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Earl Howe: I am grateful to the noble Lord. Perhaps I may clarify one or two further points. He said that our position was that once a tenancy became a farm business tenancy it would always remain so. That is the case, of course, provided that notices were exchanged in the first instance. If they were not exchanged, then, as I said, the parties run the risk that the tenancy falls out of this legislation into some other legislation.

With regard to the point that the noble Lord was just making, of course nothing in the Bill overrides planning legislation. It is up to the local community to put its stamp of approval on any diversification proposals should those proposals require planning consent. That is an important point that I should make.

Lord Carter: That is helpful. It means that the Government are relying on the lawyers to get the notices right in the first place and then the planners to look after the rural community. I understand the point that the Government make. I understand why they have it in the Bill. As I said, it is important to get on record the philosophy lying behind it. I shall read with great care what the Minister said. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

3.15 p.m.

Lord Carter moved Amendment No. 2:

Page 1, line 15, after ("or") insert ("the main").

The noble Lord said: It may be for the convenience of the Committee if I speak also to Amendments Nos. 3, 4, 5, 6 and 7, which deal with the same point. We turn now to the business conditions as opposed to the notice conditions. As presently worded, the business condition requires that part only of the land need be farmed. The arguments on these amendments will sound repetitive because the same argument will occur on all of them. Technically, as I said on the previous group of amendments, that could be a small area of a substantial acreage, the remainder of which is used perhaps by a golf course.

The main part would probably be interpreted by the courts as meaning more than half the land. There should be no problem with the change proposed in Amendment No. 2 for those who are coupling the business conditions with the agriculture conditions because the character of the holding must, as the Bill provides, be primarily agricultural.

If the amendment were to be accepted there is a problem which I shall reveal to save the Minister telling me about it. The problem will come when the business conditions are coupled with the notice conditions, because under those, while the tenancy must be

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primarily agricultural at the beginning of the tenancy, it need not remain so, as the Minister confirmed on the previous amendment.

There is an argument that if, say, more than half the land area is put to a use other than farming, a separate business tenancy should be created to cover that activity, which will then be subject to the Landlord and Tenant Act 1954. It would be undesirable were the farm business tenancy to be used in rural areas as a cloak to avoid the consequences of affording the tenant the protection of the 1954 Act. That is the important point that lies behind the wording of the Bill and the amendment. Throughout all our amendments, we shall be seeking to improve security and protection for the tenant.

At present it is possible for a business tenant to waive some of the protections, as we know, but only on a joint application by both parties to the county court or the High Court under Section 38(4) of the Landlord and Tenant Act 1954. That facility was added to the business tenancy legislation following a recommendation from the Law Commission.

We then turn to the problem of using the word "land" as opposed to "holding". Amendment No. 3 proposes to leave out "land" and insert "holding". Under the Agricultural Holdings Act 1986, as I understand it, non-agricultural activities—those which do not affect the character of the tenancy—need have no connection with the agricultural business carried on by the same person; for example, bed and breakfast or farm shops which sell produce other than that grown on the farm in question.

In the latest version of the MAFF proposals for consultation, No. 4 mentions bed and breakfast but then emphasises activities on the holding. That has led to some confusion as to whether we should be talking about the land or the holding. There is need for clarification to discover which non-agricultural activities would come within the business tenancy and which would fall outside. If they fall outside, does the Landlord and Tenant Act 1954 then come into play?

We have discussed already the effect of a change in the non-agricultural activity, the shift of emphasis in the tenant's enterprise, and so forth. In Amendment No.3 we seek to find out whether it would be better to say "holding" instead of "land".

Amendment No. 4 proposes that the word "farmed" should be left out and that "occupied" should be inserted. That is a point I discussed with the Minister when we had a helpful meeting between Second Reading and Committee. It is important to get on the record what is the Government's thinking on this point, because we are informed that if the word "farmed" is used rather than "occupied", horsiculture and the keeping of horses are excluded from a farm business tenancy. Opinions on that vary, but I am told that if we were to say "occupied" rather than "farmed" the confusion that exists on that point would be dealt with.

Amendments Nos. 5 and 6 are in the name of the noble Lord, Lord Stanley of Alderley, and I shall leave him to speak to them. As I understand it, those amendments redefine the business condition which

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forms part of the definition of the new concept. The amendments provide that so long as the land was farmed immediately after the commencement of the tenancy it does not matter if the business ceases subsequently to be agricultural. These amendments have been grouped together because they are related. However, the Committee will understand our anxiety about the change in the nature of the tenancy after it has been agreed by the landlord and tenant that the farm business tenancy exists.

Amendment No. 7 deals with the problem of "farmed" and "occupied". The three central issues are to insert "the main" part of the holding; the preference for "holding" instead of "land"; and the preference for "occupied" instead of "farmed". Perhaps the Minister can explain why the Government have adopted their wording, which we are advised is, to say the least, ambiguous. I beg to move.

The Chairman of Committees: The noble Lord, Lord Carter, has spoken to Amendments Nos. 6 and 7. I wish to indicate to the Committee that if Amendment No. 6 is agreed to I cannot call Amendment No. 7.

Lord Stanley of Alderley: Amendments Nos. 5 and 6, which stand in my name, are similar to others in the group. Their intention is to clarify the position and I begin by referring to what was said by my noble friend Lord Howe in respect of Amendment No. 1. He referred to "some of the land", which immediately raises a query. What does that phrase mean? In my opinion it creates an ambiguity. Secondly, if the tenant oversteps his mark there is a case that his tenancy might become invalid. My amendment is proposed in order to clear up that matter.

If, when the tenant takes on the tenancy, he wishes to diversify outside the terms of the farm business tenancy my amendment proposes that he should be allowed to do so. As the Bill stands, the tenants must continue to farm as laid down in Clause 1(2), which states that all or part of the land must be farmed. Unless my amendment is accepted there will be a muddle, as has been pointed out. That could cause problems for a tenant who found a successful form of diversification, which is exactly what we have been implored to do by every party for the past five or six years. If the tenant found something that was successful he might be in trouble. The key principle of the Bill is to allow tenants to diversify when they get the chance.

I accept that in order to remain within a farm business tenancy a tenant could perhaps keep a small part of the land in agriculture. However, that too creates an ambiguity and is apocryphal. The farmer could act bogusly and have four chickens, which would be ridiculous and a cause for litigation.

Finally, the noble Lord, Lord Carter, referred to the 1954 Act. My amendment would solve that problem. The 1954 Act would not apply because a farm business tenancy would apply throughout, however much a farmer would wish to diversify.

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My amendments are supported by the CLA, the NFU, the Young Farmers, the RICS and CAAV.

Lord Middleton: It is desirable that a farm business tenant should be able to diversify into other lines of rural businesses. As we have heard, such a business might take up part of his land. If that is the case, under the Bill the farm business tenancy persists under the agreed terms. If, however, the business takes up the whole of the land, as might be the case, under Clause 1(2) it ceases to be a farm business tenancy. The rights of the parties would then be governed by a code of rules which were not contemplated nor intended to apply to a tenancy agreement.

I support my noble friend Lord Stanley, whose amendment I prefer. It would allow full diversification and still maintain intact the terms of the original tenancy agreement.

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