The Law Commission has launched a long-awaited review of agricultural tenancy law, warning that outdated rules may be stifling farm investment, diversification and growth.
The review will examine the two main statutes that govern tenancies of agricultural land — the Agricultural Holdings Act 1986 and the Agricultural Tenancies Act 1995 — which, according to the Commission, are long overdue for reform.
In its introduction, the LC stated: “We have heard that these regimes may not correctly balance the interests of landowners and tenants and that the lack of security of tenure and often short-term nature of many tenancies is a barrier to investment and the viability of some tenanted farm businesses.
"We have also been told that the current law may restrict tenant farmers from diversifying and adapting their businesses and benefiting from new opportunities.
"The current law may therefore hinder economic growth and opportunity for tenant farmers.”
The project will consider whether the current legal framework provides tenant farmers with sufficient security to encourage investment while also maintaining viable businesses.
At the same time, it will assess whether landlords have the necessary confidence to let land and whether opportunities are available for new entrants to farming.
Other areas under scrutiny include whether legislation restricts tenant farmers from diversifying their activities — such as adopting more sustainable practices — and whether the law promotes collaborative relationships between landlords and tenants.
The Law Commission will also examine whether there are technical flaws in the law that cause problems in practice.
The long-awaited review signals that reforms to both security of tenure and property rights are now possible, according to rural property consultancy Acorn.
The firm explains that this could mean changes to what tenant farmers are entitled to do under law, rather than solely through contractual agreements.
"Amidst the general level of anxiety and uncertainty currently impacting the agricultural sector as a whole, some may consider that the last thing that is currently required is what could be a significant change in agricultural tenancy law," Acorn says.
"It is not difficult to see that this could result in a reduction in the supply of land available to the agricultural tenanted sector until such time as what is now a material uncertainty as to how the law may change has been resolved."
The review follows on from the government-commissioned Rock Review, which called for the Law Commission “to update legislation pertaining to agriculture, tenancies, and land use in England to bring it into the 21st Century and make it fit for the multiple demands being made on land”.
While the Rock Review made a series of recommendations for reform, it did not call for a review of security of tenure — one of the most sensitive and potentially far-reaching elements now under consideration by the Commission.
