Last week, the Tenant Farming Commissioner (TFC) has published further guidance on relinquishment and assignation (R&A).
Our previous articles on the R&A process provided a summary of the regulations which brought the process into force on 28 February 2021 and the TFC's first set of guidance on the process and the implications of putting it in motion.
As a refresher, the R&A process allows secure agricultural tenants the opportunity to offer to relinquish their tenancies to their landlords in exchange for statutory compensation. If the landlord does not accept the tenant's offer, the tenant can seek to assign the tenancy to a new entrant or an individual progressing in farming.
Following the TFC's previous approach to R&A, this new publication is guidance - it is not a Code of Practice. The legislation which applies to Codes of Practice is therefore not relevant and the guidance does not impose any requirements which must be followed in addition to the statutory process.
The TFC – whose role in the process it is to appoint an independent valuer – recommends that tenants should assemble all the necessary information before the process is initiated and agree as much as possible in advance with the landlord.
Any matters which can be agreed with the landlord in advance will assist in streamlining the process and manage costs.
The TFC has highlighted to those involved in the process that the valuer's sole task is to put a value on the components which make up the valuation of the compensation that is payable to the tenant. The valuer cannot, for example, be drawn into any discussions or differences in respect of the terms of the lease, the extent of the holding or whether an item of improvement is eligible for compensation.
The TFC recommends that the information gathering exercise should include:
- The names, addresses and designations of the landlord and tenant (paying careful attention to refer to the correct legal entitles and not any trading names or generic estate names);
- The passing rent and the details of the outcome of the latest rent review;
- A copy of the lease and any enforceable variations to the lease (and if no written terms exist, confirmation that the landlord and tenant have agreed as to the identity of each other and the extent of the holding which is let to the tenant);
- A plan clearly showing the extent of the holding which complies with the detailed requirements of the legislation; and
- A list of any tenant's improvements with confirmation of those which have been agreed with the landlord.
A valuation cannot be completed unless the valuer is furnished with all the necessary information. The legislation allows for an appeal procedure to the Lands Tribunal if the parties dispute the valuer's assessment.
A strict timetable is set for an independent valuer to be appointed (2 weeks from the date of service of the notice) and for the valuer to issue their assessment of the components which make up the valuation of the compensation due to the tenant (8 weeks from the last date on which either party could have objected to the appointment of the valuer and requested that the Land Court appoints an alternative, or, if an objection is made, 8 weeks from the date of the Land Court's decision).
The legislation does not permit any extensions to this timetable and the clock starts ticking on service of a valid notice of intention to relinquish. The TFC sets out in the guidance that he will refuse any notice of intention to relinquish if it is not accompanied by the necessary information (meaning that the process of appointing a valuer will be delayed until what the TFC considers a competent notice is received).
If you have any queries in relation to R&A, please get in touch with your contact in the Rural Business team.
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