Agricultural holdings – Welsh ‘Model Clauses’ one step closer
The Welsh Government has published its response to the recent consultation on modernising the repair and maintenance obligations and end of tenancy compensation regime applying to tenancies in Wales governed by the Agricultural Holdings Act 1986 (AHA tenancies).
New Welsh ‘Model Clauses’ will now be enacted, however there is no indication yet as to when they will be put before the Assembly.
The new regulations should be welcomed. The Agriculture (Maintenance, Repair and Insurance of Fixed Equipment) Regulations 1973 currently remain in force in Wales. Now more than 40 years old, the provisions have become outdated, leading to significant gaps and uncertainties in the allocation of liabilities between landlord and tenant for maintaining and repairing landlord’s fixed equipment.
The regulations will cover a number of new liabilities, necessary to reflect modern fixed equipment, as well as providing a more detailed breakdown of some liabilities, to remove grey areas.
The changes will bring Wales back in line with England, following the implementation of the Agriculture (Model Clauses for Fixed Equipment) (England) Regulations 2015, although the new Regulations will not be identical. It should be noted that whilst the approach in England and Wales will now be more consistent, the appropriate regulations will need to be consulted in each case.
Summary of changes:
New liabilities: reed beds; slurry, silage and effluent systems; fixed equipment generating electricity/heat/ power; fuel tanks; insulation; livestock handling systems; fire, carbon monoxide and smoke detection systems.
Change in liability: electrical supply systems – now fall solely on the landlord with exception of switches, sockets and light fittings.
Clarification/Expansion: e.g. fitted kitchens; bargeboards, fascias and soffits; chimney linings, fireplaces, firebricks.
Increase in monetary caps: Tenant liability for replacement roof tiles has increased from £100 to £500 per annum, removal of the £2,000 per annum cap on the tenant’s ability to recover the cost of replacement items from the landlord.
As was the case in England, the implementation will not be wholesale, so advisers will need to check whether the new regulations apply in each case. They will generally apply to all verbal tenancies and any written tenancy agreements which incorporate the Model Clauses as ‘amended or replaced’.
If an existing tenancy either recites the Model Clauses in full, or applies them with no reference to future amendments or replacements, the 1973 (or in some cases 1948) Regulations will continue to apply.
Although the Model Clauses apply automatically to AHA tenancies, they are very often also expressly incorporated into farm business tenancies. As set out above, whether it is the new regulations or old ones which will apply in a particular FBT will depend on the way in which they are incorporated.
End of tenancy compensation
The Welsh Government also plans to introduce changes to the compensation payable to outgoing tenants on termination. The Consultation concludes that the existing legislation no longer provides adequate compensation for the value of certain improvements and inputs with the result that tenants are lacking incentives to maintain the land in the last years of their tenancies. The new regulations will focus both on the calculation of the compensation and the type of work, for which compensation can be claimed.
The Response Paper can be accessed here.