by Michael Gregory
The tenancy system, when in good working order, is an ideal means of giving farmers farming opportunities. The representative bodies, the Minister of Agriculture and our lords and masters in Parliament must decide whether they want it to flourish or whether to let it meet its doom.
Surveys by the Country Landowners’ Association and the Centre for Rural Studies opened a window on what could lie ahead. When the branch of the fig tree puteth forth leaves, you know that summer is nigh. When the agriculture industry awakens to the fact that the tenancy system is dying, and undertakes surveys, then is the time to buckle on the denims and to get down to working for its salvation — or to kiss it goodbye.
The minister has taken a promising step. He has issued a consultation paper on Reform of Agricultural Tenancy Law. It has thrown the national bodies into talks. In mulling over the issues let them face the dismal facts.
The Ministry of Agriculture (MAFF) statistics summarise a solemn story. In 1950 60% of agricultural holdings in Great Britain were rented. In 1988 the figure had declined to 27%. In terms of land area, the totals declined from 62% rented in 1950 to 38% in 1988. For decades, when tenancies have come to an end, landowners have taken more farms in hand than they have relet — this in spite of succession tenancy laws — and have been loathe to put new land into the tenancy system. There has been no useful market in farm tenancies since the second world war.
The real position is worse than the MAFF figures disclose. It has long been known that some of the land in the ministry’s count, while tenanted de jure, was de facto in owner-occupation. The valuable report, Agricultural Land Tenure in England and Wales, of a survey by members of the Centre for Rural Studies (CRS) for the RICS, published in June 1990, shows the amount of such land to be substantial. Some 13% of the tenanted land in their survey was held by tenants with a share in the ownership. Presumably most of these were family arrangements.
The causes of the decline in farm tenancies have changed from time to time. It must be remembered that it has been happening throughout most of this century. What is worrying for those who cherish the tenancy system is that, in spite of some of the undoubted causes being tackled in the past seven years, the slide remains unremitting. The reason is not a mystery. It is the old story — restrictive laws kill the very thing which they are supposed to protect.
One of the weightier questions is whether the history of political antics over tenancy laws has so destroyed the confidence of landowners that revival is impossible. If anything effective is to be done, lessons must be learned from that history. When Minister of Agriculture Tom Williams steered the Agriculture Act 1947 on to the Statute Book it was a revolutionary measure. Recognising farming as a long-term business, it gave farm tenants security of tenure for life, no matter what the tenancy agreement said. The landlord could get the land back for sure only on special statutory grounds, colloquially known as “the deadly sins”. They arose when something dire happened, such as the bankruptcy of the tenant, a tribunal issuing a certificate of bad husbandry, or the tenant failing to put right breaches of tenancy. Landlords could also recover possession of land if they obtained planning permission to develop. But the only certainty in life is death, and the only “deadly sin” certain to occur was the death of the tenant.
These protective laws, translated into the Agricultural Holdings Acts 1948 and 1986, have not been relaxed. For four decades they have presided over a wasting infirmity of the farm tenancy system. In 1958 a vague provision for assessing rents was replaced by the sounder open-market criterion, but from then until 1984 every piece of agricultural holdings legislation favoured tenants to the disadvantage of landlords. This habit culminated in the dramatic extension, in 1976, of security of tenure to a possible three generations, by an Act which Minister of Agriculture Fred Peart, under back bench pressure, put through against his better judgment. The succession tenancy laws were retrospective, so that a letting which an owner had originally agreed for a year might go on for over 100 years by twice being passed on to a close relative when the tenants died, and landowners no doubt wondered: “Oh death, where is thy sting?”
The legislators were blind to the fact that a tenancy is a contract. It is an agreement between two sides. One has the land the other wants to farm, and Parliament says to the owner: “No matter what you agree, these things shall be — we know best.” There can be no game of football without a football. If Westminster clobbers the home side supplying the football, it can be no surprise if they refuse to go on to the field of play. But if they do play, and the rules are changed during the course of the game (as happened with tenancies in 1976), they will need a deal of persuading that it is the game for them.
Attempting to change
An attempt was made in 1984 to encourage lettings by repealing, for new tenancies only, the succession tenancy laws, and by making the taxation of landlords less stringent. However, lifetime security of tenure still attached to new lettings; the gap between the value of tenanted and owner-occupied land was not going away; and VAT and other tax laws still penalised landlords. Some new lettings resulted, but the system is slipping towards its deathbed.
The CLA got answers to some of the questions which really mattered when they did their nationwide survey in 1989. They set out to discover from landowners what was stopping them from letting, whether any reforms would induce them to trot on to the field of play in sufficient numbers for the tenancy game to continue and, if so, what were those reforms. It was already known there was a strong desire among owners to let much of the land which they had in hand.
The survey indicated that there was one way, and one way only, to revive the agricultural tenancy system, and that was by bold heart surgery. If the politicians would scrap the “we know best” laws and allow the contracts of consenting adult businessmen to stand, not only could the decline be halted but there could also be expansion. Small ad columns in the farming papers might even be headed “Farms to let”.
In view of the CLA’s findings, the CRS survey was equally valuable because one of its objectives was to get the views of farmers on the various options mooted for law reform. The researchers are to be congratulated on their industry and methodology, but less so on their conclusions. They could not believe the evidence of their own research because “curiously”, as they put it, the most popular option was again shown to be freedom of contract. They concluded the farmers could not have understood what they meant.
Unhappily, this conclusion has all the signs of being tendentious. The writers of the report refer to freedom of contract as “a blunderbuss approach”, and abandonment of statutory security of tenure as “a high price to pay”. The price paid for over 40 years of statutory interference with private agreements has apparently been lost on them. It has, as the CLA survey showed, confined the patient to its sick bed, kept alive by the artificial respiration of compulsory succession tenancies, which are widely condemned by landlords, tenants and young farmers alike.
Sundry proposals have been aired from various sources. Nearly all of them overlook two crucial facts. One is that the law of agricultural holdings has become excruciatingly complex and incomprehensible to those it is supposed to serve, and proposals making it more so are not needed. The other is that the CLA survey has identified what reforms would not halt the decline of the system. They include “retirement tenancies” and “fixed-term tenancies” and from there the woefully complicated “extension tenancies”.
The Tenant Farmers’ Association by definition support the tenancy system, and not unexpectedly they are bringing progressive thought to bear. They may not be far apart from the CLA in their general philosophy and have been commended by the CLA for declaring: “Simply tinkering with security of tenure is an inadequate response which will not answer the system’s problems.”
The association have proposed a “rural business lease” drawn partly from the business tenancy code in Part II of the Landlord and Tenant Act 1954.
In turn the CLA are putting forward a ” farm business lease”, also containing elements of the 1954 Act, as well as the Agricultural Holdings Act 1986 and the Housing Act 1988. It would allow freedom of contract once a Housing Act-type notice had alerted the tenant to what was in prospect.
There would, however, be “back-up provisions” dealing with sandry aspects of the tenancy (not to do with security of tenure) which would apply unless the parties agreed to the contrary.
The ailing patient, then, can be revived, but only by allowing the parties to make their agreements untrammelled by interfering lawgivers. The TFA are right — tinkering is worse than useless. The Minister, John Gummer, has rightly chosen to be bold. His proposals are true to the message he gave last year, that “legislation could only be justified if it were effective”. The consultation paper plumps for freedom — “the parties should be free to negotiate terms which best suit their needs and circumstances”; but, as the CLA suggested, there would be fallback provisions on compensation and tenants’ fixtures.
John Gummer has offered (“subject to the consultation exercise” and parliamentary time) therapeutic legislation to cure the patient. Let us see if all concerned have the courage to go for it and the ability to keep it simple.
