Tenant Farmer - England and Wales

England and Wales

Historically, rural society utilised a three tier structure of landowners (nobility, gentry, yeomanry), tenant farmers, and farmworkers. Originally, tenant farmers were known as peasants. If they were bonded to the land, they were also villeins, but otherwise they were free tenants. Many tenant farmers were affluent and socially well connected, and employed a substantial number of labourers and managing more than one farm, land which could either be owned in perpetuity or rotated by the owners. Cottiers (cottagers) held much less land.

By the 19th century about 90% of land area and holdings were tenanted but these figures have declined markedly since World War II, to around 60% in 1950 and only 35% of land area in 1994. High rates of inheritance taxes in the postwar period led to the breakup or reduction of many large estates, allowing many tenants to buy their holdings at favourable tenanted prices.

The landmark 1948 Act was enacted at a time when war-time food rationing was still in force and sought to encourage long term investment by tenants by granting them lifetime security of tenure. Under the Agriculture (Miscellaneous Provisions) Act 1976 security was extended to spouses and relatives of tenants for two successions, providing that they had been earning the majority of their income from the holding for five years. Succession rights were however withdrawn for new tenancies in 1984 and this was consolidated in the Agricultural Holdings Act 1986. These two statutes also laid down rules for the determination of rents by the arbitration process. The 1986 statute covered tenancies over agricultural land where the land was used for a trade or business and the definition of "agriculture" in section 96(1) was wide enough to include various uses that in themselves were not agricultural but were deemed so if ancillary to agriculture (e.g. woodlands). The essence of the code was to establish complex constraints on the landlord's ability to give notice to quit, whilst also converting fixed term tenancies into yearly tenancies at the conclusion of the fixed term. In addition, there was a uniform rent ascertainment scheme contained in section 12.

It became difficult to obtain new tenancies as a result of landlords' reluctance to have a tenant protected by the 1986 Act and in 1995 the government of the day, with the support of industry organisations, enacted a new market-oriented code in the form of the Agricultural Tenancies Act 1995. The protection of the 1986 Act remains in respect of tenancies created prior to the existence of the 1995 Act, and for those tenancies falling within section 4 of the 1995 Act. For all other tenancies granted on or after 1 September 1995 their regulation is within the 1995 Act framework.

That Act was altered with effect from 18 October 2006 by the Regulatory Reform (Agricultural Tenancies)(England and Wales) Order 2006 SI 2006/2805, which also contains changes to the 1986 Act. Tenancies granted after 18 October 2006 over agricultural land used for a trade or business will fall within the limited protection of the 1995 Act so as to enjoy (provided the term is more than two years in length or there is a yearly tenancy) a mandatory minimum twelve months written notice to quit, including in respect of fixed terms. There is for all tenancies within the scope of the Act a mandatory tenants' right to remove fixtures and buildings (section 8) together with compensation for improvements (Part III). The rent review provisions in Part II may be the subject of choice to a much greater extent than previously. Disputes under the Act are usually, by the terms of Part IV, the subject of statutory arbitration controlled by the framework of the Arbitration Act 1996.

The current regimen for regulating tenancies, commonly known as the Farm Business Tenancy, offers a fixed term between landlord and tenant. In the cycle of animal husbandry and land use and improvement, the long term effect on the landscape of Britain is not yet proven. It was predicted by landowners and other industry spokesmen that the 1995 Act would create opportunities for new tenants by allowing large areas of new lettings but this has not happened in practice as most landowners have continued to favour share farming or management agreements over formal tenancies and the majority of new lettings under the Act have been to existing farmers, often owner-occupiers taking on extra land at significantly higher rents than could be afforded by a traditional tenant.