Agricultural Holdings Act tenancy reforms: how might they impact you as a landlord?

Since 2019 we have seen various changes to the legislation that governs Agricultural Holdings Act (“AHA”) tenancies. The removal of the ‘commercial unit’ test in succession applications and changes to the eligibility rules on who can succeed to an AHA tenancy have arguably made it easier for people to do this – that said, these changes don’t come into force until September 2024 – meaning there is less chance the land returns to the landlord when the tenancy comes to an end.

In addition, tenants can challenge prohibitions or restrictions in their tenancy agreement which prevent them from applying for financial assistance. If you refuse consent to a tenant to enter into an Environmental Land Management scheme, or similar, then you could be subject to a review of your decision by an arbitrator or expert.

In the event they find in favour of the tenant, this would override the written tenancy agreement containing the prohibition. Your land could then be entered into a long-term scheme by the tenant, potentially taking it out of agricultural use and thereby removing the ability to claim agricultural property relief on it.

The above changes are gradually reducing the control that landlords have over land in AHA tenancies, in an environment where the balance of power is arguably already weighted in favour of the tenant. For some this can not only affect their inheritance tax position but also frustrate potential diversification or development of their land.