Coronavirus: farming and agricultural tenancies

9 April, 2020

Coronavirus has had a huge impact on life in the UK. An essential part of life that cannot stop is farming. More than ever we are relying on farms in the UK to provide for all of us. With difficulties over the past few months with extreme flooding, difficulties now with people not observing social distancing on public footpaths across farm land and difficulties ahead sourcing labour for farms in the summer, the hard working farmers have enough on their plates keeping food on ours. The difficulties do not end there and the financial implications of Covid-19 could be the final straw for some farmers. So, is there anything that can be done to help?

Can farm tenants skip rent payments?

Without the agreement of the landlord, even in circumstances like these, farm tenants cannot skip rent payments. However, one thing that could help farmers get through this time could be temporary rent reductions or rent suspensions. A plea has been made by the Tenant Farmers Association (TFA) and the Country Land and Business Association (CLA) for landlords and tenants across the UK to work together ‘collaboratively and compassionately’.

The plea was made in the form of a letter which went to several large farm landlords including the Crown Estate, National Trust, Church Commissioners, Duchy of Cornwall and the Duchy of Lancaster. The TFA and CLA plea applies particularly to rent payments, notices to quit and finalising new tenancy agreements, but covers all tenancy matters and asks that neither party exploit the current situation.

In the first instance if you are a farm tenant struggling to meet your rent you should speak to your landlord to see if a rent reduction or a rent suspension can be agreed or move to monthly payments from quarterly payments which could assist cash flow.

If you are a landlord being approached by your tenant you should consider the tenant’s request in light of the CLA’s request. At this difficult time it could be wise to think long term about the benefits of having a good tenant in situ.

Any agreement reached between landlord and tenant can be recorded in a side letter to the tenancy to ensure that:

  1. the tenant has certainty of the agreement; and
  2. the landlord can be clear that the arrangement is temporary and does not constitute a permanent variation to the tenancy.

If the Covid-19 issues persist this could be extended at a later date if necessary. We are happy to help draft such concessions.

Does the current forfeiture moratorium apply to agricultural holdings and farm business tenancies?

Forfeiture is a landlord’s right to terminate a tenancy for breach of the tenant’s obligations like non-payment of rent. This right must be included in the tenancy. If a landlord wants to forfeit a tenancy which includes a residential property like a farmhouse then the situation is more complicated and we recommend you speak to a solicitor to obtain advice before taking any steps.

There is currently a moratorium on forfeiting commercial leases under the Coronavirus Act 2020. It is not however clear whether this will apply to farm business tenancies or agricultural tenancies. The legislation specifically refers to tenancies under part 2 of the Landlord and Tenant Act 1954 of which both agricultural holdings and farm business tenancies are excluded.

The Property Litigation Association put questions to the Ministry of Housing, Communities and Local Government including whether this act was intended to cover farm tenancies and the reply received was “the policy objective is to cover all commercial leases.” Whilst this may have been their intent this does not seem to be reflected in the legislation and so despite best intentions it may not apply to farm tenants.

Mark Bridgeman of the CLA said that the CLA position is that they suggest: “as far as possible, current disputes are put on hold and that formal proceedings for any non-payment of rent are used only as a matter of extreme last resort.”

We echo this sentiment and recommend that at this difficult time landlords and tenants work together to get through where possible. Whilst we can’t help with the damage done by the floods or finding you staff for the fruit picking season, if you are a farm tenant or landlord we can help you put flexible arrangements in place to get you through this difficult period.