Both landlord and tenant have a right to demand arbitration on the rent properly payable. The award of the new rent will take effect from the next opportunity that the tenancy could have been terminated by Notice to Quit, thus a minimum of 12 months notice of a proposed rent amendment must be given. There must not be a rent review at less than 3 yearly intervals.
In most cases a revised rent will be agreed between the parties without the necessity of reference to an arbitrator, but this will be against the background that the arbitrator would apply the Statutory definitions in determining the rent.
A brief history of rents since 1948
The Agricultural Holdings Act 1948 contained no definition of rent other than a "rent properly payable" (s.8).
The Agriculture Act 1958 (s.2) provided that the rent was to be at a level at which the holding:"might reasonably be expected to let in the open market by a willing landlord to a willing tenant, there being disregarded ...... any effect on the rent of the fact that the tenant ...... is in occupation of the holding. " In determining this rent, three factors were to be disregarded:-
- Tenant's improvements and landlord's grant-aided improvements.
- Relief from rates.
- Dilapidations by the tenant.
The Agricultural Holdings Act 1984 (s.1) redefined the rent as one at which the holding "might reasonably be expected to let by a prudent and willing landlord to a prudent and willing tenant".
The 1984 Act introduced certain relevant factors which must be taken into account, viz:-
- The terms of the tenancy
- The character and situation of the holding
- The productive capacity and its related earnings capacity (NB for milk quotas see s.15 AA 1986)
- The current level of rents for comparable lettings
It further provided that in considering the comparables, the following must be disregarded:-
- Scarcity value
- Marriage value
- Reduction of rent by payment of a premium
and that the following must be disregarded in all cases when determining the rent:-
- *"High" farming
- Tenant's improvements
- Landlord's grant-aided improvements
- The fact that the tenant is in occupation
- Dilapidations by the tenant
- *"High" farming is the adoption by the tenant of a system more beneficial to the holding than is required by the terms of the tenancy.
The Agricultural Holdings Act 1986 consolidated the 1984 Act provisions in s.12 and Sch 2.