1 Terms over Two Years – Statutory Continuation
4.02 By virtue of s 5(1) of the 1995 Act, a farm business tenancy for a term of more than 2 years1 will, instead of terminating on its term date, statutorily continue as tenancy from year to year.
The statutory continuation is as a tenancy from year to year as from the term date ‘but otherwise on the terms of the original tenancy as far as applicable’. The tenancy will not continue as a periodic annual tenancy if, at least 12 months before the term date, a written notice has been given by either party to the other of his intention to terminate the tenancy. Prior to the introduction of reforms suggested by the Tenancy Reform Industry Group,2 an upper limit of 24 months applied to the notice period. This no longer applies,3 and the notice provision consequently offers much greater flexibility to the parties. Either party can give notice of termination at any stage during a fixed term tenancy, to take effect at the contractual term date of the tenancy, providing it is given at least 12 months prior to termination. In the case of a long fixed term, notice of intention to terminate could be given by the landlord on commencement of the tenancy, for example, thereby effectively excluding the provisions of s 5 as to statutory continuation.4.03 If a fixed term tenancy continues on expiry as a periodic yearly tenancy, it can be terminated by notice to quit of at least 12 months duration ending on a term date of the tenancy.4 As noted above, the upper limit of 24 months on the period of notice to quit was removed in 2006.5 Provided notice to quit of at least 12 months is given, ending on a term date of the tenancy, it can be of any duration. This will give considerable flexibility to the parties to structure their agreement to their financial circumstances. Where a fixed term has expired and been statutorily continued under section 5, it would be possible, for example, for the landlord to give notice to quit of 10 years’ duration, effectively granting a ‘rolling’ fixed term for a further 10 years.
The tenant would be able to reduce the term by giving notice to quit of shorter duration, at any time, provided it adhered to the basic requirement for the notice to be of a minimum of 12 months duration ending on a term date.64.04 Notice to quit can be given during the contractual fixed term to terminate the periodic ‘continuation’ tenancy on the first anniversary of the term date of the tenancy.7 This will facilitate the service of notice to quit during the last 12 months of the contractual term, ending the continuation tenancy on the first anniversary of the term date. Notice of longer duration could also be given earlier during the contractual fixed term, provided always that it ends on the first anniversary of the term date – for example if the landlord wished to extend the tenancy for one year8.
4.05 Contracting out of the effect of section 5 is prohibited.9 Any agreement by which the tenant is deprived of his right to receive at least 12 months notice, or by which the continuation tenancy will not arise (otherwise than by service of a valid notice of termination) will therefore be void. An executory agreement to surrender the tenancy will, accordingly, be unenforceable should the tenant subsequently seek to enforce his right to full notice under the 1995 Act, and irrespective of whether it is contained in the tenancy agreement itself or otherwise.10 This provision would not, however, affect a surrender of the tenancy, either by deed or by the giving up of possession by the tenant.11 It only touches an executory agreement to surrender, not an executed surrender offered and accepted by the landlord.
4.06 Where a fixed term farm business tenancy has continued on expiry as an annual periodic tenancy under s 5, as outlined above, it will be subject to the same provisions as to notice to quit as other annual periodic tenancies.12 Whatever its ultimate duration, the 1995 Act confers no statutory security of tenure on the tenant once the contractual term date has passed, other than the requirement for a minimum of 12 months notice to quit ending on a term date of the periodic tenancy. The ‘term date’ for this purpose, in relation to a fixed term tenancy, is the date fixed for the expiry of the term13.