Rural dwellings: The Housing Health and Safety Rating System and agricultural tenancies
Agricultural holdings and Farm Business Tenancies commonly include farm or estate cottages, which are then sub-let by the agricultural tenant to employees or third parties.
Amid increasing regulation in the residential sector, the interaction between the agricultural and residential tenancy regimes can become problematic. In particular, we are often asked to advise on the interaction and applicability of the Housing Health and Safety Rating system ("HHSRS") under the Housing Act 2004 ("HA 2004") to agricultural tenancies.
The HHSRS applies to the letting of all "dwelling houses" (HA 2004, section 1). There is no exception for agricultural tenancies, and accordingly, the HHSRS applies to AHA tenancies and FBTs in the same way that it applies to assured shorthold and assured tenancies under the Housing Acts. The HHSRS has a reach beyond the Housing Act legislation, into the agricultural tenancy regime.
Under the HHSRS, Local Authorities are placed under an obligation to assess potential health and safety hazards and risks present in residential properties in England and Wales. The focus is on identifying deficiencies in the property which could cause harm. Local Authorities are under a duty to take action if any category 1 hazards are identified and given powers to issue a variety of formal notices to ensure any identified hazards are addressed and removed (e.g. Improvement Notices, Prohibition Orders, Hazard Awareness Notices).
The HHSRS is focused on those areas which are the responsibility of the owner (or landlord), pursuant to section 11 of the Landlord & Tenant Act 1985 ("LTA 1985"), which areas are explained in more detail in Lydia Robinson's article 'https://www.michelmores.com/news-views/news/learning-law-contracting-out-repairing-obligations-dwellings' on section 11.
The anomaly in an agricultural context is that the section 11 statutory repairing obligations do not apply to "dwelling houses" comprised within an agricultural tenancy (let under either an AHA or FBT). There is an express exclusion in section 13 of the LTA 1985, enabling the parties to an agricultural tenancy to allocate the obligations between them as they wish. In many cases, the Model Clauses (ie under the Agriculture (Model Clauses for Fixed Equipment) (England) Regulations 2015/950) apply or are utilised.
If a Local Authority serves an HHSRS notice in relation to a dwelling house, statutory obligations are imposed on the recipient, who becomes obliged to carry out the remedial action, specified in the notice, within the deadlines set by the Local Authority.
The appropriate recipient is the "person having control of the dwelling" (Schedule 1), which is defined further in section 263 as "the person who receives the rent".
If an HHSRS notice is served in relation to the main farmhouse under an AHA or FBT, the landlord will therefore be the appropriate recipient under the legislation and will be subject to a statutory obligation to comply and at risk of penalties for non-compliance. This remains the case even if, under the terms of the agricultural tenancy agreement, the tenant is responsible for some of the repair items/issues identified by the Local Authority.
This is because the statutory obligations arising under the HHSRS are entirely separate to the contractual obligations, which may have been agreed between the parties under the agricultural tenancy agreement.
Accordingly, there is a second, contractual analysis that needs to be undertaken to check whether the landlord, as a matter of private contract, can require the agricultural tenant to undertake or pay for some or all of the works, in reliance on the terms of the tenancy agreement. Section 38 of the HA 2006 expressly preserves all existing contractual rights and remedies. This gives the landlord the ability to pass liability on to the tenant if appropriate.
Liability and defence
However, it should be noted that the landlord remains the liable person under the HHSRS regime and under section 30 of the HA 2004, will be guilty of a criminal offence on summary conviction if he/she fails to comply within the time limits specified in the HHSRS Notice. Alternatively, they may be served with a Civil Penalty Notice under the Housing & Planning Act 2016.
It is worth noting that section 30(4) provides a defence if the recipient can establish a "reasonable excuse" for failing to comply with the Notice. This can be an important provision if the co-operation of a tenant is sought to undertake the necessary remedial works.
In situations where a cottage is sub-let on an AST, then the agricultural tenant will be the appropriate recipient under the HHSRS, in his/her capacity as the residential tenant's direct landlord, and any notices should be served accordingly. Indeed, section 11 will apply to the sub-tenancy, so the content of the Notice should properly reflect the landlord's repairing obligations. However, once again, there may need to be a secondary exercise between the agricultural tenant and the head-landlord, to divvy up the required work between them to reflect their contractual liabilities under the head lease.
Homes (Fitness for Human Habitation) Act crossover
Note also that most residential sub-tenancies in England for a term of less than 7 years are now subject to the Homes (Fitness for Human Habitation) Act 2018 ("HFHHA"). The HFHHA automatically imposes an implied term into the tenancy agreement that the property is fit for human habitation throughout the term. This means that the property must be safe, healthy and free from anything that could cause serious harm.
The scope of the HFHHA specifically includes any matter or circumstances amounting to a "hazard" under the HHSRS, so there is significant cross-over between the two regimes. Where they differ, is that the HFHHA provides tenants with a direct means of forcing landlords to improve their properties to a minimum statutory standard, without relying on the Local Authority to take action. If the landlord fails to resolve issues under the HFHHA, the tenant can pursue matters through the courts and, in certain circumstances, obtain compensation.
The HFHHA currently applies to tenancies granted after 20 March 2019 and will apply retrospectively to existing tenancies from 20 March 2020, including assured agricultural occupancies under the Housing Act 1988 and Rent (Agriculture) Act 1976 occupiers.
Managing the HHSRS process
It may be necessary for the party in receipt of an HHSRS Notice to serve formal notices to do work on the other interested party, in order to ensure that liability is passed down (or up) appropriately and the HHSRS recipient is not collared for the whole lot. The interaction between any deadlines imposed by the Local Authority under the HHSRS Notice and the contractual deadlines that may apply, will need to be considered.
We have found Local Authorities to be fairly understanding in an agricultural context, provided the contractual position is explained to them at an early stage and they are able to see that the recipient is taking proactive steps to resolve issues. What they will not accept is being told, "it's not my problem/responsibility". From the perspective of the HHSRS legislation and the Local Authority, it is!