The Model Clauses (MCs) set out liabilities for the repair, replacement, maintenance and/or insurance of items of fixed equipment on a farm. They apply to some agricultural tenancies in England and Wales under the Agricultural Holding’s Act 1986 and also to some Farm Business Tenancies under the Agricultural Tenancies Act 1995.
These were last reviewed in 1988, and more substantially in 1973, meaning that some particular provisions have become out of date (e.g. the financial thresholds of compensation) or there are now some gaps as a result of technological advancements that were not covered by the previous MCs. As a result they have been reviewed again and the new MCs will apply from the 1st October 2015. Although in many ways similar to the previous provisions, there are a number of changes that may have an impact on some existing tenancies, both under the 1986 and the 1995 Acts.
Whether they apply to an existing tenancy depends on the existing provisions and whether they make alternative provisions (to the MCs) for the repair, replacement and insurance of fixed equipment. If so these existing provisions will take precedence. However where an existing 1986 Act tenancy is unwritten or silent on these issues the new MCs will apply in full. Similarly if the tenancy agreement mentions the old MCs, and that they apply as amended or replaced, the new MCs again will apply in full. However where there is no mention of replacement it is likely that the old MCs will continue to apply, but any gaps in the old MCs will be filled by the new ones.
For FBTs under the 1995 Act that invoke the old MCs and provide for their replacement, then the new ones will apply. Where the MCs text is written out in the agreement this will not be substituted unless there is mention of replacement.
So what does this mean practically? It is important to check now whether any liabilities, relevant to your agreement, will shift from landlord to tenant or vice versa, following the introduction of the new MCs. If so compensation may be due when the transfer occurs (1st October 2015), rather than at the end of the tenancy. This is important now where the party from which the liability is transferring has not, for example, complied with a repairing liability. There is only a short window (at the time of writing within the month of October 2015) in which to take action to recover compensation for an existing liability under the old MCs, by the party to whom the liability is transferring. The risk being that the party acquiring the liability may not be able to claim compensation from the other party’s past failure to meet their responsibilities after the end of October this year, if they do not refer the amount of compensation due to be determined by arbitration before the end of October.
While not a comprehensive list, the new MCs add the following repairing responsibilities to landlords; chimney linings, cladding, insulation, gas pipes & LPG tanks, and to inspect & maintain electrical systems (previously the tenant’s responsibility). Tenants have a new liability to provide half the cost of repairs/replacements to bargeboards, fascias and soffits, and liability for repair and replacement of electrical fittings (shifted from landlords), door & window furniture & glass, and removable coverings to slurry, silage & effluent systems etc.
Overall the important consideration now is to check whether any liabilities, relevant to your agreement, have shifted between parties, and if so, whether action needs to be taken now to assess any applicable changes and whether an application for arbitration needs to be considered before the end of October 2015.
