The Agriculture Act 2020 has recently introduced several changes in the agricultural sector. New rules relating to farm succession planning will apply from 1 September 2024; tenant farmers are being told to prepare in advance for the key changes.
The most significant change is the removal of all provisions relating to the Commercial Unit Test. The test currently sets out that an applicant succession tenant who already occupies a commercial unit of land is not eligible to succeed an Agricultural Holdings Act tenancy. The removal of such test will provide greater opportunities for larger businesses or other close relatives who occupy other commercial units to secure tenancies. It should be noted that the eligibility tests will still require the applicant to demonstrate a close relationship with the tenant.
The conditions relating to suitability will become more stringent. The new test of suitability will apply to both those who are to succeed on death and where retirement has taken place. A higher standard must be met as an applicant must be able to show that they are able to adhere to efficient production whilst exercising care for the environment. The applicant's experience, training and skills in business management, as well as financial standing and character will also be taken into consideration.
In terms of eligibility, amendments have been made so that following the death or retirement of the tenant, a close relative may be considered even if they have not had the seven year practical experience provided that within those seven years they attended a full-time course at a university, college or other higher education establishment for a period of not more than three years and during which time the relative's only or principal source of livelihood derived from their agricultural work on the holding.
The new rules will also see the removal of the minimum age to serve a retirement notice. Applications for succession following notice of retirement may be made at any age.
If you will be affected by the new succession rules, our quick guide to succession planning for your farming estate provides some helpful tips and key considerations: https://www.geppsolicitors.co.uk/site/blog/agricultural-law/a-quick-guide-to-succession-planning-for-your-farming-estate
This is not legal advice; it is intended to provide information of general interest about current legal issues.