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HMRC internal manual

Inheritance Tax Manual

Agricultural Holdings Act 1986: sub-tenancies of agricultural land

A landlord may grant a tenancy to someone (the ‘head’ tenant) who then grants a sub-tenancy to someone else. Legal protection in respect of a sub-tenancy will depend upon the manner in which the interest of the head tenant is determined and whether the sub-tenant has received notice to quit from the head tenant.

In common law, if the landlord terminates the head tenant’s tenancy by serving notice to quit, any sub-tenancy granted by the head tenant will also fall by operation of law. If the head tenant fails to serve a counter-notice therefore, the sub-tenant has no security of tenure. If it can be shown that the head tenant failed to serve a counter-notice in collusion with the landlord then the landlord’s notice to quit will be void (Sparkes v Smart [1990] 2 EGLR 245 CA, Barrett v Morgan [1997] 1 EGLR 1).