A Legacy of Postwar Values
At the heart of the agricultural holdings legislation lies the principle of security of tenure — a concept that’s historically shielded tenant farmers from the unpredictability of market forces and landlord decisions.
Barrister, Emily Windsor traces the origins of this level of protection back to the Agricultural Holdings Act 1948, which was succeeded by the Agricultural Holdings 1986 Act.
These statutes, she explains, were a product of their time.
“After the Second World War, the nation really valued its farmers and land production,” Windsor notes. “These statutes gave tenant farmers very strong protections, including rent control and substantial barriers to the landlord’s recovery of possession.”
In relation to tenancies granted between 1976 and 1984, these protections included not only the right for tenants to remain on their holdings unless the landlord could establish certain grounds, but also the ability to pass tenancies to family members on two occasions.
Remarkably, she explains, given that tenancies of agricultural holdings granted after 1984 do not carry succession rights, there remains a constant stream of succession applications coming before the First-Tier Tribunal.
For some time, there has been pressure for reform, given the enduring strength of these protections. Windsor points out that the presence of a 1986 Act tenancy can halve the value of land: “If you have a farm that would be worth approximately $12 million without a tenant, it might be worth £5 million subject to the agricultural tenancy.”
This creates an inherent tension between tenants and landlords, particularly when succession rights come into play.
Succession rights have been instrumental in maintaining the generational continuity of farming operations. Yet, they have also been the subject of fierce litigation.
“Succession rights are often quite hard-fought,” says Windsor. “On the one hand, you often have several generations of a farming family whose housing and entire livelihood depends on this farm. On the other hand, you have landowners thinking they’ve had enough of being unable to use their own land after 40 years.”
The New Succession Rules
Eligibility for succession has always hinged on factors such as the applicant’s relationship to the original tenant; their ability to prove financial dependence on the holding; and their “suitability” to take a succession tenancy. However, recent reforms have introduced significant changes to these requirements.
On the plus side, for tenants, there is no longer a minimum age for a tenant to serve a retirement notice, and start the process of handing over the tenancy to their designated successor.
Previously a tenant had to be 65. This change will make it much easier for a tenant to retire earlier, at a time of their choosing, which, significantly, will be at a time when they have the necessary evidence for an application in place.
However, under new rules that took effect in September 2024, the requirements of “suitability” are defined in much more detail.
In particular, potential successors must demonstrate their “capacity to farm the holding commercially”, taking into account “the need for high standards of efficient production and care for the environment.”
They must also show that a prudent landlord would shortlist them in an open competition for a tenancy of the holding.
The increased emphasis on commercial efficiency and environmental stewardship mirrors some of the broader trends in agricultural policy, Emily Windsor argues, where economic viability and sustainability are now top of mind.
She outlines the practical implications of these reforms: “A potential successor now has to show that if the tenancy was available on the open market, a prudent landlord would be willing to shortlist them.”
While these measures reflect the growing importance of sustainable farming, they could also make succession applications harder for many agricultural families.
“Suddenly, after 40 years of cultivating the land, living off it, and planning their lives around it, they might not be able to meet these new tests,” Windsor observes. “Family farming businesses often operate on very small profit margins.
Now these families will have to run their businesses keeping one eye on creating the evidence base to show that their businesses are a commercial and environmental success”.
Having said that, Emily Windsor is broadly supportive of the reforms. “The law has always had to evolve to meet the changing needs of society,” she says. “Most tenants these days rent land under more modern tenancies, which do not carry succession rights, in any event.
But, recent global events have emphasised the desirability of a nation being able to provide its own food, and we must ensure that modernisation does not undermine the fabric of rural communities or the livelihoods of those who have dedicated their lives to farming. The challenge is in striking the right balance”.
Emily Windsor is a barrister and a contributor to Muir Watt Moss: Agricultural Holdings.