tenant by his own effort or wholly or partly at his own expense, or

(ii)any intangible advantage which is obtained for the holding by the tenant by his own effort or wholly or partly at his own expense, and which becomes attached to the holding.

4.57 The tenant under a farm business tenancy is entitled on termination of the tenancy, on quitting the holding, to obtain from the landlord compensation in respect of any tenant’s improvement, subject to the rules and conditions of Part III of the 1995 Act.¹⁴⁶ Note however, that the improvement must have been made by the tenant making the claim, and not (for example) by a previous tenant.

(b)Conditions of Claim

4.58 For compensation to be obtained, the following conditions must be fulfilled:

(i)The landlord must have given his written consent to the making or provision of the tenant’s improvement.¹⁴⁷ Consent can be given in the tenancy agreement itself, or subsequently.¹⁴⁸ Note that consent must be given in writing if compensation is to be payable, even if the tenancy agreement itself is oral. Special rules as to the giving of consent apply to routine improvements and planning permissions. Consent can be given unconditionally, or on condition that the tenant agrees to a specified variation in the terms of the tenancy eg a condition to the granting of consent that all fixtures provided by the tenant be removed at the end of the tenancy, or (conversely) one that they be treated as improvements and not removable as fixtures.

(ii)The improvement must be made wholly or partially at the tenant’s expense.¹⁴⁹ If the landlord contributes the cost of materials and the tenant contributes his physical labour, the extent of the tenant’s claim will be reduced proportionately. In this case the landlord will have to ensure his contribution is recorded by agreement in writing if the tenants claim is to be reduced accordingly – a trap for the unwary.¹⁵⁰

(iii)The improvement must either be made to the holding (in the case of a physical improvement) or become attached to the holding (in the case of intangible advantages), and must not be removed by the tenant at the end of the tenancy.

(iv)The quantum of compensation is fixed as the amount equal to the increase attributable to the improvement in the value of the holding at termination as land comprised in a tenancy ie any increase in rental value attributable to the improvement or advantage provided by the tenant.¹⁵¹ It follows that compensation will only be available if the improvement adds to the rental value of the holding. This is assessed at termination of the tenancy.

(c)Physical and Routine Improvements

4.59 Most physical improvements are readily identifiable, and will be compensateable if they have the prior written consent of the landlord and add to the rental value of the holding. These would include many of the matters formerly provided for in schedule 7 to the Agricultural Holdings Act 1986 – the erection of buildings, provision of permanent fencing, making of yards, provision of silos and the like. Other physical improvements are less readily identifiable, and are consequences of normal farming and husbandry practices eg applying fertilisers, reseeding at the tenant’s expense and fallows. In such cases it was felt that requiring the tenant to obtain the landlord’s consent before commencing the improvement would be unduly onerous and disruptive of a tenant’s normal farming operations. In this case, and this case only, a tenant can apply for an arbitrator’s permission to carry out the improvement after it has been commenced. As we shall see, in all other cases the tenant must obtain the landlord’s consent, or that of an arbitrator, before commencing to make the improvement in question.

4.60 Routine improvements are defined to mean any tenant’s improvement which is a physical improvement made in the normal course of farming the holding or any part of it, but does not consist of fixed equipment or an improvement to fixed equipment.¹⁵² Fixed equipment is defined in similar terms as under the 1986 Act, to include any building or structure affixed to the land and any works constructed in on or under the land, and also anything grown on land for a purpose other than use after severance from the land eg trees grown as a wind break.

4.61 It should also be noted that routine improvements do not include any improvement whose provision is prohibited by the tenancy agreement.¹⁵³ It may be that a landlord, wishing to retain residual control over routine improvements,¹⁵⁴ may prohibit the carrying out of all, or all but specified, routine improvements. There is a question whether this will have the effect of debarring the tenant from compensation altogether, or whether it merely obliges him to obtain consent before commencing the improvement. The tenant has the right to apply for consent from an arbitrator to the making of physical improvements, notwithstanding the landlord’s refusal of consent. If the provision in section 19(10) is interpreted as denying prohibited improvements simply the status of routine improvements then the effect of a prohibition in the tenancy will be to require the tenant to obtain consent before commencing the improvement. If, on the other hand, this provision is interpreted by the courts as denying the improvement the status both of improvement and routine improvement then no application to the arbitrator for consent is possible, even before the improvement is commenced. The better view, it is suggested, is that a prohibition of routine improvements in the tenancy agreement merely prevents improvements acquiring the special status of ‘routine’ improvements,¹⁵⁵ thus necessitating an application for consent before the improvement is made.

(d)Intangible Improvements

(i) Planning Permissions

4.62 Section 18 of the 1995 Act makes provision for the tenant to claim compensation for planning permissions that he has obtained, but in respect of which the development (or change of use) authorised by the permission has not been carried out fully before the tenancy ends. If the development has been completed, the tenant will be entitled to compensation for it separately as a physical improvement, subject to the conditions outlined above. In this case he will not be able to claim, in addition, separate compensation for the planning permission for the improvement or change of use. Any value attributable to the fact that the improvement or change of use had planning permission will, however, be taken into account in the normal way when determining the amount of compensation payable in respect of the improvement, or of any intangible advantage obtained as a result of the change of use.¹⁵⁷ The policy of the 1995 Act is to give the tenant a right to compensation for planning permissions for lawful developments benefiting the holding which are not prohibited by the tenancy agreement. No compensation is payable for planning consents for improvements which the landlord has not authorised.

4.63 The tenant’s right to compensation arises if three conditions are satisfied:

•the landlord must have given his written consent to the making of the application of planning permission.

•the landlord’s consent must be expressed to be given for the purpose of enabling a specified physical improvement to be lawfully provided by the tenant, or to enable the tenant to lawfully effect a specified change of use, and

•on termination of the tenancy the specified physical improvement has not been completed or the specified change of use has not been effected.

4.64 The landlord can give his consent to the application for planning consent either unconditionally or on condition that the tenant agrees to a specified variation in the terms of the tenancy.¹⁵⁸ The variation must, however, be related to the physical improvement or change in use in question. The landlord could, for example, stipulate that the use of specified material or design be included in the application, that insurance terms in the tenancy be varied or that any physical improvement resulting from the permission (if granted) be not removed as a fixture at the end of the tenancy. There is no appeal to the arbitrator against a landlord’s refusal to give consent to an application for planning permission¹⁵⁹ – unlike a refusal of consent for a physical improvement or other type of intangible advantage. Even where the landlord’s consent is refused, there is nothing to stop the tenant from applying for planning permission and then proceeding to provide the improvement:¹⁶⁰ for he can apply for the arbitrator’s consent to the provision of the improvement itself. The availability of separate compensation for the planning permission only becomes critical if the tenant fails to complete the improvement before the end of the tenancy, as there will then be no separate compensation claim for any value attributable to it.

4.65 The provision of compensation for planning consents obtained by the tenant was a new departure introduced by the farm business tenancy regime: compensation is not available for planning permission under the Agricultural Holdings Act 1986, neither is it available to business tenants under the Landlord and Tenant Act 1954. Initially this might seem of considerable benefit to the tenant considering farm diversification, who may need planning consent for non-agricultural development or change of use. Compensation is not restricted, moreover, to those planning consents which would, if carried out, constitute an improvement on the holding – it will also be available for change of use consents where no physical improvements to the holding are in prospect. Importantly, however, compensation will only be available if the improvement is one to which the landlord has consented in writing, and if he has consented to the making of an application for planning permission. The tenant does not share in the development value generated by the planning consent, as the measure of compensation is the increase in rental value of the land ‘as land comprised in the tenancy’. This rule could generate disagreement if the proposed diversification is of little long-term benefit to the holding or an incoming tenant. This could be the case, for example, where the tenant intended to diversify into the provision of war game facilities on the farm, or paintball games or motorcycle rallying.

(ii) Other Intangible Advantages

4.66 The compensation provisions in the 1995 Act also appear superficially generous in conferring a right to compensation for intangible ‘advantages’ which are neither planning consents nor improvements. An ‘advantage’ is, somewhat unhelpfully, left undefined – except to the extent that it must become ‘attached to the holding’, and be distinguished from a planning permission or an improvement.¹⁶¹ Until the implementaiotn of the Agenda 2020 reform of the common agricultural policy,¹⁶² there was a question whether it would include dairy quota and similar rights attached to the holding. Dairy quotas were abolished from 31 March 2015, so this issue no longer has relevance.

4.67 Other intangible advantages attaching to the holding might include:

•IACS designations, water abstraction licences and some environmental designations. Note, however, that although it is commonly assumed that environmental designations might be compensateable under this head, it is unlikely that this will be of major benefit to the tenant. Most environmental designations are made by governmental agencies or statutory bodies and do not require the agreement of the individual landowner or farmer¹⁶³ – this is the case, for example, with SIs and Environmentally Sensitive Areas. They are not acquired by the tenant’s effort or at his expense.¹⁶⁴ And, in any event, the designation itself does not add value to the holding,¹⁶⁵ other than in the limited sense that a management agreement (with financial compensation) might be available in some circumstances. The financial benefit to the farming enterprise will be obtained by the conclusion of a management agreement with compensation payments – but most management agreements are personal contracts between the farmer and the relevant government agency,¹⁶⁶ and do not become attached to the holding. They would not appear to qualify for compensation, therefore, under the provisions relating to intangible advantages. Some limited classes of environmental designation might, however, qualify. These might include a Special Nature Conservation Order made under the Conservation of Habitats and Species Regulations 2010, or a long term SI management agreement made under seal and registered as a local land charge. These bind the land in the hands of successive owners, and might be said therefore to become attached to the holding in the required sense. They are not frequently used in practice, however. Most environmental agreements are now made under hand for short periods.

•Business Goodwill. It could also include business goodwill generated by the tenant. because of the requirement that the advantage ‘attach’ to the holding, after termination of the tenancy, however, it would presumably exclude compensation for some types of business goodwill – an important factor where a diversified farm business has been established. Goodwill normally attaches to the business, not the holding per se, and as such cannot be compensated for under the terms of the 1995 Act. This type of goodwill, which goes with the departing tenant, is frequently referred to as ‘dog’ goodwill. In some cases, however, some goodwill may attach to the holding and remain after the tenant’s departure (so-called ‘cat’ goodwill). Examples might include the goodwill attached to a go-cart track established on the farm, or a golf course, or a health club that will remain in business under the new occupant. These are all instances where some residual goodwill may attach to the holding after the tenant’s departure. The 1995 Act introduced, for the first time, statutory provision for ‘cat’ goodwill of this kind to be compensated. Difficult questions will doubtless arise, however, in valuing goodwill, and in distinguishing ‘cat’ and ‘dog’ goodwill in individual cases. The provisions for compensating intangible ‘advantages’ will also allow for compensation for licences acquired for the running of a diversified non-agricultural business eg restaurant and liquor licences for a farm cafe/restaurant, or for a residential complex providing farm holidays. Valuing the measure of compensation for intangible advantages of this kind may also prove difficult.

(e)Landlord’s Consent to Improvements

4.68 The tenant is only entitled to compensation for a tenant’s improvement if he has obtained the written consent of the landlord to its provision.¹⁶⁷ The landlord’s consent can be given before or after the improvement has been provided. Where the landlord refuses consent, or gives it on terms unacceptable to the tenant, the 1995 Act provides a mechanism for the tenant to refer the matter to arbitration, and seek the arbitrator’s consent to the improvement in question (see below). Unlike the landlord’s consent, however, an arbitrator’s consent can only be given before the tenant has provided or begun to provide, the improvement in question¹⁶⁸- unless it is a routine improvement, in which case consent can be requested retrospectively. Consent can be given in the tenancy agreement itself – for example as to routine improvements or the provision of specific improvements by the tenant or it can be given subsequently by letter. Note that consent must be in writing for compensation to be payable, even if the tenancy itself is oral. The landlord’s consent can be given unconditionally, or on condition that the tenant agrees to a specified variation in the terms of the tenancy¹⁶⁹ eg a condition that all fixtures be removed at the end of the tenancy, or that they be treated as improvements and not removed as fixtures.¹⁷⁰ The variation in the terms of the tenancy must be related to the tenant’s improvement in question. This would permit a variation in, for example, repairing or insurance obligations to take account of the new improvement.

(i) Arbitration on Refusal of Consent

4.69 The 1995 Act gives the tenant the right to go to arbitration where the landlord refuses consent or imposes conditions which the tenant considers unreasonable. Arbitration is provided for in three specific situations:

•where the landlord has refused to give his consent under s 17(1) of the 1995 Act to the provision of the improvement.

•where the landlord has refused to give his consent within two months of a written request by the tenant for such consent. This prevents the tenant suffering unreasonable delay where the landlord fails to reply to his request, and puts the onus onto the landlord to respond within two months or face possible arbitration. Request for consent should always be made in writing, so as to take advantage of this provision and start the clock running against the landlord, so that the right to arbitration will accrue when two months elapses.

•where the tenant is aggrieved by any variation in the terms of the tenancy required by the landlord as a condition of giving consent to the improvement.

4.70 The tenant can demand arbitration by notice in writing served on the landlord, but may only do so in relation to improvements which he has not already provided or begun to provide.¹⁷¹ In the case of routine improvements,¹⁷² however, arbitration can be requested after the improvement has been provided. Note, however, that if the tenancy agreement prohibits the provision of all, or specified, ‘routine’ improvements they may not be classed as ‘routine’ for the purposes of the 1995 Act¹⁷³ – with the practical effect that consent (and arbitration on its refusal) will be required before they are carried out, and will not be available subsequently. It will be necessary to consider the terms of the tenancy agreement in each case before requesting landlord’s consent to the improvement. It should also be noted that the tenant cannot challenge the landlord’s refusal of consent to an application for planning permission. No arbitration mechanism is provided by the 1995 Act to challenge the landlords refusal in this case – although if planning permission for the provision of an improvement is obtained the tenant will be able to refer to arbitration a subsequent refusal of consent to the provision of the physical improvement itself. This places the tenant in a difficult position if the improvement is of a nature to require planning permission, and the landlord refuses consent. If he goes to the expense of obtaining planning consent, but then fails to secure the landlord’s or an arbitrator’s consent to the provision of the improvement itself, he will not be able to claim compensation for the planning permission. If, on the other hand, he obtains landlord’s consent first, he cannot be sure of obtaining a grant of planning permission from the local authority. As we have seen, if the improvement is subsequently provided, with landlord’s or arbitrator’s consent, the tenant’s compensation will reflect the provision of planning permission. The chief danger for the tenant will therefore be to incur the expense of obtaining planning consent, but then to fail to complete the improvement before the end of the tenancy – for in this case he will receive no compensation for the planning consent and the landlord will receive an uncovenanted-for benefit on termination. In practice the tenant will be well advised to consult and co-operate with the landlord over major improvements that require planning applications, in order to avoid such problems arising. If possible, these issues should ideally be considered prior to the grant of the tenancy and reflected in the terms of the tenancy agreement, or (if the project proposals arise during the currency of the tenancy) dealt with by a variation of the terms of the tenancy agreement.¹⁷⁴

4.71 Where the tenant is aggrieved by the landlords refusal of consent, or by the conditions on which it is given, his demand for arbitration must be given within the period of two months beginning with day on which notice of the refusal or variation was given to the tenant.¹⁷⁵ Where the landlord has failed to respond within two months, following a written request for consent, then the tenant’s demand for arbitration must be served before the end of the period of four months beginning with the day on which his written request for consent to the improvement was originally given to the landlord.¹⁷⁶ In other words, the tenant has a further two months, following expiry of the period allowed for the landlord to respond, in which to demand arbitration. Where the tenant has given notice demanding a reference to arbitration the parties may agree the appointment of an arbitrator, but if one has not been agreed either party may apply to the President of the RICS for the appointment of an arbitrator by him.¹⁷⁷ No time limit is placed upon the application to the RICS, which can be made at any time providing no agreed appointment has taken place. Note, however, that no application for an appointment can be made if at any time after giving notice the tenant begins to provide the tenant’s improvement in question. Similarly, if an application has been made, but no arbitrator has been appointed, the appointment will be ineffective if the tenant commences the provision of the improvement. If an arbitrator has been appointed by this time, no award may be made by him except in relation to the costs of the reference and award.¹⁷⁸ This will, in practice, encourage the parties to secure an appointment to settle the dispute expeditiously, as the tenant cannot proceed until either an arbitration has taken place or the landlord’s consent has been obtained.

(ii) Arbitrator’s Powers

4.72 The arbitrator’s duty is to consider whether, having regard to the terms of the tenancy and any other relevant circumstances (including the circumstances of the tenant and landlord) it is reasonable for the tenant to provide the tenant’s improvement.¹⁷⁹ The terms of the tenancy will be very important in demarcating what will be ‘reasonable’ in a given case. So, for example, if improvements have been prohibited altogether in the tenancy for environmental or conservation reasons specific to the holding (or the landlord’s objectives when letting it) this might be difficult to displace before the arbitrator. But the terms of the tenancy are not sacrosanct – it may be reasonable in some cases to allow the provision of improvements, and if so the arbitrator has power to override the terms of the tenancy. This might be the case, for instance, where the provision of an improvement was necessary to comply with pollution legislation and its requirements eg the provision of new or improved silage and slurry handling or storage facilities. The arbitrator can also consider the personal and financial circumstances of both parties when deciding whether to give consent. A landlord in straitened financial circumstances, for example, may wish to resist the provision of an expensive tenant’s improvement towards the end of a long fixed term tenancy, on the basis that he would be unable to pay compensation on the (imminent) termination of the tenancy term.

4.73 When making his award the arbitrator’s powers are circumscribed: he may either unconditionally approve the provision of the tenant’s improvement, or he may withhold his approval. He is expressly prohibited by the 1995 Act from giving approval subject to any condition, neither can he vary any condition required by the landlord as a condition of his consent.¹⁸⁰ Thus, if the landlord has given his consent subject to conditions which the tenant thinks unreasonable, the arbitrator can either refuse consent altogether, or give consent unconditionally. If he refuses consent, then the landlord’s prior consent, together with the conditions subject to which it was given, will stand.¹⁸¹ If he awards consent unconditionally, this will override the landlord’s earlier conditional consent. In this situation, therefore, the tenant has nothing to lose by going to arbitration. If the arbitrator gives his approval then that approval stands for the purposes of the compensation provisions of the 1995 Act, and the terms of the farm business tenancy, as if it were the consent of the landlord.

(iii) Comparison with Agricultural Holdings Act 1986

4.74 The 1995 Act provides a simpler, and more expeditious, framework for dealing with disputes as to landlord’s consent to improvements than the Agricultural Holdings Act 1986.¹⁸² It is also more favourable to the tenant, and reflects the policy of the 1995 Act that the tenant should receive full compensation for all tenant’s improvements. Where the landlord refuses consent to long term improvements under the 1986 Act, the tenant can refer the landlord’s refusal to the agricultural land tribunal. The tribunal can give consent to improvements either unconditionally, or subject to conditions – including, specifically, a reduction in the compensation which would otherwise be payable for the improvement at the end of the tenancy.¹⁸³ The arbitrator has no such power under the 1995 in relation to a farm business tenancy, and cannot give approval subject to a reduction in the compensation payable for the improvement: he must either give consent unconditionally or refuse it altogether. This has the merit that both parties know where they stand before the arbitration, and excludes uncertainty as to possible compromise conditions imposed by the arbitrator. Another major difference between the two regimes is that the 1986 Act fails to provide a remedy for delay by a landlord in responding to a request for consent. Under the 1995 Act the tenant can refer to arbitration once two months have elapsed – the tenant with a 1986 Act tenancy has no such right. This is of considerable benefit to the tenant. who may need a speedy response if he needs to make emergency provision of new fixed equipment to deal with eg rectifying flood damage or to comply with statutory duties under the pollution legislation. Another important point of difference is that under the 1986 Act the landlord has the option, if he loses at arbitration, of giving notice that he intends to carry out the improvement himself.¹⁸⁴ He can, thereby, ‘adopt’ the improvement and so prevent a contingent liability arising to pay compensation for the improvement at the end of the tenancy. If the arbitrator gives consent to an improvement under the 1995 Act, the landlord has no such option.

(f)Amount of Compensation

(i) Compensation for Tenant’s Improvements

4.75 The amount of compensation payable to the tenant in respect of a tenant improvement is an amount equal to the increase attributable to the improvement in the value of the holding at the termination of the tenancy as land comprised in a tenancy.¹⁸⁵ This is much wider than the parallel provision of the Agricultural Holdings Act 1986, which limits tenant’s compensation to improvements of an agricultural nature specified in lists given in the schedules to the Act. Under the 1995 Act compensation is payable for both agricultural and non agricultural improvements – indeed, as the encouragement of diversification by farmers away from reliance on solely traditional agriculture is one of the key policies of the 1995 Act, it is only to be expected that compensation rights should be widened accordingly. The tenant’s potential claims are not open-ended however. To be compensateable the tenant’s improvement must add an increase in the rental value of the holding, viewed as land comprised in a tenancy. An improvement of a highly specialist nature of benefit only to the incumbent tenant might not add letting value, and as a matter of valuation practice any compensation accruing might be minimal or non existent. And, of course, compensation is only payable if the landlord has given consent to the improvement (see above). The landlord’s position is, therefore, safeguarded.

4.76 Valuing the compensation payable under section 20 of the 1995 Act involves an artificial exercise. Any increase in rental value contributed by the improvement must be quantified by assuming that the holding is relet – but the assumed letting need not be agricultural. Unlike the parallel provisions in the 1986 Act,¹⁸⁶ which limit compensation to the increase in rental value of the holding as an agricultural holding, the 1995 Act refers to its contribution to the holding as land comprised in a tenancy. The nature of the assumed hypothetical letting is not, however, specified, and neither is any assumption as to the term length or terms and conditions of the assumed letting. Note also that the 1995 Act refers to the assumption of ‘a’ letting, not ‘the’ letting, which would appear to envisage a hypothetical assumed reletting not necessarily on the same terms and basis as the farm business tenancy under consideration. The lack of detailed guidance on these matters may lead to difficulty in operating the new provisions in the short term, before valuation practice has crystallised and settled the appropriate valuation issues to be addressed.¹⁸⁷ In practice the compensation will be quantified by capitalising the increase in rental value using a number of years purchase to reflect the useful life of the improvement. The increase in rental value attributable to the improvement must be calculated at the date of termination, on quitting the holding – a factor which places on the tenant the risk of changes in circumstances rendering the improvement of little value to an incomer at termination. An example would be EC production quotas, the acquisition of which by the tenant (at potentially considerable cost) could be rendered valueless by changes in EC production support systems, and a decision to abolish or phase out quotas.

4.77 Several deductions will be made from the compensation payable where the tenant has been given an allowance by the landlord for providing the improvement, or where its provision was grant-aided:

•where the parties have entered into a written agreement whereby the tenant is given or allowed a benefit in consideration of the provision of a tenant’s improvement.¹⁸⁸ In this case the compensation payable in respect of that improvement shall be reduced by the proportion which the value of the benefit bears to the total cost of providing the improvement. The proportion is fixed by reference to the initial benefit provided by the landlord, as part of the cost of providing the improvement, and remains the same throughout the life of the improvement. The value of the improvement will decrease during the lifetime of the tenancy, but the proportion of its value to be deducted remains the same.

•where a grant has been (or will be) made out of public moneys in respect of the tenant’s improvement. In this case the amount of compensation otherwise payable for the improvement will be reduced by the amount which the grant bears to the total amount of the total cost of providing the improvement.¹⁸⁹

4.78 Both of these disregards are somewhat wider than the parallel provision in the 1986 Act. Section 66 of the 1986 Act provided for the reduction of compensation where the landlord granted a benefit in consideration of the provision of improvements – but only in relation to short term improvements not requiring landlord’s consent¹⁹⁰ eg mole drainage, application of organic or inorganic fertilisers and liming. The disregard in this case applies to all improvements, of whatever nature, under the 1995 Act. Similarly, the disregard for grants out of public funds under the 1986 Act applied only to central or local government grants – under the 1995 Act it applies to all grants out of public funds, including for example EC grants or subventions.

4.79 Planning permission which have been obtained with the landlord’s consent are separately compensated under the 1995 Act (see below). Compensation is only payable if the improvement for which permission has been obtained has not been completed, or the specified change of use applied for has not been effected.¹⁹¹ Where a physical improvement has been completed, or a change of use carried out, pursuant to a planning permission, this does not prevent any value attributable to the fact that the improvement or change of use is authorised by planning permission from being taken into account in calculating compensation for the improvement itself on termination of the tenancy.¹⁹² In other words, the value of the planning permission that was needed for the improvement will be one element in the calculation of the compensation for the improvement as a whole.

(ii) Tenant’s Improvements: the ‘Compensation Limit’

4.80 Compensation for improvements, as we have seen, is only available if the landlord has consented to the improvement in question being made by the tenant, or where an arbitrator has given consent following the refusal of the landlord to do so. The practical effect of these rules was to deter the landlord from giving consent to improvements, because he would be uncertain how much the improvement might add to the value of the holding, should the tenant seek to quit and recover his investment in the form of compensation for improvements. If the landlord gave consent he was potentially faced with an uncertain liability that would only be quantified on the later termination of the tenancy. The Tenancy Reform Industry Group considered the compensation rules, and recommended that the provisions governing compensation be relaxed in order to fix the landlord’s liability at the time that consent for an improvement is sought and given.¹⁹³ The landlord’s liability should be ‘capped’ at the amount of the tenant’s investment in making the improvement or (if less than the sum invested) the amount of the value added to the holding by the tenant’s improvement. These recommendations were enacted by the Regulatory Reform (Agricultural Tenancies) Order 2006.¹⁹⁴

4.81 Section 20(4A) of the 1995 Act now provides that the where the landlord and tenant have agreed in writing, after the commencement of the 2006 Order, to limit the compensation payable for an improvement, then the compensation payable will be the lesser of the amount by which the rental value of the holding has increased and the ‘compensation limit’. The compensation limit will be either fixed by the parties’ written agreement, or where the parties cannot agree will be a sum equal to the cost to the tenant of making the improvement. The effect of the new rules is to enable the landlord and tenant to agree a maximum sum of compensation as part of the negotiation on the giving of landlord’s consent to the improvement. If an agreement is made, then the compensation payable on the later termination of the tenancy will not exceed the agreed amount or the increased value added by the improvement, whichever is the lesser amount. If the parties were unable to reach an agreement as to the maximum compensation to be paid, then the amount payable as compensation would be the cost to the tenant of making the improvement in question.

4.82 The following points should be noted:

•The compensation limit will only apply where the parties agree to limit the amount of compensation after the commencement of section 20(4A) ie on or after 19 October 2006.¹⁹⁵

•The agreement must be in writing, although it is not necessary for it to be incorporated in the tenancy agreement itself. The parties to a farm business tenancy entered into prior to 19 October 2006 could, for example, enter into a written agreement on or after that date applying a compensation limit under s 20(4A). In the case of a farm business tenancy entered into after the commencement of the 2006 Order, there would be considerable merit in incorporating the terms of the compensation limit in the tenancy agreement itself.

•Even where a compensation limit is agreed, it may be relevant to ascertain the increase in rental value contributed by the improvement in question. If the increased value is less than the agreed compensation limit or less than the cost to the tenant of making the investment, then the lesser amount will be payable. This puts the onus on the tenant to ensure that the improvement will make a tangible contribution to the rental value of the holding – if it does not, he carries a financial risk of failing to recoup his outlay through the compensation provisions.

•Where there is no agreed contribution limit, then the compensation payable will be the cost to the tenant of providing the improvement, provided that ‘the parties are unable to agree on an amount’. Query whether for the application of the alternative quantum it is a necessary prerequisite that they attempt to reach agreement on a compensation limit.

4.83 Special rules apply where the parties have agreed a compensation limit, and the landlord then resumes possession of part of the holding. Where the tenant has provided an improvement that benefits both the part repossessed and the land retained in the tenancy, and compensation has been paid on the surrender of a portion of the holding, then the compensation payable on the later surrender of the remainder will be reduced by the amount that has already been paid to the tenant in respect of improvements carried out while the holding was intact ie prior to the resumption of possession of part.¹⁹⁶

(iii) Compensation for Planning Permission

4.84 Where the landlord has consented to an application for planning permission being made, but the improvement or change of use to which it relates has not been provided by the time the tenancy ends, the tenant can claim compensation for the planning permission under s 21 of the 1995 Act. The amount of compensation payable in this case is ‘an amount equal to the increase attributable to the fact that the relevant development is authorised by the planning permission in the value of the holding at the termination of the tenancy as land comprised in a tenancy’.¹⁹⁷ This will involve assessing the rental value without the planning consent in place (but with the potential for development), and its rental value with the benefit of planning permission, and subtracting the former from the latter to arrive at the increase in rental value attributable to the planning consent. Note, however, that compensation is only payable for planning permissions insofar as they relate to the physical improvement or change of use specified to which the landlord has given his consent under the 1995 Act.¹⁹⁸ Where the landlord has given a material benefit to the tenant in consideration of his obtaining the planning permission, the compensation will be reduced by the proportion that the benefit bears to the cost of obtaining the planning permission.¹⁹⁹ This is the same rule as applies to calculating compensation for physical improvements (discussed above). As with physical improvements, however, the disregard only applies if there is a written agreement between landlord and tenant providing for the benefit or allowance to be made by the landlord in return for the tenant obtaining the planning consent.

(g)Settling the Claim for Compensation

4.85 If the parties cannot agree, the 1995 Act provides for the tenant’s claim for compensation to be referred to arbitration. Arbitration will be by a single arbitrator, and conducted under the Arbitration Act 1996. The tenant must, however, first serve a valid notice of claim, and then make application to the RICS for the appointment of an arbitrator, within the time limits laid down in the Act. The application must be made in writing and accompanied by such reasonable fee as the President may prescribe.²⁰⁰

(i) Notice of Claim

4.86 The tenant must give written notice of his intention to make the claim to the landlord before the end of the period of two months beginning with date of the termination of the tenancy. The notice must also specify the nature of the claim.²⁰¹ This is the same requirement as that imposed for claims under the 1986 Act.²⁰² Presumably, the requirement of service before the expiry of two months from the end of the tenancy would not preclude service of notice of claim prior to termination. This has been held to be the case under the 1986 Act, and would apparently be applicable here also.²⁰³

(ii) Application for Appointment of Arbitrator

4.87 After the notice of claim has been given, the parties are still free to settle the dispute by agreement. If they cannot do so, however, the tenant may apply for the appointment of an arbitrator to the President of the RICS. The tenant can make application to the RICS provided:

•the parties have not settled the claim by agreement in writing. Note that an oral agreement will not preclude an appointment to settle the dispute by arbitration, and

•no arbitrator has been appointed by an agreement made since the notice of claim(above) was given. To preclude an application to the RICS under the 1995 Act the arbitrators appointment must have been perfected (ie he must have accepted appointment and received notice of appointment),and

•the period of four months beginning with the date of termination of the tenancy must have expired. In other words the parties have four months after the end of the tenancy to agree the compensation claim. If they do not reach an agreement, the tenant can refer the claim to arbitration once four months has elapsed. The time limit applicable to agricultural holdings under the 1986 Act was 8 months. This was felt to be too long: if the parties cannot agree once a period of four months has elapsed following the end of the tenancy, then they are unlikely to be able to do so within a longer period, and it therefore seems unreasonable to make the tenant wait (as he has to under the 1986 Act²⁰⁴) for a further four months before initiating a statutory arbitration.

4.88 If the tenant remains lawfully in possession of part of the holding after the end of his farm business tenancy – for example he holds over with the landlord’s consent as a tenant at sufferance – the time limits are extended to two months (for the notice of claim) and four months (for application to the RICS) following the date on which he gives up occupation.²⁰⁵ If the tenant’s claim applies in part to routine improvements, and he is also applying to the arbitrator for retrospective consent to their provision,²⁰⁶ then the President of the RICS must appoint the same arbitrator to decide both applications, and only one fee is payable in respect of the application.²⁰⁷

(h)Protecting the Tenant’s Right to Compensation: Miscellaneous Provisions

4.89 The tenant’s right to compensation for improvements is of central importance to a tenant – indeed in the absence of security of tenure, it is one of his most important rights under the 1995 Act. The Act therefore contains a number of miscellaneous provisions intended to preserve the tenant’s right to receive full compensation for improvements.

(i) Successive tenancies

4.90 The fact that the tenant has remained in occupation during two or more farm business tenancies does not deprive him of his right to compensation, when he ultimately gives up possession, for improvements provided during earlier tenancies.²⁰⁸ If the tenant takes a second, or further tenancy, on termination of his farm business tenancy, he is therefore able to ‘roll over’ his claim for compensation into the new tenancy, and take compensation on its later termination. He has the option, however, to take compensation at the end of the first tenancy, if he wishes,²⁰⁹ in which event his claim (having been met) is not rolled over, and on termination of the subsequent tenancy he will only be compensated for additional improvements provided during the new tenancy.²¹⁰

(ii) Repossession of Part of Holding

4.91 Under a farm business tenancy the landlord has no statutory right to repossess part of the holding, akin to that allowed for under the Agricultural Holdings Act 1986, section 31 of which allows for repossession to eg construct farm workers cottages. If the landlord wishes to have the right to repossess part of the holding, he will have to take a contractual term in the tenancy agreement²¹¹ or rely upon section 140 of the Law of Property Act 1925, which allows for notice to quit part where the reversion has been severed and the owner of a severed part wishes to terminate the tenancy as to that part. Section 140 only applies, however, where the landlord has the right to terminate by notice to quit: it will not assist the landlord, for example, where the tenancy is a fixed term farm business tenancy.

4.92 Where the landlord terminates the tenancy as to part of the holding let, the tenant’s right to full compensation is guaranteed by s 24 of the 1995 Act. This provides that the part repossessed (the ‘relevant part’) is to be treated as if it were a separate holding which the tenant had quitted in response to a notice to quit. The policy of the Act is to ensure the tenant is in no worse position in respect of compensation for improvements on the part repossessed than he would have been if the tenancy of the whole holding had been terminated. The amount of compensation payable for improvements on the part taken back is therefore fixed as the ‘amount equal to the increase attributable to the tenant’s improvement in the value of the original holding [ie the whole] on the termination date as land comprised in a tenancy’..²¹² The original holding is defined to mean the land comprised in the tenancy at the date on which the landlord gave his consent to the improvement in question, or (alternatively) when an arbitrator gave his approval for the provision of the improvement.²¹³ This ensures that there is no distortion in the compensation paid to the tenant in toto for improvements, owing to the fact that part of the holding is taken back at an earlier stage, and the remainder of the holding later. It may be, for example, that the part repossessed by the landlord contains improvements central to the tenant’s farming operation on the remainder of the holding eg the dairy parlour, or slurry/sewage sludge storage facilities. Alternatively, there may be important items of this kind on the land retained in the tenancy. In both cases the improvements will be valued – either on earlier termination of part, or on the termination of the farm business tenancy later (depending on their situs) – by reference to the contribution they make to the rental value of the original holding ie the whole holding as it was when consent to the improvement was given. It should be appreciated, however, that although the 1995 Act guarantees the tenant’s position as to compensation, the tenant’s farming business may still suffer considerable disruption or inconvenience if the landlord takes back a part of the holding where major facilities are situated. If the tenancy agreement contains an early resumption clause, therefore, this should be borne in mind when planning tenant’s improvements and their location on the farm.

4.93 Compensation for improvements on land repossessed by the landlord during the farm business tenancy will be reduced where an allowance or benefit was given by the landlord for its provision, or where it was part funded by grant out of public funds.²¹⁴ Compensation for planning permission is also available where part of a holding is repossessed.²¹⁵

(iii) Severance of Reversion

4.94 Section 25 of the 1995 Act deals with the situation where the reversionary estate has been severed, and fragmented between different owners. This is a situation over which the tenant has no control whatever – unlike that where part of the holding is repossessed (above), where planning the situs and execution of tenant’s improvements can mitigate the practical effects of repossession under early resumption clause in the tenancy. Section 25 seeks to ensure that the tenant is in no worse a position as a consequence of severance of the reversionary estate than he would have been if the landlord’s interest had not been fragmented. Accordingly, on quitting the entire holding, the farm business tenant is entitled to be paid compensation as if the reversionary estate had not been severed ie as if there were still one landlord.²¹⁶ Once the compensation has been calculated, the arbitrator is then empowered to apportion the amount awarded between the several owners of the reversionary estate. Any additional costs incurred in making the necessary apportionment are then to be paid by the reversionary owners in such proportions as the arbitrator may determine.²¹⁷ These provisions are similar to the rules applicable under the Agricultural Holdings Act 1986, s 75.²¹⁸

(iv) No Contracting Out

4.95 The 1995 Act expressly prohibits contracting out of the compensation provisions in Part III of the Act. By virtue of s 26(1) the farm business tenant is entitled to compensation in accordance with the provisions of Part III (discussed above) and not otherwise, and shall be so entitled notwithstanding any agreement to the contrary. Any provision in the tenancy agreement limiting or excluding the tenant’s right to statutory compensation will, therefore, be void – as will any separate agreement between the parties which has this effect. The prohibition on contracting out, or varying, the statutory compensation only applies, however, to matters compensated as improvements under Part III. The parties may make contractual provision for certain matters not otherwise compensated under the 1995 Act. Examples might include certain tenant right matters which are not within the definition of improvements compensated under the 1995 Act – for example the hefting (or acclimatisation) of hill sheep, or compensation for severed crops grown in the last year of the tenancy and left behind on quitting. Similarly, the parties may wish to provide for contractual compensation of damage caused by game, or caused to crops by the exercise of sporting rights reserved to the landlord. As these matters are outside the statutory compensation rights laid down in the 1995 Act, the parties can make such contractual provision for these claims, and their valuation, as they wish without infringing the contracting out provisions in s 26 of the 1995 Act.

4.96 Section 26 is similar in terms to s 78 of the Agricultural Holdings Act 1986, which also prohibits contracting out of the tenant’s right to compensation on the termination of a tenancy of an agricultural holding.²¹⁹ It is unlikely to engender as many difficulties as the corresponding 1986 Act provisions, however, partly because the procedural formalities for making claims are simpler under the 1995 Act. Under the 1986 Act, certain claims (for example for disturbance compensation) required the tenant to serve notice of claim at least one month before the end of the tenancy. The courts have held under the 1986 Act that any contractual provision that had the effect, in practice, of preventing the tenant serving the requisite notices to make a claim was void as an indirect attempt to contract out of compensation. Both short notice clauses, and provisos for forfeiture and re-entry, have been declared void where they gave the tenant insufficient notice of termination to allow him to serve the requisite notices of claim for compensation.²²⁰ The 1995 Act does not require the service of notice of claim before termination in respect any of the statutory heads of compensation, and this problem should not, therefore, arise.

1But not, note, a tenancy of two years exactly. This will terminate on its term date at common law by effluxion of time.

2See Tenancy Reform Industry Group (TRIG) Final Report (DEFRA 2003) at para 4.2.6; House of Commons Regulatory Reform Committee, Sixth Report of session 2005–06, Proposal for the Regulatory Reform (Agricultural Tenancies) (England and Wales) Order 2006, at paras 90-93.

3Article 13, Regulatory Reform (Agricultural Tenancies) (England and Wales) Order 2006, SI 2006/2805, amending s 5(1), Agricultural Tenancies Act 1995.

4Section 6(1), Agricultural Tenancies Act 1995.

5Article 13 Regulatory Reform (Agricultural Tenancies) (England and Wales) Order 2006, SI 2006/2805, amending s 6(1)(c), Agricultural Tenancies Act 1995.

6For a discussion of the options available to the parties see House of Commons Regulatory Reform Committee, Sixth Report of session 2005-06, Proposal for the Regulatory Reform (Agricultural Tenancies) (England and Wales) Order 2006, at paras 90–93.

7Section 6(2) ibid.

8Note that s 6(2) only permits service of a notice to quit during the contractual fixed term ‘to take effect on the first anniversary of the term date’. This provision was not amended by the 2006 Regulatory Reform Order. It follows, therefore, that neither of the parties can serve notice to quit of longer duration, terminating the tenancy at a date later than the first anniversary of the term date, until the contractual term date has actually passed. Once the contractual term date has passed, both parties will enjoy the greater flexibility given by the 2006 Order to serve longer notice terminating the periodic annual tenancy on a future anniversary of the term date above para 4.02.

9‘This Section has effect notwithstanding any agreement to the contrary’: s 5(4) ibid.

10Cf. Appleton v Aspin [1988] 04 Estates Gazette 123 (decided under the Rent Act 1977).

11See Dibbs v Campbell [1988] 2 EGLR 122. Section 5(4) refers expressly to any agreement to the contrary being rendered ineffective, a choice of wording that would leave an executed surrender unaffected.

12See below para 4.35 ff.

13Section 5(2) ibid.

14Ie fixed terms of between one and two years. These were not caught by the security of tenure provisions in the 1986 Act – See Gladstone v Bower [1960] 1 QB 170 and below, Chapter 5, para 5.71 ff.

15Section 140, Law of Property Act 1925.

16See Chapter 3, para 3.50 ff for drafting considerations in preparing suitable break clauses for use in farm business tenancies.

17Section 7(1) ibid. as amended by art 13, Regulatory Reform (Agricultural Tenancies) (England and Wales) Order 2006, SI 2006/2805. The latter removed the upper limit of 24 months on the period of notice.

18[1997] 3 All.E.R. 352 HL.

19[1976] 1 WLR 442.

20See Crawford v Elliott [1991] 13 EG 163, Yeandle v Reigate and Banstead BC [1996] 14 E.G. 90 discussed below para 7.04 ff.

21[1997] 3 All ER 352 at 381 per Lord Hoffmann. The House of Lords overruled Hankey v Clavering [1942] 2 All ER 31, which had previously called for a strict compliance with the terms of a break clause.

22Mannai Investment Co. Ltd v Eagle Star Life Assurance Co. Ltd [1997] 3 All ER 352 per Lord Hoffman at [766] ‘If the clause had said that the notice had to be on blue paper it would have been no good serving a notice on pink paper, however clear it might have been that the tenant wanted to terminate the lease’.

23Siemens Hearing Instruments Ltd v Friends Life Ltd [2014] EWCA Civ 382 (break notice had to be expressed to be given under s 24(2), Landlord and Tenant Act 1954. It had not been expressed as such and was therefore held to be ineffective). And see Hotgroup plc. v Royal Bank of Scotland plc [2010] EWHC 1241 (Ch);

24See for example Avocet Industrial Estates LLP v Merol Ltd [2011] EWHC 3422 (Ch) (interest on previous late rent payment still outstanding, and tenants break notice held to be ineffective).

25Siemens Hearing Instruments Ltd v Friends Life Ltd [2014] EWCA Civ 382 at [65]: ‘I do not accept that in the field of unilateral (or ‘if’) contracts there is any room for the notion of substantial compliance... The question is whether the relevant event has occurred. That question is to be answered ‘Yes’ or ‘No’. It cannot be answered ‘almost’ (Lewison LJ.).

26Section 149(6), Law of Property Act 1925.

27Section 7(3), Agricultural Tenancies Act 1995.

28As to which See Chapter 7, para 7.37 et seq.

29Law Commission, ‘Forfeiture of Tenancies’ (Law Com. No. 142, HC 279, 1985).

30Law Commission, ‘Termination of Tenancies for Tenant Default’ (CP No.174, 2004).

31For the drafting considerations see Chapter 3, para 3.57 ff above.

32Section 6 and Sch 1, Agricultural Holdings Act 1986.

33Protection from Eviction Act 1977, s 2 provides that where any premises are ‘let as a dwelling’ under a lease which includes a proviso for re-entry or forfeiture, it is unlawful to enforce the right to forfeiture otherwise than by court proceedings. In Knipe v National Trust [1997] 4 All ER 627 CA it was held, however, that a farmhouse comprised in an agricultural holding is not ‘let as a dwelling’ – it is let as an integral part of an agricultural holding. In that case, accordingly, it was held that s 5 of the 1977 Act (minimum notice to quit requirements) did not apply to a letting of an agricultural holding that included a farmhouse. By parity of reasoning, neither would s 2 of the Protection from Eviction Act 1977, with the consequence that forfeiture need not be by legal proceedings if the holding includes a farm dwelling – it can be by peaceful re-entry.

34Canas Property Co Ltd v KL Television Services [1970] 2 QB 433.

35See Doe d. Dixon v Roe (1849) 7 CB 134, Acocks v Phillips (1860) 5 H&N 183 for the common law requirements.

36See Chapter 6, para 6.162 ff. Note also that unripe crops can be subject to distress: ex parte Arnison (1868) LR 3 Exch 56.

37See Chandless v Nicholson [1942] 2 KB 321 at 323 per Lord Greene MR.

38The 1852 Act does not apply if less than 6 months rent is owing: Standard Pattern Co. Ltd v Ivey [1962] Ch 432.

39Section 138(3), County Courts Act 1984.

40Section 138(7) ibid. Relief cannot be sought in the High Court: see Di Palma v Victoria Square Property Co.Ltd [1986] Ch 150.

41Section 138(9A) ibid.

42Section 146(1), Law of Property Act 1925.

43Blewett v Blewett [1936] 2 All.E.R. 188.

44See Horsey Estate Ltd v Steiger [1899] 2 QB 79: Civil Service Co-operative Society v McGrigors Trustee [1923] 2 Ch 347.

45Farimani v Gates (1984) 271 E.G. 887 CA per Griffiths LJ.

46See Expert Clothing Service and Sales Ltd v Hillgate House Ltd. [1986] Ch 340 at 362.

47Expert Clothing Service and Sales Ltd v Hillgate House Ltd. [1986] Ch 340.

48Scala House Ltd v Forbes [1974] QB 575; Expert Clothing Service and Sales Ltd v Hillgate House Ltd [1986] 1 Ch. 340; Akici v LR Butlin Ltd [2005] EWCA Civ 1296, [2006] 2 All ER 872 (See especially Neuberger LJ, judgment at para 67).

49Ie under s 146, Law of Property Act 1925.

50Akici v LR Butlin Ltd [2005] EWCA Civ 1296, [2006] 2 All ER 872 (See especially Neuberger LJ, judgment at para 62 ff); PF Smith (2006) Conv. 382.

51Farimani v Gates, above para 4.25.

52Glass v Kencakes Ltd [1966] 1 QB 611.

53See Fox v Jolly [1916] 1 AC 1.

54This formula was approved in Glass v Kencakes Ltd [1966] 1QB 611 at 629.

55Billson v Residential Apartments Ltd [1992] 1 AC 494 (House of Lords).

56See Pakwood Transport Ltd v 15 Beauchamp Place Ltd (1978) 36 P&CR 112, 117 (Orr LJ.); Billson v Residential Apartments Ltd [1992] 1 AC 494.

57Billson v Residential Apartments Ltd [1992] 1 AC 494 at 543 (Lord Oliver).

58Billson v Residential Apartments Ltd [1992] 1 AC 494 at 537 (Lord Templeman).

59High Street Investments Ltd v Bellshore property Investments Ltd [1996] 35 Estates Gazette 87.

60[1911] 2 KB 234 CA. And See Re Brompton Securities Ltd (No2) [1988] 3 All.E.R. 677.

61Rose v Hyman [1912] AC 623 HL. Lord Loreburn thought that the principles enunciated by the court of appeal were ‘doubtless useful maxims in general, and in general they reflect the point of view from which judges would regard an application for relief ‘ ([1912] AC 623 at 631).

62Eg Glass v Kencakes Ltd [1966] 1 QB 611.

63See Earl Bathurst v Fine [1974] 1 WLR 905 (tenant of country mansion refused entry to UK by Home Office and consequently deemed unsuitable as a tenant – relief refused).

64[1976] 1 WLR 845. And See Plymouth Corp. v Harvey [1971] 1 All ER 623.

65Kammins Ballrooms Co. v Zenith Investments (Torquay) Ltd [1971] AC 850; Matthews v Smallwood [1910] 1 Ch 777.

66Central Estates (Belgravia) Ltd v Woolgar (No 2) [1972] 3 All ER 610; Van Haarlam v Kasner [1992] 2 EGLR 59.

67The reason being that one can only distrain for rent against a tenant.

68See Farimani v Gates (1984) 271 EG 887.

69Penton v Barnett [1898] 1 QB 276; and see Greenwich London Borough Council v Discreet Selling Estates Ltd [1990] 2 EGLR 65.

70Doe d. Rankin v Brinley (1832) 4 B. & Ad. 84.

71The additional requirement that it be given ‘not less than 24 months before the date on which it is to take effect’ was removed by art 13 Regulatory Reform (Agricultural Tenancies) (England and Wales) Order 2006, SI 2006/2805, amending s 6(1)(c) of the 1995 Act.

72For a discussion of the greater flexibility this offers see: the Tenancy Reform Industry Group (TRIG) Final Report (2003) at para 4.2.6, and House of Commons Regulatory Reform Committee, Sixth Report of session 2005-06, Proposal for the Regulatory Reform (Agricultural Tenancies) (England and Wales) Order 2006, at paras 90–93.

73See paras 4.09–4.13 above and the cases there referred to on the construction of notices to ‘break’ a fixed term tenancy, to which similar considerations apply.

74[1996] 1 EGLR 20 (a decision under the Agricultural Holdings Act 1986).

75Omnival Ltd v Boldan [1994] EGCS 63.

76See Sykes v Land [1992] 1 EGLR 1 (sale of a small strip of land from an agricultural holding did not invalidate a notice to quit ‘all that holding...which you hold of her [the landlord] as tenant’ where the fact of sale and surrounding circumstances were known to the tenant.

77Cawley v Pratt [1988] 2 EGLR 6.

78[1997] 3 All ER 352, above para 4.11 above.

79Section 6(2) ibid. discussed above at para 4.04.

80As to which see Chapter 7, para 7.32 et seq.

81Section 140(2), Law of Property Act 1925, s 6(3), Agricultural Tenancies Act 1995.

82[1997] 4 All ER 627.

83See s 5 Protection from Eviction Act 1977, amended by Housing Act 1988, ss 29–32.

84And since the decision in National Trust v Knipe (supra) the Protection from Eviction Act 1977.

85Cf. s 2 Agricultural Holdings Act 1986, which converts short-term lettings for less than a year into annual tenancies with full security of tenure. This is discussed further below Chapter 5, para 5.28 ff below.

86Doe d Aslin v Summersett (1830) 1 B & Ad 135.

87Greenwich LBC v McGrady (1982) 6 HLR 36; Hammersmith LBC v Monk [1992] 1 All ER 1 (HL). Aff’d Sims v Dacorum District Council [2014] UKSC 63.

88Parsons v Parsons [1983] 1 WLR 1390.

89Jones v Lewis (1973) 117 Sol Jo 373.

90Leek and Moorlands Building Society v Clark [1952] 2 QB 788.

91See Hounslow LBC v Pilling [1994] 1 All ER 432.

92Bendall v McWhirter [1952] 2 QB 466.

93As to the position under the Agricultural Holdings Act 1986 See Chapter 7, para 7.46 ff below.

94Barrett v Morgan [2000] 2 AC 264, overruling the earlier court of appeal ruling: [1997] 1 EGLR 1.

95[1995] 1 EGLR 5.

96Mellor v Watkins (1874) LR 9 QB 400 (the sub-tenancy survives and the sub-tenant is promoted to become direct tenant of the landlord).

97Brown v Wilson (1949) 208 LT 144 (overruled in Pennell v Payne supra).

98See Cohen v Tannar [1900] 2 QB 609.

99Section 52, Law of Property Act 1925.

100Jenkin R Lewis v Kerman [1971] Ch 477.

101Ives Case (1597) 5 CoRep 11a.

102See paras 3.33 ff above.

103Mellor v Watkins (1874) LR 9 QB 400.

104Section 139(1), Law of Property Act 1925.

105Leek and Moorlands BS v Clark (1952) 2 QB 788; Greenwich LBC v McGrady (1982) 6 HLR 36 (above).

106Pennell v Payne [1995] 1 EGLR 5.

107Sees 67(3), Agricultural Holdings Act 1986 and Sch 7 Part 2 ibid. which lists the improvements to which the procedure applies.

108For detailed discussion of the compensation rules under the 1986 Act See Chapter 9, paras 9.23 ff below.

109Section 15(1), Agricultural Tenancies Act 1995 cf. s 66 and Sch 7 of the Agricultural Holdings Act 1986.

110Section 20 ibid.

111Section 205(1)(ix) Law of Property Act 1925.

112Elwes v Maw (1802), 3 East 38.

113Section 22, Agricultural Holdings Act 1923.

114The tenant’s right to remove a fixture is subject to the landlord’s right to elect to purchase it on fair terms: see s 10(4), Agricultural Holdings Act 1986 and, further, Chapter 6, para 6.102 ff below.

115As to which see Chapter 6, para 6.102 ff below.

116Holland v Hodgson (1872) LR 7 CP 328: TSB Bank PLC v Botham [1996] EGCS 149.

117Elwes v Maw (1802) 3 East 38.

118Deen v Andrews [1986] 1 EGLR 262.

119Webb v Frank Bevis Ltd [1940] 1 All ER 247.

120Wansbrough v Maton (1836) 4 Ad & E 884.

121Wiltshear v Cottrell (1853) 118 ER 589.

122Jordan v May [1947] KB 427.

123Leigh v Taylor [1902] AC 157.

124D’Eyncourt v Gregory (1866) LR 3 Eq 382.

125[1997] 2 All ER 513.

126[1997] 2 All ER 513 at 519 per Lord Lloyd.

127Eg temporary livestock shelters or feeding boxes, some types of Dutch barn, greenhouses or polytunnels. The question will be whether they can be removed without substantial damage, intact or in Sections, and whether they are physically attached to the land or not.

128Smith v City Petroleum Ltd [1940] 1 All ER 260.

129Wardell v Usher (1841) 3 Scott NR 508.

130Climie v Wood (1861) LR 4 Ex Ch 328.

131Spyer v Phillipson [1931] 2 Ch 183.

132As to which see Chapter 6, para 6.102 ff below.

133Section 8(7), Agricultural Tenancies Act 1995.

134Section 8(3) and (4) ibid.

135Section 8(5) ibid.

136Section 8(6) ibid.

137Subject, of course, to the requirements of Part III of the 1995 Act as to compensation being complied with.

138These are set out in s 8(2) ibid.

139See further ch 14 below Chapter 14, paras 14.25 ff.

140See below para 14.56 ff.

141Section 8(7) ibid., above.

142Ie s 17 ibid.

143As to which see below Chapter 9.

144As to which see Chapter 9, para 9.25 ff below.

145See para 4.80 below.

146Section 16(1) ibid.

147Section 17(1) ibid.

148Section 17(2) ibid.

149Section 15 ibid.

150See s 20(2) ibid. The amount of the reduction will be the proportion which the value of the benefit given by the landlord bears to the total cost of providing the improvement.

151Section 20(1) ibid.

152Section 19(10) ibid.

153Section 19(1) ibid.

154This might be appropriate for example in a short fixed term farm business tenancy.

155The absence of a prohibition on the provision of the improvements in question is an integral part of the definition of ‘routine’ improvements in s 19(10) ibid.

156Section 26(1) ibid.

157Section 20(4) ibid.

158Section 18(2) ibid.

159Section 17(5) ibid. and s 19(1) ibid.

160Unless, of course, the tenancy agreement includes an express provision making it a term of the tenancy that the tenant obtain the landlord’s written consent prior to applying for any planning permission to carry out development on the holding (or any part of it).

161Section 15(b) ibid.

162As to which see further Chapter 15 beow para 15.05 ff.

163Although the landowners and occupiers of land that is to be notified or designated may have a right to make representations on the proposals or to be consulted before they are finalised eg in the case of an SI notification under s 28 Wildlife and Countryside Act 1981. See Chapter 13, para 13.12 ff below.

164As required by s 15(b) of the 1995 Act.

165It may well detract from its rental value in some cases.

166Eg Natural England in the case of an SI agreement.

167Section 17(1) ibid.

168Section 19(2) ibid.

169Section 17(3) ibid.

170See s 8(2)(d) ibid.

171Section 19(2) ibid.

172As to which see above para 4.60.

173See the definition of routine improvements in s 19(10) ibid.

174Of particular relevance – and utility – in this regard is the Code of Good Practice for agri-environment schemes and diversification projects within agricultural tenancies (DEFRA 2004). See Chapter 1, para 1.38 ff above.

175Section 19(3)(a) ibid.

176Section 19(3)(b) ibid.

177Section 19(4) ibid.

178Section 19(9) ibid.

179Section 19(5) ibid.

180Section 19(6) ibid.

181Section 19(8) ibid.

182For the relevant provision applicable to tenancies of agricultural holdings see Chapter 9, para 9.25 ff below.

183See s 67(3) and (4), Agricultural Holdings Act 1986 discussed below at para 9.28 ff.

184See s 67(5) ibid.

185Section 20(1), Agricultural Tenancies Act 1995.

186Section 66(1) of the Agricultural Holdings Act 1986.

187For a very good analysis of the valuation problems inherent in the compensation formula see Scammell, Densham and Williams’ Law of Agricultural Holdings (10th ed, 2015, PR Williams) at para 14.39 et seq. The CAAV also publish a guide to valuation of compensation, which provides useful guidance – CAAV publication No.166 ‘Commentary on the valuation of improvements under the Agricultural Tenancies Act 1995’(1995).

188Section 20(2), Agricultural Tenancies Act 1995.

189Section 20(3) ibid.

190Section 66(3), Agricultural Holdings Act 1986, and Sch 8 Part 1 ibid.

191Section 18(1)(c), Agricultural Tenancies Act 1995.

192Section 20(4) ibid.

193Para 4.2.3, Tenancy Reform Industry Group (TRIG) Final Report (DEFRA 2003); and See House of Commons Regulatory Reform Committee, Sixth Report of session 2005-06, Proposal for the Regulatory Reform (Agricultural Tenancies) (England and Wales) Order 2006, at paras 31–35.

194Article 16 Regulatory Reform (Agricultural Tenancies) Order 2006, SI 2006/2805, introducing a new s 20 (4A), Agricultural Tenancies Act 1995.

195Articles 1(1) and 16(2), Regulatory Reform (Agricultural Tenancies) Order 2006, SI 2006/2805.

196Article 17, Regulatory Reform (Agricultural Tenancies) Order 2006, SI 2006/2805, inserting a new Section 24(4A), Agricultural Tenancies Act 1995.

197Section 21(1) ibid.

198Section 21(2) ibid.

199Section 21(3) ibid.

200Sections 22(2) and 30 ibid.

201Section 22(2) ibid.

202Section 83(2) and (3) of the Agricultural Holdings Act 1986 (below Appendix 2.1.).

203See Lady Hallinan v Jones (1984) 272 EG 1081 (C).

204see Chapter 9, para 9.05 ff below.

205Section 22(5) ibid.

206As to which See above para 14.59 ff.

207Section 22(4) ibid.

208Section 23(1) ibid.

209Section 23(2) ibid.

210Section 23(3) ibid.

211As to which See above Chapter 3, paras 3.54–3.55 above.

212Section 24(2) ibid.

213Section 24(5) ibid.

214Sections 24(4), 20 and 21 ibid.

215Section 24(3) ibid.

216Section 25(1) ibid.

217Section 25(2) ibid.

218As to which See below Chapter 9, para 9.54 ff.

219as to which see Chapter 9, para 9.54 below.

220See Coates v Diment [1951] 1 All ER 890; Parry v Million Pigs Ltd (1980) 269 EG 281.