3 Surrender and Regrant: Preservation of Compensation Claims
9.07 The addition of land to a tenancy of an agricultural holding will have the effect of triggering an implied surrender of the tenancy and the establishment by implied grant of a new tenancy.
This could have the effect of cancelling existing rights (of both landlord and tenant) to compensation established before the new tenancy was impliedly granted. The position was considered by the Tenancy Reform Industry Group in its 2003 report on tenancy reform, and they concluded that the law created a disincentive for landlords and tenants to add to land currently tenanted under the 1986 Act. If they did so they might bring to an end their rights to compensation for value they may have added to the property (in the case of tenant’s improvements), or for value they may have lost (for example the landlord’s claim for dilapidations), during the tenancy. They therefore recommended that the compensation provisions be relaxed so as to apply in future to situations where the prior tenancy was of the whole or a substantial part of the land that is subject to the new tenancy. It would no longer be necessary for the holding to remain geographically identical throughout, and the parties’ claims to compensation would not be lost by the addition of new land to the tenancy, provided the holding’s identity remained substantially the same.6 These reforms were implemented by the Regulatory Reform (Agricultural Tenancies) (England and Wales) Order 2006.7 The reforms do not apply, however, in relation to compensation payable on termination of a tenancy where that tenancy was granted before the 2006 Order came into force, ie before 19 October 2006.8 They only apply to compensation claims made at the end of a tenancy impliedly or expressly9 granted on or after 19 October 2006.
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