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Earl Howe: I am grateful to Members of the Committee who have spoken in support of one or other set of amendments. In particular, I was interested in the arguments put forward by my noble friend Lord Stanley in support of his amendments. I can see that where the farming element of the business had become small, it would give landlords and tenants greater certainty that the tenancy would not accidentally fall out of the farm business tenancies legislation. I also recognise the logic in allowing a tenant whose non-agricultural activities are thriving but whose farming enterprise may, perhaps, be failing to diversify completely, provided that that is permissible under his tenancy agreement.

At the same time, there are arguments against that. It could be argued that the present condition in Clause 1(2) is hardly onerous; it simply requires at least part of the land to be farmed for the purposes of a trade or business. I can see nothing wrong in principle about that. It seems somewhat difficult to justify a farm business tenancy continuing to be treated as such when there is, in fact, no farming.

Nevertheless, Members of the Committee have indicated a measure of support for the principle behind these amendments and therefore, with the agreement of the Committee, I ask for a little more time to reflect on the implications of what my noble friend in particular has proposed.

Perhaps I may address a couple of the queries posed by the noble Lord, Lord Carter. He asked whether it would be better to refer to "holding" as opposed to "land". I am advised that there is no substantive difference in the context of the Bill. "Holding" is defined later in the Bill as the land comprised in the tenancy and "land" in law includes the buildings on the land.

The noble Lord also asked about the meaning of "farmed" and whether it excludes horsiculture. I am advised that "farmed" may include horse grazing but not horse keeping. Perhaps that distinction will be followed up at a later stage. Any activities outside farming that could be undertaken on a farm business tenancy could include any non-agricultural activity; for example, food processing or bed and breakfast. It includes any form of diversification. On the other hand, the use of the word "occupied" would allow the tenant to go 100 per cent. non-agricultural instead of keeping four chickens, as my noble friend put it. That is precisely why we do not want

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a farm business tenancy to act as a cloak for a business tenancy. It is also why we have insisted in the Bill that at the outset a farm business tenancy should be wholly or mainly agricultural in character and that as a minimum condition farming must continue on part of the holding throughout.

Between now and the Report stage the Government will consider whether an amendment along the lines proposed either by the noble Lord, Lord Carter, or by my noble friend Lord Stanley is likely to be helpful to business enterprises and, if so, what precise change to the business conditions in Clause 1(2) would best achieve that result. I hope that in the light of that explanation the noble Lords will feel content not to press their amendments.

Lord Carter: I am sure that the equine community will feel an immense sense of relief at the connoisseur's distinction between horse grazing and horse keeping. We look forward to discussing the matter at a later stage and I am sure that I shall have to seek advice on it.

The discussion has been helpful; we now understand that the Government are anxious to promote diversification. However, when the Bill refers to part of the land being farmed the crucial question is: how much? I suspect that in the end that may well be an area on which the courts will have to decide as to the meaning. As the noble Lord, Lord Stanley, said, you may keep a few chickens and sheep and then you can do what you like with the rest of the farm, subject to planning. I believe that 80 per cent. of our land mass is rural. I am sure that the Government expect that an increasing proportion of it will be let under farm business tenancies. It seems that they are extremely relaxed about the matter. Many people outside are not relaxed and we may wish to return to the subject on Report.

If the Government refuse to define what they mean by "part of the land"—and again we shall return to this point—there are no criteria in the Bill as to what will constitute a good farm business tenancy other than the definition of rent, the period of notice and compensation. They are all important matters, but during our farming lives we are used to Acts of Parliament defining the matters which should be included in an agricultural tenancy and the areas that a good agricultural tenancy should deal with. We shall return to those issues on later amendments. As I say, at a later stage too we may try again to define what is meant by "part of the land" because we believe that that could open the door to all kinds of abuse.

It is helpful to hear the Minister confirm with regard to holding of land that there is no need to make the change which we suggest. As I say, we may have to explore those matters again on Report.

3.30 p.m.

The Earl of Kinnoull: Would not the tenancy agreement spell out how the land would be used? When one talks about "part of the land", surely that gives a very welcome flexibility, which the industry wants. Surely the written tenancy agreement would spell out those matters.

Lord Carter: It would be nice to think that that was the case. It would be helpful were the Bill to require that. When I move amendments to that effect later on, I shall

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look to the noble Earl to support our amendments because that is what we propose but is not at present a requirement of the Bill. It is entirely up to the landlord and the tenant. There may even be an unwritten agreement, which is another point with which we must deal. It will be an extremely interesting situation where there is an unwritten agreement and only part of the land is used for farming. That could lead to a great deal of litigation. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 5 to 8 not moved.]

Lord Gallacher moved Amendment No. 9:

Page 2, line 1, at end insert ("which may be a statement included in an instrument signed by the landlord and the tenant confirming the terms of the tenancy and which takes effect from the same date.").

The noble Lord said: In moving Amendment No. 9, I shall speak also to Amendment No. 88 with which it is grouped. Amendment No. 88 is further on in the Bill in Clause 36 but I shall refer to it in dealing with this amendment.

The purpose of the amendment to Clause 1 is to clarify aspects of the notice conditions. First, it would confirm that the written notices referred to in the subsection could form part of the tenancy agreement, thus reducing any risk of doubt about the parties' later intentions.

Secondly, it is not infrequently the case that the drawing up of a tenancy agreement may follow some time after the tenancy has commenced. The amendment allows the parties to contract in to the notice conditions in those circumstances.

The third purpose of the amendment is to probe the question of when the tenancy is deemed to have commenced. Clause 36(3) states that:

    "A tenancy granted pursuant to a contract shall be taken ... to have been granted when the contract was entered into".

However, as it is not necessary for tenancies to be in written form—a point that has already emerged in the course of our discussions—does the tenancy commence from the time at which the oral agreement may have been made?

The four industry organisations, which will figure prominently in our deliberations both today and tomorrow, believe that it is desirable to have as much certainty as possible about those matters and, therefore, it should be made clear that the provision in Clause 36(3) concerning tenancies granted pursuant to a contract applies to a written contract. The second amendment achieves that. I beg to move.

Earl Howe: As the noble Lord, Lord Gallacher, has explained, the two amendments are concerned primarily with the notice conditions. The first amendment to Clause 1(4), as I understand it, is intended to enable parties to incorporate the notice in the tenancy agreement itself. Although I see the attractions of that approach, the purpose of the notice is to draw attention to the type of agreement into which the parties will enter. We have adopted that approach both to protect the tenant and to protect the landlord. If a tenant is unsure what is meant by a farm business tenancy, he has the opportunity to take advice and find out what the implications are. I am not

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convinced that that would be achieved by a clause in the tenancy agreement. We feel that it is important that the parties should both state their intentions clearly and do so explicitly for the avoidance of doubt.

Neither am I convinced that the parties should be able to contract in to the notice conditions at some later date. The whole idea is that the notice conditions must be complied with before the tenancy is granted. That is what the Bill provides. Again that is necessary for the avoidance of doubt as to the nature of the tenancy entered into.

I see no need to amend Clause 36(3) to refer to "written" contracts. Under the subsection as drafted, where a tenancy is granted pursuant to a written or oral contract, the tenancy is taken to have been granted when the contract was entered into. That reflects the fact that both written and oral contracts to grant a lease are enforceable in law. I hope that in the light of that explanation, the noble Lord will agree to withdraw the amendment.

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