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Improved agricultural returns in recent years have the potential to resurrect the ‘Commercial Unit’ test which both landlords and tenants should be aware of in relation to an application to succeed a tenancy under the Agricultural Holdings Act 1986.
The Agricultural Holdings Units of Production Order 2011 (which runs from 7th November 2011 to 6th November 2012) sets out the amount which is to be regarded as the net annual income when assessing the productive capacity of agricultural land.
In order for an applicant to gain succession of the aforementioned tenancy, the applicant must meet certain criteria in order to demonstrate that they are suitable and eligible to take on the holding and they must not be the occupier of another “commercial unit”.
Another “commercial unit” is defined as “land which, when farmed under competent management, is capable of producing a net annual income which is not less than the aggregate of the average annual earnings of two full time male agricultural workers aged 20 or over” (paragraph 3 of schedule 6 of the 1986 Act).
The annual Order is not subject to consultation and includes values for income from the Single Farm Payment Scheme.
Whilst costs relating to agricultural production seem to be ever increasing and this notional income can amount to a significant sum of money, improvements in prices over recent years do indicate that another “commercial unit” may be a more realistic consideration than it has perhaps been in the past.
For further details contact your nearest GSC Grays office:
Barnard Castle – Lucinda Clifford – 01833 637 000
Leyburn – Phil Scott-Priestley – 01969 600 120
Richmond – Guy Goggrave – 01748 829 210
Stokesley – Guy Coggrave – 01642 710 742