AHA 1986 Succession: Assessing The “Livelihood” Condition

The Upper Tribunal has examined the livelihood condition, for succession applications to tenancies under the Agricultural Holdings Act 1986, confirming that contracting work carried out on other farms is not qualifying work, and has reviewed the approach to applications to be treated as eligible under section 41.

Executors of Major M T N H Wills v. Holder [2026] UKUT 409 (LC)

https://www.bailii.org/uk/cases/UKUT/LC/2026/409.html

Most applications to succeed to an agricultural tenancy, under the Agricultural Holdings Act 1986, are resolved by agreement by applicants and landlords. Few end up requiring a full hearing before the First-tier Tribunal (“FTT”).  Rarer still is an appeal of a decision of the FTT.

Last week, however, the Upper Tribunal (Lands Chamber) gave its decision on an appeal concerning the assessment of the livelihood condition, the question of whether off-holding contracting work is qualifying work, and the approach to s.41 applications, where an applicant who cannot satisfy the livelihood condition asks to be treated as eligible on the basis that the livelihood condition has been satisfied “to a material extent”.

The succession application

The case concerned an AHA holding on an estate in the Cotswolds. The tenant and his son farmed together in partnership. The partnership had two revenue streams: an arable enterprise, which they carried out on the holding, and a contracting business, doing work on other arable farms in the locality. Following the tenant’s death, his son applied to the FTT for a direction entitling him to succeed to the tenancy.

The landlord accepted that if the applicant were eligible, he would be a suitable candidate to take on the tenancy. The sole issue for the FTT was whether or not the applicant satisfied the livelihood condition.

Section 36(3)(a) requires an applicant to demonstrate that:

“In the seven years ending with the date of death, his only or principal source of livelihood throughout a continuous period of not less than five years, or two or more discontinuous periods together amounting to not less than five years, derived from his agricultural work on the holding or an agricultural unit of which the holding forms part…”

The applicant’s primary case was that the income from the contracting business should be treated as qualifying income and should count towards his satisfaction of the livelihood condition. The landlord contended that contracting income was non-qualifying because it was not “derived from his agricultural work on the holding”.

The decision of the First-tier Tribunal

The FTT found that the applicant was eligible. In making that finding, the FTT decided that the contribution to the applicant’s livelihood from contracting work, done for other farmers on land away from the holding, should count towards the satisfaction of the livelihood condition.

The FTT said it was “obvious” that the work done on other farms was agricultural work. Once it had determined that contract farming is agricultural work, the question it asked itself was: from where is it carried on? It found that the contracting business was based on the holding, was administered and controlled from the holding, and that the machinery used for contracting work was repaired and maintained on the holding. The FTT also found that the contracting business could not have been carried on in the absence of the holding and the facilities it offered. It concluded “that the farm contracting enterprise was agricultural work on the holding, with its operations being carried on on other farms.”

In the alternative, the applicant had made a s.41 application, asking that the FTT treat him as eligible, even if he failed to satisfy the livelihood condition, on the basis that he satisfied it to a material extent. It was the applicant’s case that the respective contributions to his livelihood, from the arable enterprise and the contracting business, were 80:20; alternatively, that the appropriate split was 70:30, on the basis that he spent 70% of his time on the arable enterprise and 30% on the contracting business. The landlord argued that a better approach was to assess the relative profitability of the arable and contracting enterprises in each year, and to apportion the qualifying and non-qualifying elements accordingly.

Although the FTT decided that the applicant was eligible, it went on to consider his alternative case under s.41.  On that, the FTT decided that the correct split was 70:30, which would not have been sufficient for the applicant to satisfy the livelihood condition to a material extent, but the FTT also said that if it had adopted an 80:20 split, that would have been sufficient for the s.41 application to succeed.

The landlord appealed the FTT’s decision that the contracting enterprise was agricultural work on the holding.

The Upper Tribunal’s decision on appeal

The Upper Tribunal rejected the FTT’s interpretation of the livelihood condition by the FTT, saying:

“The proper focus is not on where the business is conducted from, or what connection exists between the holding and different parts of the business; the correct focus is on where the applicant undertakes his agricultural work. Having identified what agricultural work the applicant did on the holding, it is for the FTT to determine what proportion of his livelihood, what he spent or consumed in money or benefits in kind, was derived from that work. That is not the approach that was taken by the FTT.”

It determined that the FTT’s primary conclusion was based on a misunderstanding of the law and could not stand. The FTT had been wrong to find that the applicant was fully eligible.

The Upper Tribunal noted that its preferred approach to the livelihood condition was consistent with s.36(6), which had been introduced by the TRIG reforms in 2006.  The reforms entitled an applicant, with a landlord’s prior written consent, to treat livelihood derived from diversified activities as qualifying, for the purpose of satisfying the livelihood condition. The wording of s.36(6)(a) made it clear that not all agricultural work carried out “from the holding” was qualifying work. There was thus a clear distinction between agricultural work carried out on the holding (which would qualify) and agricultural work carried out from the holding (which would not qualify, unless the landlord had given its written consent).

The Upper Tribunal then went on to consider the FTT’s approach to s.41.  It reviewed the existing authorities on s.41, reiterating that the question of whether an applicant satisfies the livelihood condition to a material extent is not simply a question of law, but is in very large part a question of fact.  The evaluation of the factual position was best undertaken by the lower tribunal, which had the benefit of having heard all of the evidence at trial.

However, from the reasons given in the FTT’s decision, the Upper Tribunal was unable properly to understand the basis on which the FTT had decided that a 70:30 split was the appropriate one. If in arriving at that decision, the FTT had excluded matters which it appeared to consider relevant, and had done so without a good reason, that would undermine the coherence of its decision.  The FTT’s decision on s.41 had not been explained in a way which enabled the Upper Tribunal to understand its meaning, but the Upper Tribunal was reluctant to adopt a “best guess” at what the FTT had meant.

The Upper Tribunal therefore decided to set aside the FTT’s decision, on the basis that the FTT had been wrong to find that the applicant was eligible, but to remit the s.41 application back to the FTT, so that it could give that matter further consideration.

For further information, please contact Fred Harrison-James  

26 October 2026