Agricultural Tenancy Death UK (2026): What Happens to a Farm Tenancy When the Tenant Dies — AHA 1986 vs Farm Business Tenancies

The key distinction is whether the agricultural tenancy was granted before or after 1 September 1995: (1) AGRICULTURAL HOLDINGS ACT 1986 (AHA 1986) TENANCIES: these are tenancies granted before 1 September 1995 (or after that date in very limited circumstances — e.g. under a succession arrangement or where one of the parties was a party to a previous AHA 1986 tenancy). AHA 1986 tenancies carry statutory security of tenure for the tenant and, crucially, on the tenant's death, can be succeeded to by a 'close relative' of the deceased tenant through a statutory succession process. The succession right exists for up to two generations of succession; (2) FARM BUSINESS TENANCIES — AGRICULTURAL TENANCIES ACT 1995 (ATA 1995): FBTs are all agricultural tenancies granted on or after 1 September 1995 (other than AHA 1986 continuations). FBTs have no statutory succession rights. When the tenant under an FBT dies, the tenancy does NOT automatically pass to a family member — it passes with the rest of the tenant's estate under the will or intestacy, but only for the remainder of the fixed term (if applicable). The landlord can serve notice to quit if the tenancy was a periodic tenancy; even a fixed-term FBT, once vested in the estate, can be surrendered or dealt with as an asset of the estate — but the tenancy cannot be 'succeeded' in the AHA 1986 sense; (3) THE PRACTICAL SIGNIFICANCE: for farming families: (a) an AHA 1986 tenancy where the succession right has not yet been exercised twice is extremely valuable — it allows the farm to continue to be farmed by the family after the tenant's death without the landlord being able to take the land back; (b) an FBT has no such protection — when the tenant dies, the family's right to farm the land depends entirely on the terms of the tenancy and any agreement with the landlord; (4) IDENTIFYING WHICH REGIME APPLIES: the date the tenancy was granted (not the date of any subsequent renewal or tacit reletting) determines which regime applies. Many farm tenancies have been in existence for decades and remain under AHA 1986. Successor tenancies granted pursuant to an AHA 1986 succession are also AHA 1986 tenancies.

For a close relative to succeed to an AHA 1986 tenancy after the tenant's death, they must pass both the eligibility test and the suitability test: (1) WHO IS A CLOSE RELATIVE — AHA 1986 s.35: a close relative means: (a) a spouse or civil partner of the deceased tenant; (b) a brother or sister of the deceased tenant; (c) a child (including an illegitimate child) of the deceased tenant; (d) any other person who, at any time before the death of the deceased tenant, was treated by the deceased tenant as a child of the family in relation to a marriage or civil partnership of the tenant. Note: stepchildren are included if treated as children of the family. Cohabitants are NOT included unless treated as children; (2) THE ELIGIBILITY TEST — AHA 1986 s.36: to be eligible, the applicant close relative must: (a) NOT be the occupier of a 'commercial unit of agricultural land' — i.e. they must not already be running a farm of viable commercial size. The test is whether the applicant (not counting the holding in question) is occupying a commercial unit; (b) This requirement prevents already-established farmers from inheriting tenancies — it targets those who genuinely need the tenancy to farm; (3) THE SUITABILITY TEST — AHA 1986 s.39: even if eligible, the applicant must be 'suitable' to become the tenant. Suitability is assessed by the Agricultural Land Tribunal (ALT) by reference to: (a) the applicant's competence in agricultural matters; (b) whether the applicant's health is adequate to run the farm; (c) the applicant's financial standing; (d) the overall character and suitability of the applicant having regard to the holding. The ALT has wide discretion in assessing suitability; (4) THE COMMERCIAL UNIT TEST: the commercial unit test is a critical threshold. MAFF (now DEFRA) guidance defines a commercial unit as land capable of providing full-time employment for a competent agricultural worker. The exact size depends on the type of farming — arable, dairy, livestock — and current productivity benchmarks. An applicant who already occupies 200 acres of productive arable land will likely fail the eligibility test; an applicant who occupies a small domestic garden will easily pass; (5) WHO APPLIES: typically the close relative who wishes to succeed applies to the Agricultural Land Tribunal within the specified time limit. The landlord can object and apply for a direction refusing succession.

The succession process is time-critical — failure to apply within the prescribed period results in loss of the succession right: (1) TIME LIMIT — AHA 1986 s.41: a close relative wishing to succeed must apply to the Agricultural Land Tribunal (ALT) within 3 months of the date of death. This is a strict time limit. If no application is made within 3 months, the tenancy passes to the personal representatives of the deceased tenant's estate — but the succession right is lost and the tenancy can be treated as an asset of the estate (which may be surrenderable to the landlord). Failure to act promptly is one of the most common and costly mistakes in agricultural tenancy succession; (2) THE APPLICATION: the application is made to the ALT (a specialist tribunal dealing with agricultural land and tenancy disputes). The application must: (a) identify the applicant as a close relative of the deceased tenant; (b) set out the eligibility grounds (not occupying a commercial unit); (c) provide evidence of suitability; (3) MULTIPLE APPLICANTS: if there is more than one eligible close relative who wishes to succeed, they must all apply within the 3-month period. The ALT selects between them on the basis of who is most suitable to become the tenant. The ALT can also direct that a tenancy is granted in succession to one of the applicants over the landlord's objection, if the applicant passes both tests; (4) LANDLORD'S NOTICE TO QUIT AND COUNTER-NOTICE: where there is no succession application (either because there are no eligible relatives, or the time limit has been missed, or all applicants fail the suitability test), the landlord may serve a notice to quit on the personal representatives. The personal representatives generally cannot serve an effective counter-notice if there is no eligible successor; (5) INTER VIVOS SUCCESSION: in addition to succession on death, AHA 1986 ss.36-48 also provide for inter vivos succession — where the existing tenant retires in favour of a close relative while still alive. This retirement succession follows similar eligibility and suitability tests and must be agreed with the landlord or approved by the ALT; (6) ONLY TWO SUCCESSIONS ALLOWED: AHA 1986 permits a maximum of two statutory succession events per tenancy (from the original tenancy grant). Once two successions have been made (whether on death or inter vivos), the right is exhausted and the tenancy cannot be succeeded further.

Farm Business Tenancies under the Agricultural Tenancies Act 1995 have no statutory succession rights and are treated as ordinary estate assets: (1) THE POSITION ON DEATH — ATA 1995: when the tenant under an FBT dies, the tenancy vests in their personal representatives as part of the estate. There is NO statutory right for a close relative to succeed to the tenancy. The tenancy passes: (a) by will: if the will includes the tenancy as an asset (or leaves the residuary estate to named beneficiaries); (b) by intestacy: if there is no will, the tenancy passes under the intestacy rules (Administration of Estates Act 1925); (2) PERIODIC FBTs — NOTICE TO QUIT: for a periodic FBT (e.g. year-to-year), the landlord can serve a notice to quit on the personal representatives. ATA 1995 s.6 allows either party to a fixed-term FBT of more than 2 years to give notice that the tenancy will not be continued — but for periodic tenancies, the notice to quit provisions allow the landlord to recover the land relatively quickly after the tenant's death; (3) FIXED-TERM FBTS: for a fixed-term FBT, the personal representatives hold the benefit of the tenancy for the remainder of the fixed term. The beneficiaries of the estate may step into the shoes of the tenant (with the landlord's agreement) or the personal representatives may seek to assign the tenancy (if the lease permits assignment) or surrender it to the landlord in exchange for a premium; (4) IHT ON AN FBT: an FBT vested in the deceased's estate is an asset for IHT purposes. However, the tenancy itself (the right to farm the land for the remaining term) may qualify for Agricultural Property Relief (APR) under IHTA 1984 s.115 — if the tenancy is a short-term tenancy of 'vacant possession value' quality. Specialist advice on APR valuation for FBTs is essential; (5) AHA 1986 TENANCIES AND APR: for AHA 1986 tenancies passing on death (either by succession or as an estate asset if no eligible successor), the APR calculation depends on whether 'vacant possession value' or 'tenanted value' applies. Tenanted AHA 1986 land typically has a lower capital value (because the tenancy restricts the landlord's ability to sell with vacant possession), but for the tenant's estate the relevant value is the value of the tenant's interest.

Agricultural tenancy succession is rarely automatic — careful will drafting and estate planning are essential: (1) IDENTIFY THE TYPE OF TENANCY: the first step is to identify whether the tenancy is an AHA 1986 tenancy or an FBT. This requires reviewing the original tenancy agreement and any subsequent documentation. A specialist agricultural solicitor should be engaged; (2) FOR AHA 1986 TENANCIES — CHECK SUCCESSION COUNT: determine whether the tenancy has already been succeeded to once (one succession used) or twice (succession rights exhausted). A tenancy that has already been succeeded to twice cannot be succeeded again — it falls into the estate as an ordinary (though time-limited) asset on the tenant's death; (3) WILL DRAFTING FOR FARMING FAMILIES: the will should: (a) identify the tenancy specifically and state the testator's wishes about who should take over farming the land; (b) name an executor who understands agricultural matters or instruct a specialist agricultural solicitor as an adviser to the executors; (c) consider the interaction with any partnership agreement — many farms operate as farming partnerships and the partnership agreement may contain specific provisions about what happens on a partner's death; (4) IHT AND APR PLANNING: agricultural tenancies may qualify for Agricultural Property Relief at 50% or 100% — specialist advice is essential. For AHA 1986 tenancies, the tenanted value (which may be significantly below vacant possession value) is the relevant value for the tenant's estate but APR at 50% or 100% may still apply. Post-Budget 2024: APR rules are under review — confirm current APR rate thresholds with a specialist before the estate is filed; (5) CONSIDER INTER VIVOS SUCCESSION: for AHA 1986 tenancies, inter vivos succession (retirement succession to a close relative while the tenant is still alive) may be preferable to death succession if it can be agreed with the landlord or approved by the ALT — it avoids the 3-month post-death ALT application deadline and can be better planned; (6) PARTNERSHIP CONTINUATION AGREEMENT: farming families with AHA 1986 tenancies should have a partnership agreement that: (a) deals with what happens on the death of a partner; (b) provides for the farm to continue trading during the administration period; (c) addresses succession rights in the context of the partnership.