Agricultural Tenancy Succession: Tribunal Overturns Farm Tenancy Ruling

What did the Upper Tribunal decide?

In Executors of Major Michael Thomas Noel Hamilton Wills v David Keith John Holder [2026] UKUT 409 (LC), the Upper Tribunal (Lands Chamber) considered an appeal concerning David Holder’s application to succeed his late father as tenant of Clements Farm in Gloucestershire.

The Tribunal held that the First-tier Tribunal had erred in finding that Mr Holder fully satisfied the livelihood condition under section 36(3)(a) of the Agricultural Holdings Act 1986. The First-tier Tribunal had counted the income from an agricultural contracting business as qualifying income because the business was based on the holding and depended on its facilities.

The Upper Tribunal concluded that the correct focus was where the applicant undertook the agricultural work, rather than where the business was based or administered. It therefore set aside the finding that Mr Holder was fully eligible, revoked the direction granting him a succession tenancy and dismissed his application under section 36. His alternative application under section 41 was remitted to the First-tier Tribunal for further consideration.

What was the background to the succession dispute?

Mr Holder’s father had been the tenant of Clements Farm under a tenancy dating from 1964. After his father died in September 2021, Mr Holder sought a direction entitling him to a new tenancy under Part IV of the Agricultural Holdings Act 1986. The landlords were the executors of the estate of Major Michael Wills.

Clements Farm comprised around 56 hectares of arable land and 1.5 hectares of permanent pasture. Mr Holder had worked there throughout his life and carried out the manual cultivation work himself. The parties agreed that he satisfied the separate commercial unit condition. The dispute concerned the livelihood condition, which generally requires the applicant’s only or principal source of livelihood to have derived from agricultural work on the holding for the required period within the seven years ending on the tenant’s death.

Mr Holder also owned Quarry Farm, a separate farm of around 126 acres about three miles away, where beef production was the main activity. The parties agreed that Quarry Farm did not form part of the same agricultural unit as Clements Farm, so income from that enterprise could not count as livelihood derived from work on the holding.

Why did agricultural contracting income matter?

Mr Holder and his father had operated an agricultural contracting business which Mr Holder continued in partnership with his wife. It undertook arable and grassland work for customers within around 30 miles. The business was based at Clements Farm: machinery was stored and maintained in buildings there, fuel was kept on the holding, and some administration and repair work took place on site. However, much of the contracting work itself was performed on customers’ land elsewhere.

The First-tier Tribunal had treated the contracting enterprise as agricultural work on the holding because of its close operational connection with the farm. That meant it counted the contracting income as qualifying income and concluded that Mr Holder met the livelihood condition.

The Upper Tribunal held that this approach asked the wrong question. A business’s base, facilities and administrative arrangements do not by themselves turn agricultural work carried out elsewhere into work undertaken on the holding. Those connections cannot replace the statutory focus on the location of the applicant’s work.

How is the livelihood condition assessed?

Section 36(3)(a) of the Agricultural Holdings Act 1986 requires an applicant’s only or principal source of livelihood, for the required five years within the relevant seven-year period, to derive from agricultural work on the holding or an agricultural unit of which it forms part. The Tribunal noted that “principal” had been treated in the authorities as requiring more than 50% of the applicant’s livelihood.

The Tribunal considered that the First-tier Tribunal should identify the agricultural work Mr Holder actually performed on the holding and then assess what proportion of his livelihood was derived from that work. Income from the beef enterprise at Quarry Farm was non-qualifying. Income from contracting work carried out on other farms could not simply be counted as qualifying because the contracting business was based at Clements Farm.

The judgment also considered section 36(6), which extends the statutory reference to agricultural work on the holding to certain work carried out “from” the holding, and other work carried out on or from it, where the description of work has been approved in writing by the landlord after the provision came into force. The Tribunal considered that this amendment supported the conclusion that off-holding work could not otherwise automatically be counted under the original livelihood test.

The Tribunal did not prescribe one universal formula for apportioning income between qualifying and non-qualifying work. It recognised that the First-tier Tribunal must make a judgment on the evidence, but it must apply the correct legal test and give coherent reasons for the apportionment it adopts.

Why was the section 41 application remitted?

Mr Holder had argued in the alternative that, even if he did not fully satisfy the livelihood condition, he should be treated as eligible under section 41 of the Agricultural Holdings Act 1986. The First-tier Tribunal had rejected that alternative application, using a 70:30 apportionment based on the time he spent working on and away from the holding.

The Upper Tribunal found the First-tier Tribunal’s reasoning on this alternative case inadequately explained. In particular, it was difficult to reconcile the tribunal’s reliance on the close connections between the contracting business and the holding when deciding the primary eligibility issue with its apparent refusal to consider those same factors when assessing whether Mr Holder should be treated as eligible under section 41.

The Upper Tribunal did not decide the section 41 application itself. It had not heard the evidence or seen all the documents considered by the First-tier Tribunal, and considered that the original panel was best placed to reassess the matter. The case was therefore remitted for further consideration. The panel may reach the same conclusion or a different one; the judgment does not require it to find in Mr Holder’s favour.

What does the ruling mean for agricultural tenancies?

The decision highlights the need to distinguish between the location of agricultural work and the location from which a business operates. For succession applications, the fact that contracting machinery, fuel, repairs and administration are based on a tenanted holding will not, on its own, establish that income from work performed on other farms qualifies towards the livelihood condition.

Applicants and their advisers should keep clear evidence of the work undertaken on the holding, work carried out elsewhere, the sources of partnership income and the basis used to apportion livelihood. Where section 36(6) may apply, the statutory requirements, including any relevant written landlord approval, should be examined carefully.

For tribunals, the judgment also underlines the importance of addressing alternative eligibility arguments on their own terms and explaining why relevant factors are accepted or rejected. The outcome in Mr Holder’s case remains subject to the First-tier Tribunal’s reconsideration of his section 41 application.