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What is an AHA Tenancy?
Generally tenancies of agricultural created prior to 1st September 1995 will be governed by the Agricultural Holdings Act 1986.
An agricultural holding is land used for agriculture which is so used for the purposes of a trade or business, including horticulture, fruit growing, seed growing, dairy farming and livestock breeding and keeping, the use of land as grazing land, meadow land, osier land, market gardens and nursery grounds, and the use of land for woodlands where that use is ancillary to the farming of land for other agricultural purposes.
AHA tenancies confer a greater security of tenure than Farm Business Tenancies and the rent payable is often much lower than FBT rents. AHA tenancies can be difficult to terminate with limitations on serving notice and the notice taking effect.
AHA tenancies are often referred to as tenancies for life, seeking to provide protection for tenant farmers and to encourage long term investment, productivity and efficiency. AHA tenancies can also enjoy succession rights.
What is a Succession Tenancy?
AHA tenancies granted prior to 12th July 1984 are likely to carry succession rights. The succession rights would allow up to two successions, possibly passing on the AHA tenancy to two further generations of tenant farmers.
Potential successors can succeed to the AHA tenancy upon the original (or first successor) tenant’s retirement or death.
Only close relatives can succeed under the statutory framework, namely spouses, civil partners, siblings, children or persons treated as a child of the family. Grandchildren, nieces and nephews cannot succeed to an AHA tenancy.
There are strict time limits and tests to satisfy in order to succeed to an AHA tenancy, so it is important to plan for potential succession in advance and to seek legal advice at the early planning stages and also promptly, especially upon the death of the original (or first successor) tenant.
Does an AHA tenancy need to be in writing?
AHA tenancies can be oral or written.
Whilst it is preferable to have a written tenancy clearly recording the terms of the tenancy to avoid dispute, the AHA does import some terms into an AHA tenancy except in so far as they would impose on one of the parties to an agreement in writing a liability which under the agreement is imposed on the other. These are known as the Model Clauses. The Model Clauses set out both the landlord’s and tenant’s obligations to maintain, repair and insure fixed equipment.
For landlords of oral/unwritten AHA tenancies, it is advisable to serve a section 6 notice on the tenant.
What is a section 6 notice?
A section 6 notice is a request by either the landlord or the tenant to reduce the tenancy to writing. If the parties cannot agree the written terms of the tenancy, the matter can be referred to arbitration to determine.
More importantly from the landlord’s perspective, a service of a section 6 notice by the landlord imports a prohibition on assignment so that the tenant may not assign, sub-let or part with possession until either an agreement is concluded or the arbitrator makes his award. Where there is an oral AHA tenancy and no section 6 notice has been served, the tenant may assign the tenancy to another party, including a company. An AHA tenancy to a company would not only further limit the circumstances in which the landlord could terminate an AHA tenancy, but also vastly increases the value of the AHA tenancy.
