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Agricultural Tenancies Bill [H.L.]

4.23 p.m.

Earl Howe: My Lords, I beg to move that the Commons amendments be now considered.

Moved, That the Commons amendments be now considered.—(Earl Howe.)

On Question, Motion agreed to.


COMMONS AMENDMENTS [The page and line refer to Bill 40 as first printed by the Commons.]
COMMONS AMENDMENTS
1Clause 1, page 1, line 27, leave out "before the grant of the tenancy" and insert "on or before the relevant day".
2Page 2, line 2, after "the" insert "tenancy or".
3Page 2, line 4, after second "the" insert "tenancy or".
4Page 2, line 8, at end insert:
"( ) In subsection (4) above 'the relevant day' means whichever is the earlier of the following—
(a) the day on which the parties enter into any instrument creating the tenancy, other than an agreement to enter into a tenancy on a future date, or
(b) the beginning of the tenancy.
( ) The written notice referred to in subsection (4) above must not be included in any instrument creating the tenancy.".

Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 1 to 4 en bloc.

On Report and at Third Reading, the noble Lord, Lord Gallacher, drew the attention of the House to a possible trap. As the Bill was drafted, any tenancy granted before 1st September would have been subject to the Agricultural Holdings Act 1986. That would be the case even if the tenancy did not begin until on or after 1st September and the parties had intended it to be a farm business tenancy. The noble Lord tabled an amendment to Clause 36 which I could not accept, but I undertook to

2 May 1995 : Column 1349

consider the issues which he had raised. He could hardly have anticipated the number of amendments which were needed to address his point!

The first group of amendments relates to Clause 1 and will assist parties wishing to comply with the notice conditions. Under the Bill as drafted notices had to be exchanged before the tenancy was granted. An oral agreement to enter into a farm business tenancy might be held to be a contract of tenancy, in which case the tenancy would have been granted when this initial agreement was entered into. It would already be too late to exchange notices.

The amendment allows notices to be exchanged at any time on or before the day on which the lease, that is the instrument creating the tenancy, is signed. Where there is no written tenancy, notices must be exchanged before the beginning of the tenancy. I commend the amendments to the House.

Moved, That the House do agree with the Commons in their Amendments Nos. 1 to 4 en bloc.—(Earl Howe.)

Lord Carter: My Lords, I am grateful to the Minister for explaining this matter. We warned him that that point might arise. We are glad that the Minister has explained that it is the date of signing the lease which is important rather than the date at the beginning of the tenancy.

On Question, Motion agreed to.


COMMONS AMENDMENTS
5Clause 2, page 2, line 25, leave out from beginning to "or" and insert "the tenancy begins before 1st September 1995".
6Page 2, line 26, leave out "granted after that commencement" and insert "beginning on or after that date".
7Clause 4, page 3, line 12, leave out "granted after the commencement of this Act" and insert "beginning on or after 1st September 1995".
8Page 3, line 14, leave out "entered into after that commencement" and insert "beginning on or after that date".
9Page 3, line 15, at end insert:
"( ) is granted by a written contract of tenancy entered into before 1st September 1995 and indicating (in whatever terms) that the 1986 Act is to apply in relation to the tenancy,".

Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 5 to 9 en bloc. With the leave of the House, I should also like to speak to Amendments Nos. 13, 28 and 29.

This group of amendments also concerns the beginning of the tenancy and addresses the specific point identified by the noble Lord, Lord Gallacher. We recognise that if farm business tenancies are to come into operation this autumn, people need to be able to plan ahead. The amendments to Clause 2 will make it clear that the date on which a tenancy begins will normally determine whether it is a farm business tenancy or 1986 Act tenancies. No farm business tenancies can begin before 1st September 1995. From that date the only new 1986 Act tenancies will be those permitted by Clause 4.

The first two amendments to Clause 4 bring this clause into line with Clause 2. The third amendment is important. It will enable a 1986 Act tenancy to begin on or after 1st September provided it was granted by a written contract

2 May 1995 : Column 1350

of tenancy, entered into before that date, which indicated that the 1986 Act is to apply to the tenancy. This provision is necessary to prevent the Bill having a retrospective effect on contracts entered into before 1st September where the parties intended the 1986 Act to apply.

Moved, That the House do agree with the Commons in their Amendment Nos. 5 to 9 en bloc.—(Earl Howe.)

Lord Carter: My Lords, I imagine that it will be rare in the run-up to 1st September for anyone to set up a new tenancy under the 1986 Act. Will this provision apply to a succession tenancy which comes into effect before 1st September or will that follow automatically as a result of the 1986 Act?

Earl Howe: My Lords, the noble Lord is right that any tenancies which come into effect prior to 1st September will legally have to be 1986 Act tenancies because the Bill comes into force only on 1st September. This provision addresses the possibility that parties may wish a 1986 Act tenancy to apply after 1st September and the contract is entered into prior to 1st September.

Lord Carter: My Lords, we need to be clear about the point. As I understand it, the parties will not be able to use the 1986 Act after 1st September. However, can the Minister confirm that it is only if the parties want to do so after 1st September, having made the decision before that date, that that would be the case? Is that correct?

Earl Howe: My Lords, that is indeed the case, other than those specific exceptions allowed for in the Bill.

On Question, Motion agreed to.


COMMONS AMENDMENT
10Clause 4, page 3, line 22, after "tenancy," insert:
"( ) is created by the acceptance of a tenant in accordance with the provisions as to compensation known as the 'Evesham custom' and set out in subsections (3) to (5) of section 80 of the 1986 Act on the terms and conditions of the previous tenancy,".

4.30 p.m.

Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 10.

The amendment safeguards the position of existing tenants who took over their market gardens by making use of the Evesham custom. Noble Lords may be unfamiliar with the Evesham custom. The custom grew up last century in the Evesham area where there was a considerable number of very small market garden holdings, and enables an outgoing tenant, in effect, to sell a new tenancy if the landlord is willing to accept the new tenant. The payment made by the new tenant covers all compensation for past improvements that is due to the outgoing tenant and also generally includes a premium in return for receiving a tenancy conferring life-time security.

Under the Bill as it left your Lordships' House, any new tenancy would be a farm business tenancy and would not really be,


    "on the same terms and conditions as the previous tenancy",

which is what the Evesham custom requires. Tenants to whom the Evesham custom applies could suffer an immediate loss as their holding would become much less valuable as an asset if, for example, they needed a loan.

2 May 1995 : Column 1351

The amendment ensures that where the custom applies and is used to create a new tenancy, that new tenancy will remain subject to the 1986 Act. That will resolve the problems in relation to this small group of market garden tenants whom we would not want to see suffering financial loss by reason of an unintended effect of the Bill.

Moved, That the House do agree with the Commons in their Amendment No. 10.—(Earl Howe.)

Lord Carter: My Lords, we have all been intrigued by the Evesham custom; indeed, we all had to read up about it to find out exactly what it was. However, can the Minister say whether it applies in the Evesham area only or are there agreements outside of Evesham that use the custom?

Earl Howe: My Lords, my understanding is that it applies only in the Evesham area. However, I shall take advice on that point and, if I am wrong, I shall write to the noble Lord.

On Question, Motion agreed to.


COMMONS AMENDMENTS
11Clause 10, page 6, line 41, after "rent," insert:
"( ) any date as from which there took effect a previous determination as to the amount of the rent made, otherwise than as arbitrator, by a person appointed under an agreement between the landlord and the tenant,".
12Clause 11, page 7, line 20, after "direction", insert ", determination".

Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 11 and 12 en bloc. These are technical amendments. Under the Bill, the parties may agree to the appointment of a person to determine rent "otherwise than as arbitrator". The amendment to Clause 10 is necessary so that the rent review cycle takes account of any such rent determination in the same way as if an arbitrator had determined the rent at a rent review. The amendment to Clause 11 is consequential.

Moved, That the House do agree with the Commons in their Amendments Nos. 11 and 12 en bloc.—(Earl Howe.)

On Question, Motion agreed to.


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