Land Compensation Manual Section 8: Agricultural interests

Agricultural interests

The Valuation Office Agency`s technical manual covering all aspects of compulsory purchase and compensation.

Matters covered

8.1 General

This section is concerned with the compensation payable in respect of interests in agricultural land with particular reference to the special statutory provisions relating to such interests.

It should be noted that the Agricultural Holdings Act 1986 and the Agricultural Tenancies Act 1995 apply only to England and Wales.

8.2 Landlord and tenant - agricultural tenancies

Since 1 September 1995 the law in England and Wales relating to the letting of agricultural property has been governed by two principal statutes.

Existing tenancies continue to be protected by the Agricultural Holdings Act 1986 (AHA 1986). Save for the exceptions noted below, new tenancies commencing on or after 1 September 1995 are governed by the Agricultural Tenancies Act 1995 (ATA 1995). The exceptions are:

(a) existing tenancies under AHA 1986;

(b) succession tenancies to AHA 1986 where two successions have not already taken place;

(c) variations of tenancies in (a) between the same landlord and the same tenant, where the law implies a surrender of the old tenancy and a re-grant of a new tenancy;

(d) tenancies beginning on or after 1 September 1995 pursuant to a written contract of tenancy before that date indicating that the AHA 1986 is to apply to that tenancy;

(e) tenancies granted under the Evesham custom.

This section deals primarily with compensation to tenants occupying under the terms of AHA 1986.

Statutory Compensation applies to agricultural tenancies granted under the ATA 1995 for all land whether agricultural or not, if comprised in a farm business tenancy.

8.3 Notice to quit compensation

The background to a tenant’s right to compensation from his landlord following a valid notice to quit under AHA 1986 and the points to be considered are set out in Practice Note 8/1.

8.4 Special provisions within the compensation code

The special agricultural provisions within the compensation code include:

Agriculture (MP) Act 1963 – section 22 Discretionary allowance (see Paragraphs 8.31 to 8.41) applicable to AHA 1986 and ATA 1995

Agriculture (MP) Act 1968 – sections 12 to 13 (as amended) Re-organisation payment under section 60(4) AHA 1986. Not applicable to ATA 1995 tenancies

Land Compensation Act 1973 – sections 33A to 33K Basic and Occupiers Loss Payments introduced for CPOs made on or after 1 November 2004.

Land Compensation Act 1973 – sections 34 to 36 Farm Loss Payments were abolished for CPOs made after 31 October 2004 and replaced by Basic and Occupiers Loss Payments (see above item).

Land Compensation Act 1973 – section 48 Provision for protection of tenants’ security of tenure. Not relevant to ATA 1995 tenancies

Land Compensation Act 1973 – sections 53 to 57 Provisions in connection with taking part of holdings.

Land Compensation Act 1973 – sections 59 to 61 Provisions regarding choice of basis of compensation following notice to quit.

The interest

8.5 General

Under the Agricultural Holdings Act 1986 the tenant enjoys considerable security of tenure. A tenant who continues to pay the rent, to look after the holding and to farm within the rules of good husbandry, can usually expect to be able to resist any notice to quit, save in certain circumstances specified in Schedule 3 AHA 1986 and the Agricultural Holdings (Arbitration on Notices) Order 1987 (SI 1987 No 710) and, particularly, when the land is required for some non-agricultural purpose for which planning permission has been granted or is not required.

It should be noted however that the common law rule is that a notice to quit part of a holding is bad and where the planning permission relates to part of the holding only, the landlord may not be able to obtain much advantage unless there is an effective resumption clause in the tenancy agreement, or the purpose for which the land is ‘required’ is one of those set out in sections 31(1) and (2) AHA 1986 thus validating a notice to quit relating to part of a holding.

8.6 Section 48 LCA 1973

Under section 48 LCA 1973 the right of the landlord to serve a notice to quit under the provisions of Schedule 3 Pt 1 Case B or section 27(3)(f) AHA 1986 shall be disregarded in assessing compensation payable by an acquiring authority if the requirement for ‘a use other than for agriculture’ arises solely from the scheme underlying the acquisition or any other compulsory scheme. However, while for the purpose of assessing compensation payable by an acquiring authority the tenant’s security of tenure is protected in so far as the requirement or use arises from any compulsory scheme, it is not protected to the extent that the landlord has served or is in a position to serve an effective notice to quit apart from any scheme. Section 48 applies not only to the ordinary 12 months’ notice to quit but to a notice under a resumption clause.

If a tenant has vacated as a consequence of such a notice it shall be assumed, in assessing the market value of the landlord’s interest, that the tenant has not done so. A tenant served with such a notice to quit might be entitled under section 59 LCA 1973 to elect for compensation to be assessed under section 20 Compulsory Purchase Act 1965.

8.7 Resumption clause

Generally, a landlord must give at least 12 months’ notice to quit. The principal exception to this is where the contract of tenancy provides for early resumption by the landlord of possession of the holding, or some part of it for some specified non-agricultural purpose (see section 25(2) AHA 1986). However, a notice to quit under such a resumption clause that provided for only one month’s notice has been held to be ineffective because it would have prevented the tenant from giving the requisite one month’s notice before the end of his tenancy that he intended to claim more than the minimum of one year’s rent.

If the tenancy agreement contained a resumption clause section 62(1)(2) AHA 1986 would be relevant in determining the terminal compensation that the landlord would have had to pay to the tenant. Where the landlord resumes possession of the holding or part of the holding through the operation of a clause in the tenancy agreement allowing possession of the land to be resumed for non-agricultural purposes at less than 12 months’ notice in circumstances in which section 25(2)(b) AHA 1986 would apply, the tenant is entitled under the provisions of section 62 to be compensated in the terminal compensation for the loss of the additional benefit (if any) to be received if the tenant had been allowed to remain in possession until the usual period of notice had expired. The ‘additional benefit’ should represent the amount, if any, by which the present value of the tenant’s net financial gains had the tenant remained in possession until 12 months from the end of the year of tenancy current when the notice was given, exceeds the compensation actually received apart from section 62.

The precise wording of resumption clauses needs to be examined carefully.

8.8 Growing crops

Crops growing on land at the relevant valuation date are part of the land until severed and the occupier’s interest in the crops is the same as his interest in the land.

8.9 Value of interest

An interest in agricultural land should be valued therefore having regard to the rights and obligations of the landlord and tenant as they would have existed in a no scheme world - the tenant being at risk of dispossession only in so far as the tenancy agreement and the statutes taken together allow. The market value of such an interest with vacant possession, under Rule (2), section 5 LCA 1961, should take into consideration every intrinsic quality of the land including its profit-making potentialities and the crops growing thereon at the valuation date. This value should reflect all the residual values to the consumption of feeding stuff by stock on the holding and to the application of organic and inorganic manures and limes and the value of any grant or acreage payment that would pass to the purchaser of the interest.

Matters to be taken into account in assessing the open market value of the interest and other heads of claim, for example ‘disturbance’ or ‘allowance by an incoming tenant’ are more fully discussed in Practice Note 8/1.

Apportionment of rent

8.10 Leases

Where any part of the land to be acquired is the subject of a lease for a term of years unexpired that includes other land not to be acquired, section 19 CPA 1965 requires the rent to be apportioned and provides for settlement by the Upper Tribunal (Lands Chamber) if agreement cannot be reached between the lessor and lessee and the acquiring authority.

Powers are also available under section 1 LCA 1961 for the settlement of such apportionment of rent by the Upper Tribunal (Lands Chamber).

8.11 Tenancies

Where any part of the land to be acquired is the subject of a tenancy that encompasses other land not to be acquired, the rent should be apportioned (even though the apportionment to the part taken may be no greater than a peppercorn) before any agreement is made as to the amount of compensation payable. Any departure from this may lead either to a duplication of compensation, or to injustice to the lessee or tenant and/or difficulties over subsequent agreement of compensation.

8.12 Basis of apportionment of rent

The apportionment of the rent payable at the date of severance should be on the basis of the value attributable to the severed land and the retained land, respectively, as part of the whole. The rent apportioned to the retained land should have no regard to any depreciation suffered by reason of the severance or the use made of the severed part.

8.13 Effect of apportionment of rent on tenancy of holding

The apportionment of rent does not operate to create new tenancies and therefore does not debar the landlord from securing an increase in rent of the remainder of the holding within the next three years by arbitration under section 12 AHA 1986, or section 10(6) ATA 1995 or as may comprise agreed terms under an ATA tenancy.

Mitigation of loss

8.14 Occupier’s continuing in occupation

Where land is purchased in advance of requirements the valuer should ascertain the acquiring authority’s proposals regarding the cultivation of the land until possession is required.

If a tenancy were granted, this would be by way of a Farm Business Tenancy under the ATA 1995 and no security of tenure would be created apart from that granted by the terms of the tenancy.

8.16 Adjustment of compensation

Where a tenancy is granted, care must be exercised in such matters as unexhausted manures, growing crops, removal expenses etc to avoid duplication, and the amount of any payment for removals and loss on forced sale should be reduced having regard to the mitigation of loss arising from the grant of a tenancy.

Owner’s right to enlarge notice to treat

8.17 General

Where notice to treat is served in respect of part only of an agricultural unit, the owner (not necessarily an occupying owner) of an interest greater than as tenant for a year or from year to year (‘the claimant’) may, within two months, serve a counter-notice under section 53 LCA 1973 requiring the authority to take his interest in the residue of the unit. ‘Agricultural unit’ has the same meaning as under the ‘blight’ provisions of Town and Country Planning Act 1990, that is, ‘land which is occupied as a unit for agricultural purposes, including any dwellinghouse or other building occupied by the same person for the purpose of farming the land’.

These provisions also apply when notice to treat is deemed to have been served in the case of purchase notices (section 137 T&CPA 1990 - Interests affected by refusal or conditional grant of planning permission, revocation, modification and discontinuance orders), and in respect of vesting declarations (Compulsory Purchase (Vesting Declarations) Act 1981).

Any rights under sub-sections 8(2) and (3) CPA 1965 are preserved, so that if the owner so chooses he may require the authority to purchase such minor severed parts but a counter-notice under section 53 LCA 1973 can only require the authority to purchase the claimant’s interest in the whole of the rest of the unit excepting only any part in respect of which his interest is no greater than that of a yearly tenant.

8.18 Procedure, service and withdrawal of counter-notice, and disputes

The counter-notice must be served on the authority, and a copy upon any person having an interest in the land referred to in the counter-notice, but failure in the latter does not invalidate the counter-notice. Unless the authority agrees in writing to accept the counter-notice as valid within two months of its service either party may then within a further two months refer to the Upper Tribunal (Lands Chamber) for a decision as to whether the claim in the counter-notice is justified (section 54 LCA 1973).

If the counter-notice were accepted or upheld, the authority would be deemed to have served another notice to treat in respect of the remainder, under the same powers and on the same date as the original notice to treat. The claimant may, however, withdraw the counter-notice at any time up to the end of six weeks after the Upper Tribunal has determined the compensation payable, and the deemed notice to treat would then lapse.

8.19 The test for a counter-notice

To succeed with a counter-notice the claimant must show that the remainder of the agricultural unit not included in the notice to treat is not reasonably capable of being farmed as a separate unit by itself or in conjunction with:

(a) land comprised in the same unit but in respect of which the claimant has an inferior interest and/or,

(b) any other unit occupied by him at the date of notice to treat in respect of which he has an interest greater than as a yearly tenant.

Any land in respect of which there is an extant notice to treat is to be disregarded.

The test requires subjective consideration of the viability of the remaining part of the severed unit, together with any other unit owned by the claimant (but not other land of which he is only a yearly tenant). As to whether detached lands are or are not part of the severed unit will depend on the structure of the farming enterprise ‘pre-scheme’ so that the definition of the unit for the purposes of the extent of the counter-notice is a matter that concerns the circumstances of the claimant’s own farming operations.

On the other hand the question of the viability of the remainder, ‘post-scheme’, is not one to be answered solely in terms of the attitude of the actual claimant, but whether or not the ‘other land’ were capable of being farmed as a separate unit. For this purpose, although the claimant’s views must carry a great deal of weight, regard should be had to the generality of possible farming uses, there being no requirement that the claimant’s existing system of farming must be continued. Where the house and/or buildings are on the land taken, regard should be had to any prospect of replacing them, and the compensation to be received for such lost buildings might not be irrelevant. Any case in which it is contended that the remainder of the unit is not viable because the compensation would not be sufficient for replacing essential buildings should be referred to the PS Professional Guidance team.

Although it is not in any way a prescribed test, it is thought that no unit would be considered viable if reduced to less than what, for other purposes, is described as an ‘intermediate unit’ in section 40 of the Agriculture Act 1967, being ‘an agricultural unit which ………. is capable, when farmed under reasonably skilled management, of providing full-time employment for an individual occupying it’.

The valuer may be called upon to advise authorities on the acceptability or otherwise of counter-notices, and in view of the time limits consideration should not be delayed after a referral to the valuer is made.

If the valuer requires assistance in this context advice should be sought from the PS Professional Guidance team who will decide whether DEFRA (or the Scottish or Welsh Governments as appropriate) should be consulted.

8.20 Assessment of compensation

By virtue of section 54 LCA 1973 the interest in the residue of the unit that is acquired under this procedure is to be valued as if restricted to its existing use. The provisions of sub-sections 5(2), (3) and (4) of LCA 1973 will apply. Thus Schedule 3 T&CPA 1990 rights are included in existing use for this purpose (except the rebuilding of any building for which compensation has been received following an order requiring its removal under T&CPA 1990) but any other existing planning permission is to be ignored. In some circumstances the determination will present valuation problems, for example where there are two notices to treat deemed to have been served at the same time under the same authorisation. The land thus to be acquired should however be the subject of one valuation and unless or until there is an authoritative decision to the contrary, this approach should be maintained, the only variation from normal being the assumption that the additional land is subject to the restriction mentioned above.

The provision enabling the scope of the acquisition to be enlarged arises out of agricultural considerations of viability rather than compensation considerations. The hypothetical restriction against development which is to be applied to the valuation of the remainder of the unit rests on this basic concept with the result that the owner can receive compensation on the basis of agricultural value only. It will be appreciated that if the assessment of compensation in respect of the additional land in the deemed notice to treat is treated as a separate exercise following upon the acquisition of the land included in the original notice to treat, the object could be defeated because the first valuation could include compensation for depreciation in the development value of the added land; and on the occasion of the assessment of the compensation for the added land disturbance compensation might be payable notwithstanding that overall the ‘Horn v Sunderland’ principle might be violated. If by treating the acquisition as a whole as mentioned in the previous paragraph, the compensation for the whole unit looks unrealistic because development potential is ignored, it should not be inferred that the approach is wrong, it merely indicates that it is not a case that the provision was intended to meet. The claimant can withdraw his counter-notice whereupon compensation would be due to him for damage to the development potential of any retained land in the normal way.

Any case of difficulty should be referred to the PS Professional Guidance team.

8.21 Management and disposal of surplus land

If, as a result of a counter-notice served by a lessee, the authority becomes the owner of the balance of a lease but does not also acquire the lessor’s interest, it is required to offer to surrender its surplus leasehold interest to the lessor on such terms as are reasonable, and any actual terms in the lease relating to surrender are to be disregarded. Valuers are authorised to advise upon and conduct negotiations in connection with such surrenders.

If the parties have not agreed terms within three months of offering to negotiate and the lessor has not referred the question of what terms are reasonable to the Upper Tribunal, the authority must do so. The lessor is deemed to have accepted the surrender on the terms laid down by the Upper Tribunal one month (or such other period as is directed) after the Tribunal’s decision. If the lessor refuses any sum payable to him as determined by the Tribunal, or fails to make out a title, the money may be paid into court as for a compulsory purchase.

Tenant’s right to enlarge notice of entry

8.22 General

The provisions of section 53 LCA 1973 regarding the rights of certain owners of agricultural land to require the purchase of the whole of the relevant unit are applied by sections 55 and 56 LCA 1973, with due alterations of details to the circumstances of an agricultural tenancy such as would fall to be considered under section 20 CPA 1965.

Sections 55 and 56 LCA 1973 apply where the authority has served formal notice of entry under sections 11(1) CPA 1965, but by virtue of section 57 LCA 1973, the same provisions are applied in other stated circumstances, with necessary modifications, where authorities are empowered to take possession of land from tenants, for example under section 584 Housing Act 1985.

The basic considerations and procedures are as for owners of agricultural land, taking ‘notice to treat’ as synonymous with ‘notice of entry’, but the question of viability of other land is measured by the aggregate of land being:

(a) the residue of the ‘holding’ (that is, the land in the tenancy); (b) any other land comprised in the same agricultural unit, and (c) land in any other agricultural unit in respect of which the claimant’s interest is greater than that of a yearly tenant.

8.23 Effect of tenant’s counter-notice

The effect of a valid counter-notice served by a tenant under section 55 LCA 1973 is to enlarge the notice of entry so that it relates to the whole of the holding (ie the aggregate of land comprised in the contract of tenancy. As a result, the authority would then be able to enter onto the additional part under the original notice of entry if it wished to do so. Otherwise, it is deemed to have entered on the day before the expiry of the year of tenancy which is current when the tenant’s counter-notice is accepted or confirmed, and the tenant’s compensation under section 20 CPA 1965 is assessed accordingly. This is so notwithstanding that the tenant may not actually have given up possession until much later as he may remain for up to a year after the counter-notice is validated without prejudice to his rights under sub-section 56(2) LCA 1973. The compensation under section 20 CPA 1965 should have regard to the net benefits that would accrue to the tenant if he intends or could reasonably be expected, to remain after the deemed entry date.

8.24 Authority’s action upon termination of the tenancy

If the authority were to acquire the landlord’s interest in the severed portion of the holding, whether by agreement or under a counter-notice, served in accordance with section 53 LCA 1973, the departure of the tenant would leave the land with vacant possession to be used or disposed of in the normal way.

If the landlord is retaining the severed portion, the authority must give up possession of it to him as soon as it is received from the tenant, and he must take it. (If the tenant gives up the balance in parts, it is all surrendered to the landlord when the last part is handed over.)

The intention is that the authority steps into the shoes of the tenant in relation to the landlord, and he can look to the authority for settlement of any claim arising out of the termination of the tenancy, save that both the authority and the tenant are protected by sub-section 56(3)(a) LCA 1973 against any liability arising from the transfer of possession. The landlord’s rights are those that stem from the tenancy agreement, from AHA 1986 or ATA 1995, and may include, for example, arrears of rent, penalties, dilapidations etc. If he wishes to claim for general depreciation to the holding (analogous to section 72 AHA 1986) he must submit a written claim within three months of the termination of the tenancy. It will be necessary to take particular care in cases of this description to ensure that there is no duplication arising out of the claim for terminal compensation and compensation payable in connection with the acquisition of the landlord’s interest in the land taken from him.

Set against that, the authority takes over the rights of the tenant which similarly accrue, such as compensation for tenant right and improvements, but as the circumstances are those of a tenant voluntarily leaving the holding the authority will not be entitled to recover disturbance compensation under section 60 AHA 1986, notwithstanding that it will normally have made such payments to the tenant.

Having regard to the probability that there will be features common to both the landlord’s claim for terminal compensation and the tenant’s compensation under section 20 CPA 1965, it may be desirable to deal with them both concurrently as may be practicable.

There is no statutory requirement that any professional fees incurred by the landlord are to be reimbursed, nor for the payment of interest. The normal practice between landlord and tenant that each party pays its own costs should be followed. If this is the only matter preventing a settlement it should be referred to the PS Professional Guidance team.

Valuers are authorised to advise acquiring authorities regarding such terminal claims and to negotiate settlements where requested. In the event of a dispute a reference lies to the Upper Tribunal (Lands Chamber).

8.25 Reduction of landlord’s compensation for land acquired

Any increase in the value of the land not being acquired from the landlord which is attributable to his taking possession of it under these provisions is to be deducted from the compensation payable to him (section 56(3)(e) LCA 1973) in respect of that part of his land which is being acquired. This deduction, which relates only to the matter specified, is additional to any set-off under other statutory provisions.

Tenant’s right to enlarge notice to quit – section 32 AHA 1986

8.26 General

Where a tenant is served with a notice to quit part of an agricultural holding, he may within 28 days serve a counter-notice under the provisions of section 32 AHA 1986 to the effect that he accepts the notice as a notice to quit the whole holding. However, the tenant is not entitled to exercise both the rights under section 32 AHA 1986 and the option under section 59 LCA 1973 to take compensation under section 20 CPA 1965; he may choose to exercise one or the other, but not both.

8.27 Section 61 LCA 1973

A tenant served with a notice to quit part of an agricultural holding which would entitle him, under section 59 LCA 1973, to elect to take compensation under section 20 CPA 1965, who makes such an election within the period of two months of the date of the service of the notice to quit, may within the same period serve a notice under section 61 LCA 1973 claiming that the remainder of the holding is not reasonably capable of being farmed either by itself or in conjunction with other relevant land as a separate agricultural unit.

The procedures and considerations are those applying to the right of a tenant to enlarge a notice to treat with necessary modifications as if a reference to notice of entry were a reference to notice to quit.

If the notice under section 61 LCA 1973 were accepted or declared valid and if before the end of 12 months after the notice has been accepted or declared as valid, the tenant gave up possession of the whole holding, the tenant would be entitled to receive compensation under section 20 CPA 1965 in respect of the whole holding, and a re-organisation payment under section 12 A(MP)A 1968 (as amended by AHA 1986) as if the acquiring authority had taken possession under a notice of entry.

Obligation to purchase interest affected by planning proposals

8.28 General

For the right of owners of agricultural land to serve blight notices see section 15 of this Manual.

Re-organisation payment

8.29 On acquisition

Section 12 A(MP)A 1968 provides that where an authority possessing compulsory powers acquires the interest of an agricultural tenant or takes possession of his land the provisions of section 60 AHA 1986 will apply as if the acquiring authority were the landlord of the holding and compensation had become payable to the tenant under section 60. (See also Practice Note 8/1.)

Generally in such circumstances the tenant will be entitled to a sum equal to four times the annual rent of the holding, or appropriate portion of that rent, as the case may be, to assist in the re-organisation of his affairs (re-organisation payment).

For the basis of apportionment of rent see Paragraphs 8.10 to 8.13.

If a claimant be entitled to both a re-organisation payment under section 12 A(MP)A 1968 and an Occupier’s Loss Payment under section 33B LCA 1973, payment can be made in respect of only one entitlement. If the claimant makes a claim under both provisions, the provision that produces the greater amount shall be paid.

8.30 Tenants for a fixed term of two years or more

Under section 12(2) A(MP)A 1968, a tenant holding under a tenancy for a term of two years or more is not normally entitled to a re-organisation payment. If, however, the total compensation payable apart from any re-organisation payment is less than the compensation that would have been received if the claimant had been a tenant from year to year (including a re-organisation payment), the claimant is entitled to a re-organisation payment amounting to the difference.

8.31 Tenants who have sublet or granted grazing and mowing agreements

A tenant who has sublet so that immediately before the acquiring of his interest or taking of possession of the land he was not in possession or entitled to possession, does not qualify for the additional payment.

Where the land is subject to a grazing or mowing agreement under the proviso to section 2 (3)(a) AHA 1986, the tenant will continue to be entitled to the additional payment. The occupier under a short term letting or licence under section 2 AHA 1986 will not be entitled to the additional payment (section 10(4) AHA 1986).

8.32 Exclusions

A tenant will not be entitled to the additional payment where the acquiring authority requires the land for the purposes of agricultural research or experiment or demonstrating agricultural methods or for the purposes of enactments relating to small holdings (section 13(2) A(MP)A 1968). The additional payment is also excluded where the land is being acquired under section 84(1)(c) Agriculture Act 1947 (a provision to secure land severed or injuriously affected by the exercise of statutory powers for use in conjunction with other land).

Where the land is being compulsorily acquired or taken by the exercise of powers contained in the T&CPA 1990, under sections 226 and 228 (land acquired for development), under section 230 (land required for purposes of exchange) or section 7 New Towns Act 1965 (land acquired by a development corporation), it shall be deemed that the land is not required for any of the purposes set out in the preceding paragraph and thus the payment is not excluded.

8.33 Taxation

The sum payable under section 60 AHA 1986, which is described as being ‘a sum to assist in the re-organisation of the tenant’s affairs’, is not subject to capital gains tax or income tax.

8.34 Disputes

Any dispute relating to the additional payment arising on compulsory acquisition or dispossession shall be determined by the Upper Tribunal (Lands Chamber) (Schedule 3 A(MP)A 1968).

Where the annual rent of the holding was not determined by arbitration under section 12 AHA 1986 and the acquiring authority considers the rent is unduly high, the authority may, under the provisions of Schedule 2 AHA 1986, make application to the Upper Tribunal for the rent to be determined. The Tribunal is given power to order that the additional payment should be based on the rent that would be determined under arbitration under section 12 AHA 1986 instead of the actual rent if it is satisfied that the actual rent was fixed collusively by the parties to the contract of the tenancy with a view to increasing the compensation on the compulsory acquisition or taking of possession.

8.35 Avoidance of duplication

Where a re-organisation payment is payable under section 60 AHA 1986, the compensation payable for the tenant’s interest shall be reduced by the amount of the re-organisation payment (section 48(5) LCA 1973). This procures to the tenant the tax-free advantage of the re-organisation payment.

8.36 Notice to quit

The provisions for a re-organisation payment where a tenant quits a holding in consequence of a notice to quit (or a counter-notice given by a tenant under sub-sections 74(1), (2)(a) or 2(b) AHA 1986 following a notice to quit part) are set out in Practice Note 8/1.

Discretionary allowances

8.37 General

Section 22 A(MP)A 1963 authorises any authority possessing compulsory powers to make discretionary allowances to occupiers of agricultural land (within the meaning of AHA 1986) who are displaced as a result of the authority’s acquisition.

8.38 Amount of allowance

The occupier must have been carrying on a trade or business for the purpose of agriculture on the land, and the allowance is limited to:

(a) such reasonable allowance as the authority thinks fit towards his removal expenses (which should be accorded the same interpretation as ‘expenses in removing’ (see section 4), and (b) the loss which, in its opinion, he will sustain by reason of the disturbance of his trade or business (which should be assessed on the basis outlined in section 4).

8.39 Not normal practice to ‘top up’ compensation

Although there are no stipulated restrictions on the exercise of the discretionary powers conferred by the section, it is not to be expected that discretionary powers would be invoked by government departments, in circumstances where the claimant has another right to statutory compensation in respect of the same losses, so as to ‘top up’ that compensation.

Consequently, the persons who are likely to benefit under these powers are those who do not have any legal compensatable interest in the land from which they are displaced, for example, licensees.

Discretionary payments should not normally exceed the amount which would have been payable had the claimant qualified as of right under section 20 CPA 1965.

8.40 Fees, interest and arbitration

Questions of fees and interest should be dealt with as for other discretionary payments (see section 4). There is no provision for arbitration.

8.41 Procedure and reports

The procedure to be followed is that set out in section 4 of this Manual.

Compensation for depreciation caused by use of public works

8.42 General

Compensation may be payable for the depreciation of an interest in agricultural land due to the physical factors caused by the use of public works (see section 14 of this Manual). In assessing the value of the interest it should be borne in mind that such value will include crops growing on the land and the potentiality of the land for profit.

Home loss, basic loss and occupier’s loss payments

8.43 General

See section 13 of this Manual.

Loss on forced sale

8.44 Assistance from BAMS (Building and Machinery Specialists)

If the valuer requires advice in determining the compensation payable for loss on forced sale of agricultural plant and machinery, application for assistance should be made to BAMS via the appropriate pro-forma.