1 The Agricultural Tenancies Act 1995
1.26 The most radical reform of land tenure legislation since 1948 was introduced in the Agricultural Tenancies Act 1995. The latter introduced a new type of tenancy structure – the ‘Farm Business Tenancy’ – that applies (with minor savings) to all tenancies of farmland granted on or after 1 September 1995.
The reform of farm tenancy law introduced by the 1995 Act was long overdue. The decline of the landlord/tenant system is an incontrovertible fact, even if the reasons for it are sometimes disputed. As we have seen,36 the Northfield committee in 197937 put the proportion of farmland let under commercial agricultural tenancies at 35–40% of the total available. This represented a substantial decline from the position obtaining in 1908, when an estimated 88% of farmland was tenanted. In 1991 MAFF statistics put the tenanted sector at 35%.38 It must be appreciated, also, that much of the land that was being let under the previous tenancy laws was let on short-term arrangements designed specifically to avoid the creation of a full agricultural tenancy with security of tenure.39 The 1994 CAAV Tenanted Farms Survey indicated, for example, that no less than 67% of new lettings were on short fixed term Gladstone v. Bower tenancies.40 The statistics, however bad, do not give a true picture of just how far the traditional landlord/tenant system has declined. This has far reaching consequences for the economic and social structure of the countryside and poses particular problems, for example, for entrants to the industry (perhaps with little capital) seeking to rent as a first step on the agricultural ladder.1.27 When reform proposals were first put forward by MAFF in 1991 complete deregulation of future lettings was the preferred option. The industry agreement on which the 1995 Act was ultimately based, however, represented a partial retreat from total deregulation – notice of termination of at least 12 months was to be retained for terms of 2 years or more, and fall back provisions for arbitration on compensation for improvements and rent were proposed.41 The 1995 legislation is something of a compromise, therefore, in that it retains residual intervention in matters of termination of tenancies and dispute resolution, while primarily promoting freedom of contract.
It nevertheless represents a substantial deregulation of the market for let farmland, with the parties free to negotiate the terms of the tenancy without statutory interference, and without the imposition of security of tenure after expiry of the agreed term. The legislation has three principal objectives: (i) To encourage landowners to let land;42 (ii) To provide a flexible legal framework within which farmers can diversify into other farm-based businesses while still remaining an agricultural tenant; and (iii) To provide a framework which recognises the increased importance of environmental land management by farmers, and allows for the enforcement of environmental covenants in farm tenancies.43