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Lord Middleton: On the amendment itself, apart from the wider question of the application of Clause 17, the clause excludes payment of compensation for planning permission obtained by the tenant. That is catered for by Clause 18. The purpose of Amendment No. 59 is also to exclude from Clause 17 other intangible advantages. That would at the same time take away the necessity for the landlord's consent for an intangible improvement.

In the Bill, intangibles do not come under Clause 18 where consent is obligatory. So, as I see it, under Amendment No. 59 intangibles would emerge as not requiring the landlord's consent at all. I do not believe that that would be quite within the spirit of the Bill. I understand that the noble Lord will not argue that Clause 18 should not stand part.

On the wider question, under the Bill the landlord has an absolute right of veto where a tenant wishes to apply for planning permission. I believe that that is correct because otherwise the landlord will be compensating the tenant for something which the landlord might not want—for example, if permission were for residential housing which he did not want on his land, any compensation might amount to a very large sum indeed.

4.15 p.m.

Earl Howe: Despite the explanation given by the noble Lord, Lord Carter, I find it difficult to see why he seems so opposed to the idea that it is only equitable for the person paying compensation to know well in advance of the end of the tenancy that he is to pay it. In the case, for example, of milk quotas the landlord may be required, as my noble friend said, to pay a substantial sum of money at the end of the tenancy. Indeed, he might decide that the more affordable course would be to grant a further tenancy and that would surely be to the tenant's advantage unless he had a compelling reason to move holding.

By requiring all forms of tenant's improvement to be dealt with on the same principle—namely, that the written consent of the landlord is an essential requirement if compensation is to be paid as of right—parties know exactly where they stand from the outset. The consent requirement is by no means onerous and where the tenant is aggrieved over the lack of consent or conditions attached to it, the Bill ensures that the matter may be resolved with the assistance of an arbitrator.

Clause 17(4) does not exempt planning permission secured by a tenant from the requirement that written consent be obtained from the landlord in order to ensure that compensation may be paid. All that the subsection does is to remove planning permission from the general

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provisions concerning tenant's improvements in Clause 17. Specific rules are provided for planning permission in Clause 18 and it may be of assistance to the Committee if I outline them briefly.

Clause 18 implements the joint industry agreement on agricultural tenancy reform of December 1993 that compensation will be payable in respect of a planning permission gained by a tenant which is related to activities on a holding permitted by the terms of an individual tenancy agreement. It is not intended that the tenant should obtain a share of the development potential by being compensated for the fact that a planning permission enables development other than for the specified purpose for which the consent of the landlord was given.

That means that the requirements for landlord's consent under Clause 18 are slightly different from the provisions in Clause 17 which cover other intangible advantages. A landlord's consent in respect of planning permission must be expressed to be given to enable a specified physical improvement to be made or a specified change of use to be effected. Also, at the end of the tenancy that improvement must not have been completed or the change of use must not have been effected.

Clause 18 imposes a necessary limitation on compensation in respect of planning permission. As Members of the Committee may be aware, there is no legal requirement that planning permission must be sought only by a landowner and planning permission may enable fairly general development or a change of existing use to be made. Clause 18 makes it clear that entitlement to compensation in respect of planning permission is directly related to a physical improvement or change of use that was specified at the time consent was given by the landlord. Thus, although we are introducing for the first time the possibility for the tenant to be compensated for an unused planning permission, there are certain safeguards to ensure that he is not over-generously compensated, that is to say, compensated out of proportion to the value of the improvement for which the permission is sought.

With the leave of the Committee, while we are debating intangible advantages, perhaps I may revert to the question which my noble friend Lord Stanley put to me a while ago. He asked whether a tenant could seek consent part way through a tenancy if he had already begun to build up goodwill. The tenant may seek consent at any time, although, of course, it is prudent to seek it before making the improvement, as I indicated earlier to my noble friend, because the landlord might refuse. What the tenant cannot do is go to the arbitrator to obtain retrospective approval because the tenant has in effect pre-empted the case by going ahead with the improvement, albeit part way. So, as I said earlier, the advice to a tenant would be to seek an agreement with the landlord at the outset. I hope that with those words of explanation, the noble Lord, Lord Carter, will feel able to withdraw the amendment.

Lord Carter: I am very grateful to the Minister and to other noble Lords who have taken part in this debate. This is a complicated point. The reason why I have

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decided not to oppose Clause 18 stand part was that I suspected that we could deal with the issue in relation to this amendment and thus save the time of the Committee.

I still have one concern. As I understand it—and perhaps the Minister can confirm this point—under general planning law anyone can apply for planning permission on a piece of land whether or not they own it or have any involvement with it. It is often the case that developers go round the country and put in for planning permission even without the owner being aware of it until he sees it on the agenda of the local planning committee. Are we saying that the tenant under a farm business tenancy is to be put into a separate category where he will be the only category of person to whom that does not apply? It would be helpful if the Minister could reply on that point. It is central to the debate.

Earl Howe: I am not quite sure that I understand the noble Lord's point. He is, of course, quite right in that the planning laws in this country enable any individual to apply for planning permission on any piece of land, whether it is their land or someone else's. Here, quite clearly, if a tenant has by his own efforts sought and obtained planning permission for a specified development, then it is equitable that at the end of the tenancy, assuming that the development has not proceeded, he should be recompensed for that planning consent. If someone else has been responsible for obtaining the planning consent, then the situation is somewhat different. If, for example, the landlord has applied for the consent, my understanding is that the landlord has a case for claiming that the value of the planning consent should be attached to him. What the tenant has to do is get the landlord's consent first. That is the pre-requisite for obtaining compensation at the end of the day.

Lord Carter: A shaft of light suddenly strikes the Minister on this point. There is a point here which I shall not labour, but on which I am still not clear. It seems to me that, if we are not careful, farm business tenants will be a unique category. Perhaps I may give as an example the situation—it is a little unlikely but is possible—where a tenant decides that there is some development value in the land on which he farms. In the ordinary way, whether or not he had any involvement with that land, he could apply for planning permission. As I understand it, before he can even apply for planning permission on that land he has to get the landlord's consent. I believe that that puts him in a unique category. I see that the noble Earl, Lord Kinnoull, knows something about this subject. I give way to him.

The Earl of Kinnoull: I believe the point is that if a developer makes an application and notifies the owner, he still has to buy the land. He may go through the whole process and the cost of an application and appeal is charged to him, but still he has to negotiate. Hopefully, he will negotiate an option. If the tenant applies, he will have to have had permission from the landowner first if he is to gain anything at all out of this. I am sure that the normal course will be an application

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for a building related to the farm business, not a residential five-acre development. That would be very unusual. If that happened, I assume that the landlord would not give permission because he would feel entitled to gain from that as it would be a residuary interest to his farm.

Lord Stanley of Alderley: As this is Committee stage, perhaps I may enter the debate. I have to get my shafts of light, when I get one, by going outside. I believe that the point has been made that it is vitally important that we have (not on the face of the Bill) these heads of agreement to warn tenants and landlord, before they enter into agreements, of the possible problems that could occur. They were discussed yesterday.

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