The Family Farm - Planning for Success

Many local farmers still occupy their farm, or additional parcels of land, under an Agricultural Holdings Act (AHA) Tenancy. Tenancies granted under the AHA 1986 provide limited rights of succession for the close relatives of the tenant, so can be very valuable to the family in securing their longer term future. In contrast Farm Business Tenancies (FBTs) granted under the Agricultural Tenancies Act 1995 usually provide less security, more onerous terms and a potentially higher rent.

For that reason if your family has an AHA tenancy it is important to be aware of the implications and plan ahead for ways to make it easier for relatives to succeed to the tenancy when the original tenant retires or dies.

You must however satisfy two criteria, Eligibility and Suitability.

Eligibility

  • You must be a close relative (as defined by the Act).
  • It must be your principle source of livelihood.
  • A “commercial unit” test must be met.

Suitability – this includes:

  • Age
  • Health
  • Finances
  • Qualifications/Experience
  • Landlord’s views

Landlords may oppose the application if they believe they can get better terms by letting the farm or land on an FBT. So if you are keen to keep your succession rights it is important to plan ahead.

There are also strict time limits which must be kept to when making the application, so it is important to know what these are in advance.

Keeping good supporting records is also vital, and could help save costs and stress when it comes time to make your application.

Other factors to consider are:-

  • Whether you have a Farming Partnership Agreement (you should have one!) and what the terms of this agreement provides for.
  • What your Will provides for. Again, if you have not got one, you should have!

Our advice is to PLAN AHEAD with your Solicitor and Accountant.

Our Rural Law team recently held a seminar on this subject which was very well received by those who attended. If you would be interested in attending future seminars on this subject, please let us know by contacting lauren.dixon@rurallawpractice.co.uk

Published 8 December 2017

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