In April 2024, and following the publication of the Rock Review, the Farm Tenancy Forum published their Code of Good Practice, with the “do what it says on the tin” title: Agricultural Landlord and Tenant Code of Practice for England. The aim was to encourage the three C’ s
- Clarity;
- Communication; and
- Collaboration,
between landlord and tenants. The Code aims to provide guidance on the standards of behaviour expected from all landlords and tenants and, importantly, those who provide professional advice in relation to agricultural tenancy matters.
The Code was prepared with input from many professional organisations which are invested in the rural sector including the Agricultural Law Association, the Central Association of Agricultural Valuers, the CLA, the NFU, RICS and the Tenant Farmers Association.
Such codes are not new and there is already a well established one for commercial property. Some would therefore that this is a long overdue step on the path to engendering more professional landlord and tenant relations.
What does the Code require?
The first thing to say is that the Code is voluntary. Therefore, it cannot be forced by one side or the other and there is always the ability for freedom of contract, subject to the legal framework. However, the aim of the Code is to foster improved working practices in the interests of the agricultural tenanted sector generally. As such, the Code uses words such as “should” rather than “must” but that does not mean that it should not be carefully considered. Despite its voluntary nature, it is possible that the Code may be used against a party if they do not follow it as will be seen below.
The Three C’s
The aim for each is broadly as follows:
- Clarity – the aim is that there is clarity of intention, expectation and how to deal with problems if they arise;
- Communication – the aim is for the landlord and tenant to communicate clearly, in a timely and considered manner and that it is tailored to the needs and situation of the recipient;
- Collaboration – the Code encourages a collaborative and co-operative approach between landlord and tenant on the basis that this has worked best in the past and will as the raft of environmental and regulatory changes take place to the rural sector over the coming years.
The emphasis on collaboration is a key element and professional advisors in the rural sector will appreciate the long term nature of agricultural landlord and tenant relationships and the need to be able to adapt to changes in the law, policy and environment. An open, supportive and listening relationship between landlord and tenant will usually help ensure that any obstacles can be overcome and so this is not a new concept. At a time of great change in the rural sector and in relation to environmental and climate challenges, the land owning and occupying sector acts as the gatekeepers to help address these issues and so this will only be more likely to be a
Some specific recommendations
There are some specific points in the Code, for example:
- If a tenancy is offered or let on the open market, then the landlord should provide sufficient information so as to present a fair representation of the farm or land concerned including the recognition of any limitations that apply or any special or unusual features that are proposed in the agreement;
- The advertising should include the key terms i.e. length of term, any ingoing payments, repairing and insuring obligations, obligations under any environmental schemes and permitted use;
- The Code encourages the landlord and the outgoing tenant to give any ingoing tenant the opportunity to view the farm and any Tenancy Agreements to allow them to know exactly what they are taking on;
- For the benefit of landlords, prospective tenants could rightly be expected to outline their farming proposals, experience and qualifications and to be expected to produce business plans and/ or proof of their financial standing. Those already operating farming enterprises elsewhere may be asked to disclose details about that;
- The Code encourages the landlord and tenant to engage regularly throughout the tenancy to discuss how things are operating and to keep records and agree outcomes and action points.
What about when things go wrong?
Disputes will naturally arise from time to time and cannot necessarily be avoided. However, the Code, focusing upon the three C’s, encourages the landlord and tenant to work through their differences without the need to proceed to Court. Alternative Dispute Resolution (such as without prejudice meetings, expert determination and mediation) is encouraged and the parties are encouraged to support the dispute resolver/ mediator in arriving at a fair and balanced conclusion.
The parties are encouraged to minimise the costs involved and adopt a proportionate approach to the dispute. Importantly, the Code suggests that dispute resolvers may wish to take into account whether parties and their advisors have acted in accordance with the Code when it comes to making awards as to costs where they have the legal discretion to do so.
This is therefore likely to be used by parties involved in a dispute where they consider that the opposing party has not complied with the provisions of the Code. This could of course apply to any part of the Code and not just the above comments regarding disputes. Compliance with the Code is therefore to be encouraged to demonstrate that a party has acted reasonably and proportionately in all the circumstances. Failure to do so may lead to the costs position being less advantageous to the non-compliant party than otherwise would be the case.
This is something we regularly see enforced in litigation generally whereby parties fail to adhere to Practice Guides and Pre Action Protocols and so this is a natural progression and likely to be persuasive to a dispute resolver who has the gift of awarding costs.
Who is responsible for compliance?
Essentially, the responsibility for compliance lies with both the individual parties involved and their professional advisors, and the latter certainly need to be aware of the terms of the Code and should be advising their clients to read it as well. The Code should therefore be actively used when negotiating a new lease of agricultural rural land, whether afresh or as a renewal.
Will the code prove to be effective?
Essentially, the proof will be in the pudding but it will be down to professional advisors to use the Code in a productive way. From experience, we often see that the most productive landlord and tenant relationships are those where the landlord and tenant work together in a sensible and meaningful way, seeking to resolve issues that arise rather than entrench themselves and put up barriers. The reality is that rural tenancies are generally long term arrangements, whether these are AHA tenancies, long FBT’s granted from the outset or they are tenancies left to run on a periodic basis.
Unlike, say, residential or commercial leases, agricultural leases can tend to be granted for a number of years. The passage of time means that issues will arise and of course we are seeing a raft of regulatory and legal change including loss of BPS payments, the introduction of new environmental schemes, the rise of carbon credits and generally, the role that the agricultural and rural sector have to play in dealing with the challenges of climate change. As new schemes and laws are introduced, these will place new and unexpected challenges to landlords and tenants and having a Code that encourages parties to act reasonably, generally, is wholly sensible to help achieve real results for individuals and the public at large.
If you would like to discuss this with our Rural team, please do get in touch by phone 0345 450 5558, by email enquiries@stephens-scown.co.uk, or by completing the form below.