27 May 2022

New tenancy rules for farmers

James Lloyd a partner in the agriculture team looks at the rules around assured shorthold tenancy, and what rights both parties have.

A lot of farmers have long used assured shorthold tenancies (AST) to let cottages, whether to employees or not. That is because they allow flexibility especially in getting the cottage back if the farm needs it. But, because of issues with rogue landlords in the buy to let sector abusing the ease of removing tenants, the Government has now set out that it will be changing the law to strengthen rights for tenants to stay on. Farm cottages are inherent parts of the farm and farming businesses and so the arrangements need to be kept under review as the law changes.

Current position

Currently, if the tenant is in breach of the terms of his AST or, if there are limited circumstances (set out in statute) where the balance falls in favour of the landlord needing the property back then the landlord can serve a notice seeking possession from the tenant. This notice is known as a “Section 8 notice” and it can be served at any time during the tenancy but is very restricted.

Alternatively, the landlord can serve a s21 notice, which allows the landlord to give the tenant two months’ notice to bring the tenancy to an end. The notice cannot expire prior to the end of the fixed term (usually 6 months), but there is no need for the landlord to give any reason for ending the tenancy.

Because s21 notices are easier to use than the legislation for agricultural employee occupancies, it is common for a notice to be (correctly!) served before any employee goes into a cottage to make the tenancy an AST and not an Assured Agricultural Occupancy.

Changes ahead

It has been proposed in the Queen’s speech that the use of no-fault evictions may be brought to an end. This change will not happen straight away as first there needs to be a consultation on how to balance tenants’ needs for greater security while ensuring landlords are able to recover their property if properly needed.

The consultation paper proposed is intended to strengthen and extend the grounds for possession under s8 notice, particularly where the property is needed for the landlord’s or a family member’s use, and if the landlord wants to sell.

Under the new proposals, landlords will continue to have the ability to evict tenants where the tenant breaches the AST terms (e.g. the tenant fails to keep the property in a state of good repair and condition), where rent is in arrears or where the landlord plans to sell the property or live in the property themselves.

Problems ahead

The proposals do not provide for the landlord to terminate the tenancy where they wish to rent to another tenant. That could be a problem particularly if an AST has been used for an employee, who now may be able to stay on after their employment ceases, provided they pay the rent and behave. However, that means the previous flexibility to remove the tenant so the cottage can be used by another employee is likely to be lost. Note that is where an AST has been used, not where a service occupancy or Assured Agricultural Occupancy is used – which is a separate subject in itself.

Any questions?

Contact James at james.lloyd@wilkinchapman.co.uk to discuss

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