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Lord Carter moved Amendment No. 14:

After Clause 2, insert the following new clause:

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Covenants deemed to be included in oral farm business tenancy

(". In any oral agreement between a landlord and a tenant for the letting of a farm business tenancy the covenants listed in Schedule (covenants deemed to be included in oral farm business tenancy) to this Act shall apply unless the parties agree to the contrary in writing.").

The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 89, which is consequential.

With these two amendments we come to an interesting discussion on the question of oral agreements. I must admit that, when I first looked at the Bill, I was surprised that there was no requirement for a farm business tenancy to be in writing. I understand that the Government felt that they had a good reason for that on the grounds that if they did not include oral agreements within the scope of the Bill, attempts would be made to get round the Bill by having oral rather than written agreements. When the Minister replies, perhaps he will deal with this point. If, under the Bill, the landlord and potential tenant must exchange a notice in writing, is it then the Government's view that they will then attempt to circumvent the Act by having an oral agreement? I just cannot understand the logic of that.

We have tried to provide that if there is to be an oral agreement there should be a number of covenants listed in the schedule which will be,

    "deemed to be included in oral farm business tenancy ... [which] shall apply unless the parties agree to the contrary in writing".

It is rather odd to agree to the contrary in writing in an oral agreement but I am sure that the Minister understands the point that I am trying to make. I assure him that this is a probing amendment with regard to the whole question of oral agreements. It is extremely important that the Committee should understand what are the Government's intentions in that regard.

Obviously, one looks at the usual covenants and I am sure that Members of the Committee who are involved in those matters will recognise that the covenants on the part of the landlord and tenant are standard. We are trying to tease out the reasons why the Government decided not to require a farm business tenancy to be in writing; in other words, that an oral agreement will come within the ambit of the Bill.

The Minister replied to a question that I put to him on an earlier amendment. In its response to the Government's proposal document, I believe that the Agricultural Law Association stated specifically that it felt that it was wrong for those new tenancies not to be in writing and suggested that oral agreements were likely to be used only for short-term lettings on bare land, and that anybody going about the matter properly would have written agreements in any event.

As I say, we are probing the Government on their reasons for including oral agreements in the provisions of the Bill. Why have the Government promoted the view that after 1st September next all tenancies, whether written or oral, which fall within the definitions of Clause 1 will be farm business tenancies? We suggest for the sake of good order and good practice that if there were to be such oral agreements there should be a

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schedule in the Bill which sets down the minimum covenants that one would expect on the part of the landlord and tenant. I beg to move.

5.45 p.m.

The Earl of Kinnoull: I welcome the amendment. I believe that it adds greatly to the Bill. In practical terms, I feel that the unwritten tenancy would be for very short periods. There are too many dangers involved in it for both parties and I hope that the written tenancy will be the one that goes forward on all occasions.

The noble Lord, Lord Gallacher, mentioned building societies. Building societies have shown great sympathy in very unhappy circumstances, much more so than banks. I am glad to say also that they do not lend on farm land.

Lord Northbourne: I support the amendment, although perhaps not in its finer detail. It seems to me to be absolutely wrong that anything but a tenancy of bare land for relatively short periods should be an oral tenancy. We are talking about responsible landlords and tenants. We must expect them to put down clearly what is their intention. I do not know whether the particular headings are correct in the amendment proposed by the noble Lord, Lord Carter, but I support the principle.

Earl Howe: I am grateful to the noble Lord for explaining his amendment. It is somewhat odd. As the noble Lord explained, it refers to a schedule of landlord and tenant covenants, one of which purports to reflect the provisions of the Bill and the rest of which the noble Lord has presented as a set of uncontroversial ground rules which should be applicable to any farm business tenancy agreement, in particular an oral agreement.

I differ with this approach. First, in so far as the suggested covenants reflect the provisions already contained in the Bill, they must be unnecessary. But more importantly, it is no part of a deliberately simple and streamlined Bill to write in provisions about deemed covenants for oral agreements. It is for the parties to decide what conditions and arrangements should apply in respect of their agreements, whether written or oral in nature. It is not for the Government to do so. The whole point of the Bill is to allow the parties to an agreement maximum freedom to decide on the terms which suit them best.

Of course I accept that this is a probing amendment, but it would go further than even the over-prescriptive 1986 Act currently provides. Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 provides that a contract for the sale or other disposition of an interest in land must be in writing. Short leases are excluded from that provision. A short lease is a lease for a term not exceeding three years at the best rent that can reasonably be obtained without taking a premium.

That is the general law in relation to the requirement that leases must be in writing. There can be no special features of farm business tenancies which would justify them receiving special treatment. We cannot require that farm business tenancies have to be in writing because some, whether accidentally or deliberately, will not be.

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The Agricultural Law Association's ideas relate, I venture to say, to the ideal world from which agriculture, as we all know, unfortunately differs.

Therefore, I hope that that explanation helps the noble Lord and with those thoughts in mind, I hope that he will feel able to withdraw the amendment.

Lord Northbourne: Before the noble Earl sits down, perhaps I may ask for further clarification. I did not jot down the particular reference but I believe he said that the general law provides that any tenancy of three years or longer must be recorded in writing. Does that include farm business tenancies?

Secondly, reference was made to what happens if someone forgets to record a farm business tenancy in writing. But what happens if someone forgets to record a tenancy in writing under some other provision?

Earl Howe: I made clear that there could be no special features of farm business tenancies which would exempt them from the requirements of the general law. Therefore, a farm business tenancy would be subject to that rule. As to what the situation would be if a lease was not in writing, I believe that would be a matter for the court to decide if it came to a challenge. Clearly, both parties would be taking a risk that the tenancy might not for some reason or other fall under the provisions of the Bill. However, I shall take advice on the precise legal position and, if I can clarify the matter, I shall write to the noble Lord.

Lord Carter: We are certainly learning as we go along. The amendment was intended to be a helpful probe. But, again, I have been slapped down and reminded about simplicity. I have been told that we should leave it to the parties to sort out the matter. The Government are clearly washing their hands of all responsibility and leaving the matter to landlord and tenant. They are in full deregulation mode when they address the Bill.

I listened to the noble Earl saying that all was for the best and that all will be for the best in the best of all possible worlds when the Bill becomes law. He makes Dr. Pangloss look like a beginner. But, again, the Minister is very concerned about our approach which he described as "over-prescriptive". However, I should like to remind Members of the Committee that it was the Labour Party which introduced security of tenure for the first time in the 1947 and the 1948 Acts. It was the Labour Party which, rightly or wrongly, introduced a succession of tenancies in the 1976 Act: but it is a Conservative Party which abandoned those protections with the 1984 and 1986 Acts.

The Minister keeps saying—and I am grateful to him for putting it on the record again; indeed, from our point of view, it is most helpful—that they see no special features in farmland and that it is up to the parties themselves. In other words, the landlord and tenant can agree what they like. As long as they fulfil the notice and the business conditions, they do not even have to fulfil the agricultural conditions. Our probes are certainly bringing out a view of the Bill which I am sure will be very interesting to the agricultural industry. I beg leave to withdraw the amendment.

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Amendment, by leave, withdrawn.

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