THE letting out of farm cottages can provide a useful source of extra income, say lawyers Clarke Willmott LLP. But landowners should beware of inadvertently granting a secure tenancy.

Private lettings For many years now it has been possible to avoid security of tenure through the use of an assured shorthold tenancy (AST) governed by the Housing Act 1988.

This can be used to let a cottage (two acres or less) as long as the rent falls within certain limits.

Under the AST regime the landlord has the ability to secure possession of the cottage on giving appropriate notice, although a court order may be necessary.

Before February 1997, to create an AST the landlord had to serve a particular notice on the tenant before the tenancy was granted.

That requirement was then generally removed, except in relation to farm workers.

Lettings to farm workers The rules relating to farm workers are different and complex.

A landlord may grant a farm worker an AST to avoid security of tenure problems.

There are however added conditions to fulfil, including the need to serve a prescribed shorthold notice on the tenant before the tenancy is granted. Failing this, the letting will be an assured agricultural occupancy.

An assured agricultural occupancy can be created if three conditions are satisfied:

  • The letting is a relevant licence or tenancy. Generally this depends on the occupier having exclusive occupation. It does not matter that no rent is being paid.
  • The cottage is in, or has been in “qualifying ownership”. The cottage will qualify if it is owned by the employer, or if arrangements have been made between cottage owner and employer for the farm worker’s use of the cottage.
  • The worker is or was a “qualifying worker”. The worker must at some time have worked full-time in agriculture for at least 91 weeks out of 104 weeks (these terms are defined). Importantly the employment does not have to be with the same employer and the time working in agriculture does not have to be during the term of the tenancy.

Unexpected problems could arise where:

  • The tenant is not an agricultural worker when he moves in, but changes his job later on.
  • The tenant is not working on a farm when the tenancy starts, but the owner then discovers that he qualifies due to his previous employment elsewhere.
  • The tenant is working on a farm for someone else and the cottage owner agreed with the employer to make the cottage available.

Assured agricultural occupancies If a tenant has an assured agricultural occupancy, there will be rights of succession for his spouse or civil partner, control of rent and very limited grounds for repossession of the cottage.

The message to any landowner is to take proper advice before allowing the prospective tenant into occupation, find out about the tenant’s previous employment and if there is any doubt, serve the prescribed notice just in case the tenant qualifies as an agricultural worker.

Once an Assured Agricultural Occupancy has been created, it is very hard to rectify.