What Is a Farm Business Tenancy? — ATA 1995 Qualifying Conditions
The ATA 1995 s.1 defines a farm business tenancy as a tenancy meeting the business conditions (land farmed for a business throughout the tenancy) and either the agriculture condition (primarily agricultural character at the start) or the notice conditions (pre-tenancy exchange of notices identifying the tenancy as an FBT). Diversified farm businesses (equestrian; rural tourism; renewable energy) remain eligible provided the land is still farmed. AHA 1986 tenancies (created before 1 September 1995) remain governed by the AHA 1986 regime — the two regimes coexist on many holdings.
Rent Review Under the ATA 1995
Either party can trigger a 3-yearly open market rent review under s.9 ATA 1995 by serving at least 12 months' notice. The rent is reviewed upward or downward to the open market rent between a willing landlord and willing tenant. If no agreement is reached, either party can refer to a RICS arbitrator. The arbitrator must disregard (s.10): improvements made with landlord's consent within the last 25 years; and tenant's failure to repair. This is a more flexible and market-responsive regime than the AHA 1986 review formula.
Termination — Notice to Quit and No Succession
Fixed-term FBTs for 2 years or less expire automatically at the end of the term — no notice required. Fixed-term FBTs for more than 2 years require a written 12-24 month notice to quit before the term date (s.5 ATA 1995) or the tenancy continues as a periodic tenancy. Periodic FBTs require a written 12-24 month notice to quit. There are no statutory succession rights under the ATA 1995 — the tenancy ends on death. This is a fundamental advantage for landlords compared to the AHA 1986 succession regime.
Tenant Compensation for Improvements (ss.15–27 ATA 1995)
On termination of an FBT, the tenant has a statutory right to compensation for improvements made with the landlord's written consent, assessed as the increase in the value of the landlord's reversion (s.20 ATA 1995). Landlords can give conditional or unconditional consent; refusing consent without good reason can be challenged by arbitration (s.19). The parties may contract out of improvement compensation rights in the tenancy agreement — specialist advice required. Scotland has a separate regime under the Agricultural Holdings (Scotland) Act 2003 with LDT (≥25 years), SLDT (≤5 years), MLDT (≥10 years), and Repairing Tenancy structures.