Agriculture and the Renters (Reform) Bill

At present, where an agricultural worker lives in accommodation provided by their employer, that tenant is an assured agricultural occupier, who may only be evicted if one of the fault grounds for eviction set out in the Housing Acts is made out. At the moment, farmers and landowners are able to get around the protections of an AAO by giving their tenant/worker a notice before the beginning of a tenancy stating that their occupation of the property will be under an assured shorthold tenancy. This allows the farmer to terminate the tenancy on a no-fault basis by serving a section 21 notice. The Renters (Reform) Bill, which is intended to bring into effect the government’s promise to abolish so-called no-fault evictions, was published on 17 May 2023. Alongside this, the Bill brings additional changes which will affect the rural sector. We have summarised these into five key points. 1. No more fixed terms The majority of tenancies are for a fixed term where, unless there is a break right for the landlord or tenant, both parties are tied into the tenancy for a fixed period. This is intended to give security to both parties. With the removal of fixed terms, tenants/workers have more flexibility to choose when they leave on giving two months’ notice. If they do not choose to leave, a landlord/farmer will need to have a valid reason to terminate. This also marks the end of the AST. There will only be assured tenancies going forward and, subject to implementation, all existing ASTs will become assured tenancies. 2. Abolition of section 21 When the Bill is passed, it will remove a landlord/farmer’s ability to serve notice under section 21 of the Housing Act 1988; a no-fault eviction notice. This means a landlord/farmer will only be able to terminate an assured tenancy if one of the grounds set out in legislation has been met. The removal of the no-fault eviction procedure means there will no longer be any reason for landlords/farmers to convert an AAO into an assured tenancy. Further, the Bill as drafted would not allow for a conversion notice to be served once it comes into effect. 3. Terminating the tenancy – ground 2ZA The first new ground specifically for an agricultural tenant allows a landlord/farmer to serve a notice to quit where either: a. the landlord/farmer themselves have been served with a valid notice to quit by their landlord, or b. the fixed term of their farm business tenancy has less than 12 months left to run. This covers situations where a landlord/farmer has been given notice to quit under their own tenancy and must be able to give notice to their residential sub-tenants in order to give vacant possession of the farm. There are a number of wrinkles that might arise. For instance, under the Agricultural Holdings Act 1986 a notice to quit that does not give reasons can be valid and validly served but if the tenant serves a counternotice, the notice to quit can’t take effect without the consent of the First-tier Tribunal. The question remains as to whether a tenant farmer in receipt of such a notice to quit is still able to serve notice to quit on their own residential tenant. Similarly, an FBT tenant whose tenancy is for a fixed term of two years or more may hold over after the fixed term. They do not need to give up occupation until they are served with a notice to quit giving at least 12 months’ notice. As it stands, an FBT tenant who is holding over after the expiry of their fixed term and hasn’t been served with any notice to quit may still be entitled to serve notice on their residential tenants. 4. Terminating the tenancy – grounds 5A & 5C Currently AAO tenancies do not end with the termination of the employment of the farm worker. If the relevant notice to convert the tenancy into an AST has not been served, landlords/farmers are limited in the grounds they could use to obtain possession from the tenant/worker, even when they were no longer employed to work on the farm. With the abolition of the fixed term and no-fault evictions, the government will in effect turn an AAO into a service occupancy through the introduction of two new grounds which allow the landlord to obtain possession from the tenant: a. where the landlord/farmer needs the dwelling house for a person who will be employed by the landlord/farmer in an agriculture position, whether temporarily or permanently; and b. where the dwelling house was let to the tenant as a consequence of their employment and that employment has now terminated. For point a, we assume the acceptance of a job offer will trigger the ability to rely on this ground. These grounds will make it easier for landlords/farmers to remove former workers, but it is important the tenancies are adequately drafted to ensure these new grounds are covered. 5. When does it come into play? The Bill still has several parliamentary stages to go through, but when passed, the implementation will be a two-part process: The government will give six months’ notice as a minimum before all new tenancies entered into after the Bill comes into force will fall under the new rules. At least 12 months after that initial implementation date, the rules will be backdated and will govern all existing tenancies. There has been no update on the Bill since it was published, but now parliament is back in session we expect to see the Bill progress over the coming months. Amy Evans is an associate and Andrea Nicholls is a managing associate in the real estate litigation team at Penningtons Manches Cooper