Updated: Aug 17, 2024
On 8 February 2023, the Agricultural Leases (Reletting) (Amendment) Act, 2022 came into force, bringing significant changes to the Agricultural Leases (Reletting Act) (Chapter 199), which has at times been described as an outdated law.
The principal change brought about by this Act is the possibility for landlords to request a rent increase by opening a court case before the Rural Leases Control Board. This increase cannot be more than 1.5% per year of the value of the agricultural land meaning that the Board can award less than this 1.5% if it deems fit. Therefore, if for example a piece of land is valued at EUR 10,000, the maximum rent that may be awarded by the Board is 1.5% x EUR 10,000 = EUR 150 per year.
However, this increase is not based on the value of the land as free and unencumbered on the open market. Rather, it is based on the value of the land as agricultural land used for agricultural purposes. An arbitrary formula to determine the agricultural value of the land in terms of the law was also introduced, establishing the base rate per tumolo at EUR 2,570. This is the lowest value that the land can be attributed as the law sets a number of guidelines that must be followed when determining the value of the land as "agricultural land".
If the land includes a farmhouse that the farmer uses as his primary residence, the rent for the farmhouse alone can be revised annually by up to 2% of the free and unencumbered market value. Tenants of lands including a farmhouse used as their sole residence, will be given the possibility by the Board to terminate the lease of the farmhouse but retain the lease of the land at the rent established by the Board.
Landlords can request the rent increase by filing an application before the Rural Leases Control Board. The Board will consider four factors when calculating the increase:
The value of the land as “agricultural land”
The means of the farmer
The conditions and circumstances affecting the land
Any burden that is unfair to the lessor
Whilst these amendments are a step in the right direction, it would appear that they shy away from addressing the core issues. However, it appears to be in the landlords’ best interests to avail themselves of this ordinary remedy to avoid jeopardising their judicial position and rights in the future.
For further information on agricultural leases and the new amendments, feel free to contact us on info@amaadvocates.com.