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COMMONS AMENDMENT
13Clause 13, page 8, line 5, leave out "the grant" and insert "or before the beginning".

Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 13, to which I spoke when moving Amendment No. 5.

Moved, That the House do agree with the Commons in their Amendment No. 13.—(Earl Howe.)

On Question, Motion agreed to.


COMMONS AMENDMENTS
14Clause 19, page 9, line 43, leave out "the proposed provision of a" and insert "any".
15Page 9, line 44, leave out from "improvement" to "is" in line 45 and insert "the tenant under a farm business tenancy".
16Page 10, line 8, at end insert "but this subsection has effect subject to subsections (1A) and (2) below.
(1A) No notice under subsection (1) above may be given

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in relation to any tenant's improvement which the tenant has already provided or begun to provide, unless that improvement is a routine improvement.".
17Page 10, line 21, after "RICS", insert "subject to subsection (7A) below".
18Page 10, line 25, leave out "proposed".
19Page 10, line 26, at beginning insert "Subject to subsection (7A) below".
20Page 10, line 27, leave out "proposed".
21Page 10, line 35, at end insert:
"(7A) Where, at any time after giving a notice under subsection (1) above in relation to any tenant's improvement which is not a routine improvement, the tenant begins to provide the improvement—
(a) no application may be made under subsection (3) above after that time,
(b) where such an application has been made but no arbitrator has been appointed before that time, the application shall be ineffective, and
(c) no award may be made by virtue of subsection (5) above after that time except as to the costs of the reference and award in a case where the arbitrator was appointed before that time.
( ) For the purposes of this section—
'fixed equipment' includes any building or structure affixed to land and any works constructed on, in, over or under land, and also includes anything grown on land for a purpose other than use after severance from the land, consumption of the thing grown or its produce, or amenity;
'routine improvement', in relation to a farm business tenancy, means any tenant's improvement which—
(a) is a physical improvement made in the normal course of farming the holding or any part of the holding, and
(b) does not consist of fixed equipment or an improvement to fixed equipment,
but does not include any improvement whose provision is prohibited by the terms of the tenancy.".
22Clause 22, page 11, line 47, at end insert:
"( ) Where—
(a) an application under subsection (3) above relates wholly or partly to compensation in respect of a routine improvement (within the meaning of section 19 of this Act) which the tenant has provided or has begun to provide, and
(b) that application is made at the same time as an application under section 19(3) of this Act relating to the provision of that improvement,
the President of the RICS shall appoint the same arbitrator on both applications and, if both applications are made by the same person, only one fee shall be payable by virtue of section 30(1) of this Act in respect of them.".

Earl Howe: My Lords, with the leave of the House, I beg to move that the House do agree with the Commons in their Amendments Nos. 14 to 22 en bloc.

The noble Lord, Lord Gallacher, raised the subject of compensation for tenant-right matters during Committee, Report stage and at Third Reading. Similar concerns were also expressed in another place. The above group of amendments responds to those concerns.

Under the Bill all improvements require landlord's consent in order to be eligible for compensation. In cases where consent is refused, the tenant has the right to go to arbitration (except in the case of planning permission). The concern was that some tenants, being used to the different approach in the 1986 Act, might not realise that

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they needed landlord's consent for certain routine operations for which they later intended to claim compensation. That point has now been addressed.

The Government have reflected carefully and come up with an approach which can cover tenant-right matters such as growing crops, applying fertiliser and other individual routine acts of husbandry which add value to the holding, including those which add only a small amount of value compared with the overall value of the holding. The amendments to Clause 19 will ensure that a tenant can carry out "routine improvements" of that kind without losing the right to arbitration if for any reason the landlord withholds consent for them. This approach has the support of the Industry Group.

Moved, That the House do agree with the Commons in their Amendments Nos. 14 to 22 en bloc.—(Earl Howe.)

Lord Stodart of Leaston: My Lords, I have absolutely no locus in the debate as I farm in Scotland, to which the Bill does not apply, but, nevertheless, I have been a practical farmer for many years. I have studied the drafting of Amendment No. 21 as regards "fixed equipment". I congratulate the draftsmen on producing it, but wonder whether my noble friend the Minister will be kind enough to tell me exactly what it means.

Earl Howe: My Lords, I believe that there is an explanation in the Marshalled List regarding the meaning of the term. It says that "fixed equipment",


    "includes any building or structure affixed to land and any works constructed on, in, over or under land, and also includes anything grown on land for a purpose other than use after severance from the land, consumption of the thing grown or its produce, or amenity".

While the draftsmen are most certainly to be complimented on their phraseology, I would not wish to elaborate on such excellent wording. However, if my noble friend is still in doubt, I shall be glad to elucidate the matter further after today's proceedings.

Lord Stodart of Leaston: My Lords, I shall be most obliged if my noble friend will do so.

Lord Carter: My Lords, in fact, I was about to ask the same question. When I looked at the definition of "fixed equipment", I could not for the life of me think of anything that would not be caught by the description of,


    "anything grown on land for a purpose other than use after severance from the land, consumption ... its produce, or amenity".

What is left? I just cannot think of anything else that would be "fixed equipment" under that definition. However, while I am making other points on the group of amendments it is possible that the answer may suddenly appear.

I am extremely grateful to the Minister for referring to the approval of the Industry Group. Indeed, I should have been most disappointed if we had got through the Commons amendments without having the blessing of that group. However, when the Minister says that the amendments respond to the arguments that were made, that is a pretty cool statement bearing in mind all the arguments that we were given in the House during the Bill's passage as to why compensation for tenant right could not be paid. We are pleased that the Government have now accepted the argument.

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I also congratulate the draftsmen on the idea of the "routine improvement" which I believe catches the sort of things that we discussed. Obviously the basis of the valuation will be left to the parties to determine. That is clear. Moreover, in the case of what we used to call tenant right, it will now be the incoming tenant who pays, and again it will be up to the parties to determine that between themselves. As I said, it is clear and it meets the points that have been made, as I understand it, for those things which the tenant thought he would be compensated for in the normal course of business. But if such things have been forgotten, the new provision will cover the situation. We are all waiting with baited breath for the explanation of "fixed equipment".

On Question, Motion agreed to.


COMMONS AMENDMENT
23After Clause 30, insert the following clause:
".—(1) Section 99 of the Law of Property Act 1925 (leasing powers of mortgagor and mortgagee in possession) shall be amended in accordance with subsections (2) and (3) below.
(2) At the beginning of subsection (13), there shall be inserted 'Subject to subsection (13A) below,'.
(3) After that subsection, there shall be inserted—
'(13A) Subsection (13) of this section—
(a) shall not enable the application of any provision of this section to be excluded or restricted in relation to any mortgage of agricultural land made after 1st March 1948 but before 1st September 1995, and
(b) shall not enable the power to grant a lease of an agricultural holding to which, by virtue of section 4 of the Agricultural Tenancies Act 1995, the Agricultural Holdings Act 1986 will apply, to be excluded or restricted in relation to any mortgage of agricultural land made on or after 1st September 1995.
(13B) In subsection (13A) of this section—
"agricultural holding" has the same meaning as in the Agricultural Holdings Act 1986; and
"agricultural land" has the same meaning as in the Agriculture Act 1947.'
(4) Paragraph 12 of Schedule 14 to the Agricultural Holdings Act 1986 (which excludes the application of subsection (13) of section 99 of the Law of Property Act 1925 in relation to a mortgage of agricultural land and is superseded by the amendments made by subsections (1) to (3) above) shall cease to have effect.".

Earl Howe: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 23. This is a rather technical amendment, but the effect is quite simple. Since 1948 the agricultural holdings legislation has effectively prevented mortgage lenders from putting restrictions on the letting of agricultural land by landowners who have mortgaged the land. The banks have now suggested, and the main industry organisations have agreed, that there would be advantages in treating agricultural land like any other land or property which is mortgaged and enabling mortgage lenders to control lettings if they so wish. Subsection (4) of the new clause achieves that objective.

A substantive amendment to the Law of Property Act 1925 is also needed to avoid retrospection. As we made clear throughout the discussions on the tenancy law reform, the new legislation is not to be retrospective. The new clause adds a new subsection to Section 99 of the

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Law of Property Act 1925 to safeguard the interests of existing borrowers and people who are entitled to a new 1986 Act tenancy.

Moved, That the House do agree with the Commons in their Amendment No. 23.—(Earl Howe.)


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