This is an interesting and useful decision on succession following the death of a tenant under the Agricultural Holdings Act 1986.
The facts are unusual in that the area of the holding is small (1.390 hectares), the applicant (Mrs Wright) was quite old (73) and there had been limited agricultural production going on (not least because Mrs Wright and her late husband had been informed some years before by HS2 that the line of the track would go straight through the middle of their plot/house). The net result was that Mrs Wright was hugely dependent upon the value of benefits in kind to establish her eligibility, and in particular the value of her right to live in the house on the holding.
That house was also unusual in that it had been essentially created by Mrs Wright’s husband out of a World War II military building (the land now comprising the holding had been part of an airfield) and had then been further improved by the two of them over the years. The method of construction was therefore unusual, albeit the result was a warm and comfortable home.
Issues therefore arose in the application as to the proper approach to the valuation of the house as a benefit in kind and what, if any, discounts should be applied to reflect the parties’ actual repairing obligations and the method of construction.
After reviewing the various decisions on this subject the Tribunal concluded:-
“58 Taking the recent decisions as a whole, in determining the value of the accommodation to the applicant the general approach has been that which is best summarized in Helm. The Tribunal also accepts that as a matter of logic this is normally the correct approach. In the end it comes down to finding the best comparables. If one can find useful comparables which closely reflect the dwelling on the holding, then those are obviously the comparables to use. If, however, the nature, condition or location of the dwelling means that one cannot find such comparables, one must find a set of comparable properties which offer some of the broad characteristics of the dwelling in question. That is how one applies the Helm test in the real world. Whether to apply a reduction for the difference between the repairing liabilities under an AST and the Model Clauses depends on the particular facts of each case. In none of the cases referred to above was a reduction applied because of the mode of construction of the property and in the light of the Tribunal’s view that the Helm test is the appropriate test, there could be no logical justification for applying one.”
Helm is a reference to the First Tier Tribunal’s decision in Helm v. ALIH Properties Ltd [2010].
In the light of those conclusions, the Tribunal went on to adopt the parties’ expert valuers’ agreed rental values for an equivalent property (in terms of the nature and extent of the accommodation) let on an assured shorthold tenancy and applied a discount of 7.5% to reflect the differing repairing obligations, but applying no discount to reflect the method of construction.
The Tribunal also concluded that on authority where a husband and wife share the accommodation, no discount should be applied to reflect the shared nature of their accommodation. The applicant was entitled to rely on the full value/benefit of the accommodation.
Having worked through the figures the Tribunal concluded that Mrs Wright satisfied the principal source of livelihood test fully for a continuous period of 3 out of the seven years, but was a near miss in the other four years, concluding that over the whole of the 7 year period her income from the holding was 49.9% of her total income. The Tribunal accordingly went on to consider whether it would be fair and reasonable for her to be treated as eligible and concluded that it would. And then went on to conclude that she was suitable.
Whilst cases with unusual facts often do not provide much helpful broader guidance, there is a lot of useful analysis here which will be of general application. The full decision (which can be found – here) is certainly worthy of attention.