Making improvements under an agricultural tenancy

If the owner consents to the improvements, the tenant and owner can reach an agreement about compensation for the tenant. There is a general obligation to pay fair compensation for improvements.

Improvements that a tenant may make

The Agricultural Tenancies Act 1990 list of improvements that a tenant can make without the owner’s consent is:

• drainage
• making or improving necessary roads or bridges
• clearing and removing stumps and logs
• destroying noxious animals
• destroying pests (within the meaning of the Rural Lands Protection Act 1998)
• making permanent subdivision fences
• sowing pastures
• applying fertilisers, liming materials and trace element products (within the meaning of the Fertilisers Act 1985)
• repairs to buildings (notice must be given to the owner)
• repairs to or re-erection of buildings to meet the requirements of the Food Act 2003 or other laws
• repairs to and the cleaning of silt from wells, bores, dams, reservoirs and ground tanks.

The NSW Civil and Administrative Tribunal (Tribunal) can also approve tenants’ improvements if they are determined to be suitable and desirable.

Improvements made by owners

There are also certain situations where an owner can make improvements with or without the tenant’s consent. If the tenant consents to the improvements, both parties can reach an agreement about compensation to the owner. The compensation can be fixed by agreement, but a tenant cannot be made to pay an unfair amount.

The owner is only able to make improvements without the tenant’s consent if the Tribunal has determined the improvement is suitable and desirable in the circumstances.

Compensation for improvements and other matters

Both tenants and owners can be eligible for compensation.

• If a tenant makes improvements to a farm, compensation is based on the value of the improvement to an incoming tenant.
• If an owner makes improvements to a farm, compensation is based on the value of the improvement to the current tenant.
• The tenant is entitled to compensation where there has been a general improvement to the farm due to the adoption of better farm management practices by the tenant.
• The owner is entitled to compensation for any deterioration of the farm because the tenant didn’t manage the farm properly.
• The tenant is entitled to compensation for any products they stored and left on the farm at the end of the tenancy, such as grain, hay, silage, fertiliser or any other useful commodity.
• The tenant is also entitled to compensation for fixtures they have installed if they do not remove the fixtures at the end of the tenancy.