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Lord Carter: My Lords, I am pleased to support the amendments because they deal with an important point. The intention of the legislation is that all new lettings after 1st September should be under the new legislation but that all existing tenancies and rights of succession should continue. I believe that that is the Government's intention. The present wording protects those successions approved by the agricultural land tribunal.

If we understand the Bill correctly, it allows new 1986 Act tenancies to be created, but only if they are fresh succession tenancies. The point is raised by practitioners —I mentioned it in Committee, and I do not believe it was properly answered—as to whether the intention is that no existing tenant with full security should inadvertently lose that security. It is also asked whether accumulated succession rights will be preserved.

The Bill does not achieve that end. It addresses only a situation where, inadvertently, by operation of law, an existing tenant surrenders his tenancy on a regrant. There are numerous examples where existing tenants, agreeing in co-operation with the landlord to a new tenancy on modern up-to-date terms, may inadvertently find themselves thereafter without security. It is a technical point on the drafting that was raised in Committee. We feel that there is not the security that there should be on succession. It would be helpful if the Minister could reassure us.

Earl Howe: My Lords, I agreed in Committee to give further thought to my noble friend's amendment. Although we do not think there is anything technically wrong with the clause as drafted, the fuller wording of the amendment would make clearer the circumstances in which succession tenancies can—and indeed cannot—be granted. I am sure therefore that my noble friend will be pleased to hear that since the amendment achieves the right result and is supported by the industry, I am happy to accept it.

Lord Stanley of Alderley: My Lords, I thank my noble friend for that answer.

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On Question, amendment agreed to.

Lord Carter moved Amendment No. 7:

Page 3, line 22, at end insert:
("( ) is granted by a written contract of tenancy indicating (in whatever terms) that the 1986 Act is to apply in relation to the tenancy; or").

The noble Lord said: My Lords, Amendment No. 7 was discussed in Committee. The Government's argument is that if anyone wants the terms of the 1986 Act, they simply write them into the new farm business tenancy. However, we were advised—again I am talking of those involved with smallholdings—by the county land agent of the Norfolk County Council that,

    "I should like the flexibility to be able to continue to relet statutory smallholdings [and] 'County Farms equipped holdings' under the 1986 Act and an amendment to this effect would be very helpful".—[Official Report, 12/12/94; col. 1151.]

The point, which I shall not repeat at length but which was made in Committee, is that if it is logical to allow tenants to contract into a new succession tenancy—it may be unlikely but it is possible—then they should be allowed to contract into a new life or retirement tenancy. We know that smallholdings were deliberately excluded from the 1986 Act. However, if there is a group of people who would like to opt into the 1986 Act we think it would be helpful if they could do that. They could save time because they would not have to go through all the paraphernalia of the farm business tenancy and having to write into the new tenancy all the clauses of the 1986 Act. The point would not affect an enormous number of people but we feel that there should be a means by which the parties could contract into a new life or retirement tenancy if they wished to do so. I beg to move.

Earl Howe: My Lords, I find it surprising that the noble Lord thinks that people will want to opt into the 1986 Act when there is at the moment such a marked reluctance to let land on lifetime tenancies. Nor do I see any reason to leave this option open. If a tenant wants a lifetime tenancy and the landlord is willing to grant him one there is nothing to prevent them from drafting an appropriate farm business tenancy to provide that security. That is what Norfolk County Council could do if it wished. In the same way the parties can agree, if they wish, to write into their farm business tenancies many of the provisions that are in the 1986 Act. One thing they will not be able to do is to agree to write down the compensation for tenants' improvements. The mandatory provisions in the Bill will apply.

I am somewhat puzzled as to why the noble Lord should advocate an amendment which could deprive a tenant of the very same compensation rights which, as I recall, he praised at Second Reading as being superior to those of the 1986 Act. The main industry organisations have agreed that once the new legislation is in force it should apply to all new lettings other than those arising under the statutory succession provisions. This amendment, which leaves the 1986 Act option open, would give rise to confusion and would not be in the interests of the industry as a whole. We believe that the new legislation will provide all the flexibility the

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industry needs, including the option to agree lifetime tenancies. I hope that the noble Lord will feel able to withdraw the amendment.

Lord Carter: My Lords, I did say that I thought that this would be used only comparatively rarely and by a comparatively small group of landlords and tenants. We have been pressed by those in the smallholdings area who say that this would be useful to them. It seems that we cannot persuade the Government. I do not propose to come back to this matter again. We have tried twice and it seems that we cannot convince the Government. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Carter moved Amendment No. 8:

Page 3, line 27, leave out from ("tenancy")") to end of line 31.

The noble Lord said: My Lords, this is an important point which was touched on earlier during the discussion of Amendments Nos. 6 and 9 in the name of the noble Lord, Lord Stanley. I am not quite sure whether the point will be picked up in the Government's acceptance of the noble Lord's amendments. It is a technical point. The preservation of security for an existing tenant on an expressed surrender and regrant is as important as where there is a surrender and regrant by the inadvertent operation of law. If the intention of the legislators is that all tenants with existing protected tenancies should not inadvertently lose that security after the passing of the 1995 Act, the wording which we propose is necessary.

I am advised by practitioners that there are instances of landlords and tenants agreeing to relocation within an estate. But because of the way the Bill is drafted, and the 1986 Act particularly, tenants would effectively be unable to move even though it is in the landlord's interests that they should because the tenant would not be able to get the same security as before. I am advised that the statement in Committee by the Minister about being able to achieve that by a long-term fixed term lease shows a fundamental misunderstanding of the doctrine of estates and the distinction between a protected annual tenancy and fixed term lease.

It is a technical point. It is one of those areas of the 1986 Act and the carryover into the 1995 legislation which needs to be looked at because what the Government intend will not be achieved. It will not give the flexibility that it should give in the operation of the Act. When we discussed the matter in Committee the Minister said that he would consider it and see whether there was anything in the technical point which had been raised. I have been advised by a leading practitioner in the field that that is the case. It would be helpful if the Government could say either that they take the point or that they are prepared to take the matter away and consider it. I beg to move.

5.15 p.m.

Earl Howe: My Lords, I have indeed considered this matter since we debated it at an earlier stage. However, I have come to the conclusion that the amendment would have a drastic effect which we do not believe would be acceptable. As drafted, the clause provides protection for people who have an existing tenancy under the Agricultural Holdings Act 1986 against losing

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their rights under that Act—for example, their security of tenure—simply because a variation in their tenancy agreement has effect by operation of law as an implied surrender followed by the grant of a new tenancy. We accept that in those circumstances it would be inequitable for the new tenancy to be excluded from the scope of the 1986 Act when the parties had not intended that to happen.

However, the amendment would mean that the Agricultural Holdings Act 1986 would apply to any tenancy granted to a person who had previously held a tenancy under the 1986 Act on that land. That would be the case even if the parties had expressly signed a new tenancy agreement. Since that could hardly happen accidentally it seems quite unreasonable to provide for such new tenancies to be subject to the 1986 Act. In addition, the effect would be that where a short-term letting under a ministry licence or under a Gladstone v. Bower tenancy had come to an end and the parties wished to enter a farm business tenancy the amendment would mean that the 1986 Act would apply to the new tenancy. That, too, would be clearly unsatisfactory.

We are satisfied that the clause as drafted provides adequate protection for tenants against an unwitting loss of their rights under the 1986 Act. We would not wish to go any further than that. I am sorry to disappoint the noble Lord but, in the circumstances, I hope that he will feel able, albeit reluctantly, to withdraw the amendment.

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