Changes to the Tests for Succession - From 1st September 2024

The statutory tests for tenancy succession in both England & Wales changed after 1^st September 2024. Succession can only be gained under the Agricultural Holdings Act (1986) for certain individuals, with an appropriate tenancy, on the death or retirement of the tenant.

The policy background for the recent change is the aim to support improved productivity in the farming sector, ensuring the incoming tenant is the best candidate available.

The revised Suitability Test now means that on the basis of stated criteria, the successful applicant will be the one who would be shortlisted for the tenancy if it were offered for letting. It is effectively a business test, and whilst other potential changes were discussed at the time the Agriculture Act 2020 was being prepared, this is the only change. There are no changes to the substance of the Close Relative or Livelihood tests for eligibility. Applications to succeed are in front of the First Tier Tribunal (FTT).

The Tests

When determining an application, the Tribunal will have regard to many relevant matters under the headings of eligibility and suitability, including:

• The applicant must be closely related to the tenant
• Worked on the holding and have been primarily dependent on it for their living for at least 5 of the previous 7 years
• The person's likely capability and capacity to farm the holding commercially, with or without other land, taking into account the need for high standards of efficient production and care for the environment in relation to managing that holding;
• The person's experience, training and skills in agriculture and business management;
• The person's financial standing and their character;
• The character, situation and condition of the holding;
• The terms of the tenancy.

So, what does the new test mean?

With age no longer to be a factor, anyone (closely related) can apply at any age to succeed to a tenancy providing they meet the criteria, it is now essentially a test of the applicant's management skills and capability to running a business with care for the environment. All of which will be framed in a hypothetical context of an applicant applying for a new tenancy, therefore 'what a prudent and willing landlord could reasonably be expected to regard if the applicant were amount the candidates to whom they would be willing to grant the tenancy'.  So it is a test of business acumen using a hypothetical analysis as if the tenancy was on the open market.

Comment

As at the time of writing (October 2024) we are not aware of any applications to the Tribunal. What will be interesting in due course is where there is a disputed application.

There are likely to be new challenges for such applications from:

• Young applicants, for whom, according to the case, the focus on capacity and capability (perhaps future looking) may balance relative lack of experience
• Spouses who have not been actively involved in the business.

Such issues will gradually come into perspective as experience of the new legislation builds. It may also be that many parties will find ways to settle matters between themselves without being one of the first cases at Tribunal.

This is a fairly lengthy subject which has been kept to a minimum for the purpose of this article. Clearly it is best to take advice before embarking on a succession application. 

For further information, contact PFK Rural on 01768 866611 or email: This email address is being protected from spambots. You need JavaScript enabled to view it..