Agricultural Landlords and Tenants
New Documents for Agricultural Landlords and Tenants
The Property Folder continues to expand, this month with the addition of Farm Business Tenancy Agreement templates and associated forms and notices. The new documents will be of interest to both landlords and tenants of agricultural land.
What is a Farm Business Tenancy?
Under the Agricultural Tenancies Act 1995, a tenancy is a Farm Business Tenancy (FBT) if:
- The land is farmed for the purposes of a trade or business during the term of the tenancy; and
- The character of the tenancy is primarily or wholly agricultural.
Only if a tenancy fulfils all these criteria will it be a FBT. Farmed means carrying on agricultural activities (“agricultural” is defined below). The trade or business requirement means that leases granted to tenants who farm only as a hobby or for their own consumption cannot be FBTs. Agricultural includes growing crops and rearing animals for farm work or sale. Rearing animals for other purposes, e.g., horses for riding, is not an agricultural use.
Non-FBT Lettings of Bare Land
If the proposed letting of bare land cannot be an FBT, as it does not satisfy the requirements above, another type of tenancy agreement, lease or licence should be used. Some options are:
- A business lease. If the land is being used for business purposes but the use is not classed as agricultural, consider granting a business tenancy. To avoid the tenant acquiring security of tenure, the landlord may wish to contract the lease out of the security of tenure provisions of the Landlord and Tenant Act 1954.
- A common law tenancy. If the land is let for private purposes, e.g. grazing a family horse or growing vegetables on an allotment, and the tenant has exclusive use of the land, a common law tenancy should be granted. This will not attract security of tenure.
- A grazing licence. If the tenant will be using the land to graze a horse but will not have exclusive use of the land, a grazing licence may be appropriate.
- A short term licence to occupy. If land is being used for a single event, e.g. a fete, or on a regular basis, e.g. for weekly sports practice, a licence to occupy should be granted.
The Bare Land section of our Property Folder contains Farm Business Tenancy Agreements and other lease and licence templates for various uses of bare land, including the uses referred to above. Further documents will be added in the next few months.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.