Case A: A quick route to possession or a trap for the unwary?
Agricultural tenancies let under the Agricultural Holdings Act 1986 between 12 September 1984 and 31 August 1995 by a smallholdings authority or ‘the Minister’ are (potentially) able to be brought to an end by the service of a notice to quit pursuant to Schedule 3, Part I, Case A, of the Agricultural Holdings Act 1986 (AHA), following the tenant reaching the age of 65.
32 years on from the genesis of this provision, we are starting to see more and more requests for advice on the operation of Case A, in a world which has changed substantially since the provision was first enacted.
Before we outline the problems which are frequently encountered, it is worth considering the manner in which Case A is intended to work. In summary, Case A provides that a notice to quit may be served where:
The holding was let on or after 12 September 1984;
- The tenant has reached the age of 65;
- Suitable alternative accommodation is provided (if the tenant will be deprived of accommodation); and
- The tenancy agreement contains an acknowledgement that the tenancy is subject to Case A (or its successor)
Section 37 of the Agriculture Act 1970 defines ‘the Minister’ as the Minister of Agriculture, Fisheries, and Food (now the Secretary of State for Environment, Food and Rural Affairs). Section 38 of the same Act provides that a smallholding authority is the council of every county in England and the council of every county or county borough in Wales.
It is common for written tenancies granted by a smallholdings authority or the Minister to lack the all important acknowledgement that the tenancy is subject to Case A. However, there is often little need to panic as most tenancies granted after 12 July 1984 will not attract rights of succession anyway. On the other hand, it is worth noting that a landlord cannot force retirement upon a tenant, and will then have to await death in order to seek possession.
Suitable alternative accommodation is determined in accordance with Pt II, paragraphs one to seven of Schedule 3 to the AHA.
Schedule 3 of the AHA also provides that a certificate of the housing authority for the district in which the holding is situated, certifying that that authority will provide suitable alternative accommodation, shall be conclusive evidence that suitable accommodation will be or is available.
Our experience is that in these days of acute housing need, most retiring tenants will be considered either too affluent, or as intentionally homeless, and as such would not qualify for such a certificate.
Alternatively, accommodation shall be deemed to be suitable if it consists of either:
- A protected tenancy (within the meaning of the Rent Act 1977);
- An assured tenancy which is not an assured shorthold tenancy (within the meaning of the Housing Act 1988); or
- On terms which will afford to the tenant security of tenure reasonably equivalent to the security afforded by Part VII of the Rent Act in the case of a protected tenancy, or on terms which will afford to the tenant security of tenure reasonably equivalent to the security afforded by Chapter I of Part I of the Housing Act in the case of an assured tenancy which is not an assured shorthold tenancy.
Additionally, the accommodation must be reasonably suitable to the needs of the tenant’s family regarding proximity to place of work and either:
Similar as regards rental and extent to the accommodation afforded by dwelling-houses provided in the neighbourhood by any housing authority for persons whose needs as regards extent are similar to those of the tenant and his family, or
- Reasonably suitable to the means of the tenant and to the needs of the tenant and his family as regards extent and character.
This is all very well, but the Rent Act 1977 itself provides that: “A tenancy shall not be a protected tenancy at any time when the interest of the landlord under that tenancy belongs to (a) the council of a county or county borough”. Meanwhile, paragraph 12 of the Housing Act 1988 prevents local authorities from providing assured tenancies.
The consensual (and often sensible) solution that many smallholdings authorities look to use is that the tenant surrenders their tenancy and in return is provided with a residential tenancy of the farmhouse on the holding until death.
Our view is that the Housing Act 1985 at section 80 will apply to most (if not all) smallholdings authorities such that tenancies of residential dwellings granted by them will be secure tenancies attracting rights of succession and the right to buy.
In view of the above provisions, if a new let of the farmhouse (only) on a smallholding is provided directly by the smallholdings authority, the let it is likely to be vulnerable to an argument by the tenant that they have accrued or will accrue rights of succession and the right to buy because they have become a secure tenant under the Housing Act.
One wonders whether it was the intention of Parliament to put smallholding authorities into this positon, particularly given the purpose of the smallholding initiative in the first place, and the fact that many do not hold other housing stock.
In many circumstances it may be possible to agree a deed of variation to the AHA tenancy which allows the tenant to stay in the farmhouse and preserves AHA status (keeping the tenancy out of the secure regime) but surrendering much of the land; or an armslength structure acting as landlord of a tenancy of a replacement dwelling.
Working with agents, we have also looked at monetising the right to live in an assured property for life with security of tenure, if only to provide a comparative analysis for audit and oversight purposes.
There are bespoke solutions available to most of the problems outlined above; however, they require careful consideration of unintended consequences, potential risks, and very careful drafting accordingly.
Please contact the Michelmores Agricultural Team if you wish to discuss any of the issues raised in this short article, or with any other queries of an agricultural legal nature.