The Agriculture Act 2020 marked one of the most significant reforms to UK farming and tenancy law in recent years. Now that it has been in force for over a year, agricultural tenants, landlords, and advisers have had the chance to reflect on its practical impact, particularly the abolition of the commercial unit test and the changes to succession criteria under Agricultural Holdings Act (AHA) tenancies.
The End of the Commercial Unit Test
For decades, the commercial unit test proved to be a highly contentious and, at times, unfair barrier to succession applications. It disqualified applicants who occupied a separate “commercial unit” of agricultural land, regardless of the reality of their farming operation.
The test was based on whether land could produce a hypothetical income equivalent to the wages of two full-time agricultural workers under “competent management”. This theoretical approach relied on Units of Production Orders (UPOs), which often failed to reflect current market conditions.
In practice, the test risked penalising progressive farmers who had diversified or expanded their businesses, making it harder for family members to secure succession rights.
A Clearer Focus on Suitability
While applicants have always needed to demonstrate their suitability to succeed to a tenancy, the reforms have provided more clarity around what that means in practice. The emphasis has shifted towards:
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The applicant’s ability to farm commercially
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Business management skills
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Production standards
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Environmental considerations
This shift reflects the modern demands of agriculture, ensuring that successors are not only maintaining viable farms but also adapting to new sustainability and regulatory expectations.
What Have We Learned After a Year?
The removal of the commercial unit test has simplified the succession process by removing an arbitrary and technical hurdle. Applicants now face greater scrutiny on their overall suitability, but they also have more transparency about the criteria being applied.
Some key lessons include:
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Death successions remain more flexible, with tribunals still able to treat applicants as eligible even where they do not fully meet the suitability criteria.
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The removal of the test was expected to have a bigger impact on retirement successions, but its effect has been more modest so far.
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For many tenants, the change has lifted a psychological burden, signalling recognition by policymakers that AHA succession is still a vital feature of the tenanted farming sector.
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The reforms may encourage the next generation to commit to farming careers, with reassurance that working within a larger or diversified enterprise won’t automatically disqualify them from succession.
A Step Towards a Modern Tenancy Framework
Overall, the reforms appear to favour commercially minded, forward-looking tenants who can demonstrate business and environmental awareness. By removing outdated barriers and clarifying expectations, the Agriculture Act 2020 has helped modernise the framework around succession, while still protecting the livelihoods of farming families.
At DTM Legal, we work closely with farmers, landowners, and agricultural businesses to navigate succession planning, tenancy disputes, and the evolving legislative landscape.
