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5.20 p.m.

The Earl of Courtown: My Lords, perhaps I may join other noble Lords in congratulating my noble friend Lord Yarborough on a fine maiden speech. I hope that we shall hear more from him in the near future.

It is with great pleasure that I find myself able to speak in the Second Reading of this Bill, which is so important to the rural economy. As a chartered surveyor in the rural practice division of the RICS I am very

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aware, as I know other noble Lords are, that the industry has been discussing the revision of the agricultural holdings legislation for some time. That has enabled the various interest groups to be in some agreement, with the RICS providing its knowledge of the industry from its role as adviser to both landlord and tenant.

Today the industry can show only little evidence of new lettings becoming available. Glancing through a recent edition of the Farmers Weekly, the only opportunities available were two Gladstone v. Bower agreements and a five-year Ministry licence, both examples of short-term agreements. None of that can offer great encouragement to the new entrant.

It is therefore evident that action is required. Tenancies under the 1984 Act, being lifetime agreements, and those under the 1976 Act, with two successions, have had an enormous effect in discouraging landlords from letting their land on the open market. We therefore have a plethora of various types of different agreements that enable landowners to keep control of their land and be classed as farming in hand, and therefore to benefit from the resultant taxation treatment. No matter what legislation we have before us, it will take a great deal to persuade landowners away from highly successful alternative forms of farming agreements.

Landowners and tenants must be made aware that the Bill will provide them with the legal framework to form a clear-cut relationship, with the landowner receiving a regular income agreed between the parties to the tenancy, and the tenant being aware of his obligations and the length of the term. Arrangements such as share-farming are often not clear and certainly without a regular income, not to mention the legal minefield that may occur in some thinly disguised agreements where rent is paid in everything but name.

I have already mentioned the requirement of gaining the confidence of the industry, but probably the most important requirement is suitable financial conditions. By that I mean comparable relief between let land and in-hand land.

I am also concerned that some of the statistics do not point to much more land becoming available. The RICS has produced some interesting information, but I am somewhat concerned--and on this matter I agree with the noble Lord, Lord Carter --that they do not show that fully equipped tenancies, let for a term that will encourage long-term husbandry, will come on the market.

The picture that becomes clear from the information available is of a situation in which the majority of units let under a farm business tenancy will be let for a term of less than 10 years. Most of those units will be bare land units which will tend to be let to existing farmers rather than new entrants.

Having expressed my concerns, overall I am hopeful that this legislation will provide the right framework. I was particularly glad to see that there is no retrospective effect on holdings let under the Agricultural Holdings Act. I am also glad to see that certain mandatory matters cover various important areas, such as notice requirements, notices to terminate a farm business tenancy, notices if necessary to trigger rent reviews and

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also notices before the grant of a tenancy. I am also glad that the position relating to service of notices, which in the past has led to difficulties and been unclear, is more clearly defined in Clause 34 of the Bill.

Tenants' improvements is another area in which I am pleased to see changes. The position under the Agricultural Holdings Act is complicated and could be described as being weighted against the tenant. The Bill now proposes that should a landlord refuse consent for a tenant's improvement the tenant will now have the opportunity to apply to an arbitrator for the consent and thus enable compensation to be paid by the landlord to the tenant at the end of the term. In addition, the tenant will be able to apply for planning permission without fear of the landlord serving a notice to quit under the required case provision in the 1986 Act and, at the end of the term, the tenant will be able to claim compensation for the consent on termination, whether or not that consent has resulted in the improvement being carried out.

Another area in which improvements have been made is dispute resolution. That has been made much simpler. As I understand that part of the Bill, the parties to a tenancy will be able to put mechanisms in the agreement to provide for the appointment of umpires or experts before going down the costly and time-consuming route of arbitration.

Freedom of contract will enable landowners and tenants to prepare agreements to suit their own needs as well as the requirements of the holding. Terms can be agreed to reflect the varying conditions of a holding. For example, in the case of a holding with many listed farm buildings the resulting repair responsibility for those buildings must be equitable between the parties. For a holding which has a high environmental value the landlord and tenant can agree a farming standard and rental value which will take such factors into account.

The whole basis of the Bill is a meeting of like minds, that of a willing landlord and a willing tenant. To enable the legislation to work, freedom of contract and flexibility are of prime importance. In particular, I refer to the length of term. It would be enormously detrimental to have a minimum term, which would defeat the whole concept of the Bill.

We will be mistaken if we expect a massive number of holdings to become available. The confidence of the industry must first be gained. I feel that with this Bill we are going some way to achieving that aim. Having passed through the legislative process, I hope that this Bill will provide a relatively simple piece of legislation compared with past attempts at revision of the landlord and tenant system in England and Wales.

5.27 p.m.

The Marquess of Hertford: My Lords, I too should like to congratulate my noble friend Lord Yarborough. I thought his speech outstanding. I once had the pleasure of galloping over some of his land, and the rather less intense pleasure of falling into one of his very big ditches.

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Like many other speakers today, I declare an interest. I am both a landlord and a tenant, and a member of both the Country Landowners' Association and the National Farmers Union, both of which give this Bill strong support.

In 1940 I had the good fortune to inherit an estate in Warwickshire. There were then 24 farm tenants. There are now three, apart from me and my son. That is not merely because death duties reduced the size of the estate, but mainly due to the effect of the Agriculture Act 1947, the Agricultural Holdings Act 1948, and all the other legislation which has been enacted which has given so many rights to tenants and so few to landlords that many--probably most--people in my position have done everything possible to take their land in hand and farm it themselves. Perhaps that was selfish; but I do not believe that it was necessarily good for the industry.

Given time, the Bill may change that state of affairs. It should eventually make it a great deal less difficult for a young man who is not the son of a farmer to acquire a farm tenancy. Agricultural colleges are full of young men who would like to take up farming. The best they can hope for from college is to become a foreman or farm manager. The Bill will provide a much needed degree of flexibility, enabling a landowner and a tenant to make arrangements that suit them both instead of being bound by out-of-date rules.

I realise that to some people the very word "landlord" has an aroma of sulphur about it, no doubt connected with ancient folk memories of evictions, enclosures, and so forth. It is in some ways perhaps unfortunate that so very few country constituencies ever elect Labour Members of Parliament. One cannot help feeling, perhaps wrongly, that most Members of the Opposition know and care very little about what life in the country is actually like--how it works, or how we all live. That could account for their dislike of hunting and shooting as well as a distrust of landlords.

I hope that there will not be too much opposition to the Bill. I am moderately encouraged by the apparent wish of the noble Lord, Lord Carter, to amend rather than to oppose the legislation. It is a good, useful and helpful measure. I sincerely hope that it passes through Parliament and becomes law before the next general election.

5.31 p.m.

Viscount Mountgarret: My Lords, first, I apologise to my noble friend Lord Howe for my late arrival and for missing his opening "overs". The fact that I could not be here on time was because I had to attend a funeral in Norfolk. However, I am delighted that I was not too late to hear the magnificent maiden speech of my noble friend Lord Yarborough whose knowledge of land and farming is reminiscent of that of his much respected late father whom we all miss very much.

I much welcome the Bill, as do all noble Lords on this side of the Chamber. The reasons have been given and do not need rehearsing again. However, perhaps I may make a few points.

Mention has been made of compensation to the tenants. I am all for fair compensation to tenants--indeed to a greater extent than occurs now. However,

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the principle of compensation for a tenant relates not to his expenses but to that which he leaves behind. If he were so permitted, a tenant could leave behind the quota system, in particular for livestock. At present the quota does not lie with the land but with the tenant. We know that there are difficulties in that respect. However, I hope that my noble friends will consider the issue. Where a tenant retires from farming and takes his most valuable quota for livestock with him, in effect the value of the letting of that holding is reduced in the future because the landlord can offer only accommodation rather than facilities for the land to be stocked. I hope that that quota could be purchased by the incoming tenant, with the outgoing tenant compensated for it.

I am slightly unhappy about Clause 23(3). I may have misread and misunderstood it. My noble friend will correct me. However, as I understand the clause, the tenant shall not be entitled to compensation at the end of any tenancy after the initial tenancy, whether for two years, five years, 10 years or whatever,

    "in respect of any tenant's improvement provided during the earlier tenancy in relation to the land comprised [therein]".

If that is so, I do not believe that the position is quite fair. Reference has been made to the Gladstone v. Bower agreements. When shorthold tenancy agreements are renewed, the tenant is entitled to compensation. However, if he takes on the new tenancy, the amount of compensation will be rolled over and carried forward. I do not understand why that cannot occur under the Bill. For instance, if with the landlord's consent a tenant puts up a set of buildings which are worth £20,000, the write-off of buildings is generally about 20 years, which represents £1,000 a year. If his first tenancy were for five years, he would be entitled to compensation of £15,000. However, as I understand the Bill, if he were to continue the tenancy for another five years, at the end of the second five years he will not be entitled to any compensation for the buildings erected during the first tenancy. Perhaps my noble friend will clarify that point and tell me whether I am wrong. If I am not wrong, perhaps that matter could be considered.

I turn to taxation. I see that my noble friend Lord Stanley is in his seat. He believes that he will have the same ticking off that I may receive as I am not a taxation expert. However, if I understood his remarks correctly, I was somewhat concerned that he seemed to come down more in favour of the interests of the Treasury than with regard to the land. The noble Lord, Lord Carter, referred to the issue. He said that his party agrees that it would be better to have the tenanted sector and the owner occupier sector taxed on the same basis. That is all very well. But which way round will that taxation be? Will the tenanted sector join the vacant possession sector, or will it be the other way round? That factor could make a substantial difference. If noble Lords opposite believe that it would be correct to put taxation for vacant possession land on the same basis as that of the tenanted sector, then the chances of the Bill succeeding in the long term will be somewhat reduced.

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