Farm cottages: Finding a way through the statutory maze

The offering of accommodation with employment remains a familiar scenario on many farms and rural Estates. Since the passing of the Housing Act 1988 (“HA 1988”) and the creation in 1989 of Assured Shorthold Tenancies (“AST”), the vast majority of lettings to agricultural workers have been on ASTs with extremely limited security of tenure.

There remain in existence, however, a good number of secure tenancies, which are governed by the predecessor of the HA 1988, the Rent (Agriculture) Act 1976 (“1976 Act”). For the first time in nearly 30 years, the 1976 Act has been given judicial consideration by the Upper Tribunal in the recent decision of Hook v Hawkins [2019]. The Judgment provides a useful analysis of the rights of an agricultural worker and his family, with the added complication of a divorce.

Background: Protection under the 1976 Act

To be a protected occupier the occupier must satisfy the following 3 stage test under s 2(1):

  1. He/she is a qualifying worker;
  2. He/she occupies the dwelling-house under a qualifying tenancy or licence; and
  3. The dwelling-house is in qualifying ownership.

Qualifying Worker

  • The occupier must be employed; self-employed agricultural workers will not be protected.
  • The employment must be in agriculture; NB gamekeepers are not employed in agriculture.
  • There is a 2 year qualifying period - the occupier must show that he/she has worked full time (at least 35 hours per week) for not less than 91 out of [the last] 104 weeks (unless suffering from a qualifying injury or disease).

Qualifying licence or tenancy

The following arrangements will qualify for protection:

  • A dwelling-house let as a separate dwelling to an individual who occupies the house as his/her principal home.
  • A licence under which a person has exclusive occupation of a dwelling-house.

The definition excludes lodgers, workers provided with bed and board, and workers sharing accommodation with their landlord or other people (e.g. hostel accommodation); but protection bites if the occupier shares with 2 other workers or fewer.

Implications of 1976 Act Protection

  • The occupier has lifetime security of tenure (via creation of a statutory tenancy when original contract comes to an end – usually linked to the employment contract).
  • The Landlord has very limited ability to recover vacant possession.
  • Occupier has one right of succession.
  • Regulated rents are imposed (known as fair rents) which may be 60-70% of open market value.

The Hook v Hawkins case

Anne Hawkins married her husband, Trevor, in 1975. Around the same time, Trevor was employed in agriculture by the original land owners. Trevor did not have a written employment contract.

A property (2 New Cottages in Shifford) was made available for Anne and Trevor to live in. No rent was paid. The couple had two children whilst living there.

In April 1990, Trevor and Anne split. Trevor ceased employment and moved out of 2 New Cottages. Anne and the children continued residing there. In June 1991 Anne and Trevor divorced.

In around 1992 or 1993 the original landowners told Anne that they required 2 New Cottages for another farm worker and provided her with the use of Carlan Cottage in Bampton. Anne started paying £200 per month in rent. No written tenancy agreement was entered into. The landlords told Anne that if another property became available in Shifford, she and the children could move into it.

In 1995 Anne and the children moved into 1 New Shifford Farm Cottage, which is the subject of the dispute. Anne continued paying £200 per month rent. In September 2015 Anne was informed that James and Fiona Hook had become her landlords.

The question before the Upper Tribunal was whether Anne’s tenancy was a ‘protected tenancy’ under the 1976 Act or whether it was an ‘assured tenancy’ governed by the HA and as such, whether the First-Tier Tribunal (“FTT”) had jurisdiction to deal with a notice proposing rent under an assured periodic tenancy. At first instance, the FTT determined that Anne had a ‘protected tenancy’, but did not appear to confine that to the 1976 Act, but also referred to the Rent Act 1977.

Assured Tenancies

Assured tenancies are another form of statutory tenancy. Any tenancy created between 15 January 1989 and 28 February 1997 will be an assured tenancy, unless the tenant was served with prior notice, that an Assured Shorthold Tenancy was being created.

The hallmarks of an assured tenancy are:-

  • Minimum rent requirement of £250 per annum.
  • There is no rent regulation.
  • Lifetime security of tenure is conferred on the tenant.
  • The landlord has limited ability to obtain vacant possession
  • Assured tenancies confer one right of succession to qualifying family members.

Hook v Hawkins: The Decision

On appeal the Upper Tribunal reversed the FTT’s decision. The Upper Tribunal were clear that there was no question of Anne or Trevor having any statutory protection under the Rent Act 1977.

Trevor satisfied the qualifying criteria in section 2(1) of the 1976 Act and it was Trevor alone who was granted a qualifying licence of 2 New Cottages, because he was allowed to occupy the premises under the terms of his employment and no rent was paid, which pointed to a service occupancy, as opposed to a tenancy.

The Upper Tribunal emphasised the wording of section 2(1) which states:

“he shall be a protected occupier of the dwelling-house if  - (a) he is a qualifying worker…”

Anne was never a qualifying worker, so was never a protected occupier during Trevor’s employment.

When Trevor ceased his employment in 1990 and left 2 New Cottages the licence came to an end. Section 1(6) of the Matrimonial Homes Act 1983 came into play here. Section 1(6) allowed Anne’s occupation to be treated as occupation by Trevor. As a result, section 4(1) of the 1976 Act, which allows a widow of the occupier to succeed to the statutory tenancy, came into effect.

When the divorce was finalised in June 1991 Anne’s continued occupation of 2 New Cottages no longer constituted occupation by Trevor. At this time, the statutory tenancy ended. Anne could not enjoy a statutory tenancy in her own right because she had never been a qualifying worker and she had not enjoyed the benefit of a qualifying licence or tenancy.

As such, Anne was deemed to be occupying under an assured periodic tenancy under the HA 1988, the consequence of which is that the landlord can now charge her an open market rent.

Conclusion

Residential tenancies can be fiendishly complicated, especially where an agricultural worker has been occupying a farm cottage (or a series of cottages) for many years. It

is vital that an accurate assessment is made of their status under the various statutory regimes before steps are taken to impose or review a rent, draw up a written agreement or make any changes to their tenancy. Similarly landowners need to tread carefully and obtain proper advice when granting new tenancies to agricultural workers or potential agricultural workers.