Farm Business Tenancy Agreement (Longer Term) With Buildings
This Farm Business Tenancy (FBT) Agreement (Longer Term) With Buildings allows a Landlord to let farming land that includes buildings to a tenant for a term exceeding two years. The lease contains detailed provisions setting out the Tenant’s responsibilities, including in relation to the Rural Payments Agency (formerly known aa the Basic Payments Scheme) and delinked payments and entitlements affecting the land. There are rent review provisions.
The repair covenants in this FBT incorporate the provisions of The Agriculture (Model Clauses for Fixed Equipment) (England) Regulations 2015 which set out the respective obligations of the Landlord and Tenant. Alternatively, the parties can draft their own bespoke provisions.
Before entering into this lease, the Landlord and Tenant should exchange notices confirming that the agreement is to be and remain a Farm Business Tenancy. See the Landlord’s FBT Notice and the Tenant’s FBT Notice templates.
To be a Farm Business Tenancy as defined in the Agricultural Tenancies Act 1995, the land must be farmed for the purposes of a trade or business during the term of the lease. The character of the tenancy must be primarily or wholly agricultural. Agricultural includes growing crops and rearing animals for farm work or sale.
This lease has Land Registry Prescribed Clauses at the beginning. If the lease has a term of more than 7 years these clauses must be completed otherwise the Tenant will encounter problems when they try to register the lease at the Land Registry. Leases with terms of more than 7 years are subject to compulsory registration at the Land Registry.
The Prescribed Clauses are not strictly necessary for a lease with a term 7 years or less but it is advisable to use them as they helpfully record the main terms.
Prescribed Clause LR3 includes a field for an optional Guarantor. If there is no Guarantor, this field can be left blank and Clause 12 (Guarantor’s Covenant) should be deleted.
Prescribed Clause LR4 makes reference to a plan. A lease with a term of 7 years or less does not necessarily need to include a plan but it is strongly recommended that a plan is included so that the extent of the Holding (the property that is being leased to the Tenant) is clear. A lease with a term of more than 7 years must contain a plan unless the letting is of the whole of the property comprised in the title number(s) referred to as Prescribed Clause LR2
The plan should as a minimum show the Holding edged red. The plan may also need to show the Landlord’s Neighbouring Property edged blue and show with green edging the areas (if any) over which rights are granted to the Tenant in the First Schedule to the lease if these areas cannot be adequately described in words.
In Clause 2 the Landlord grants the lease to the Tenant. The Tenant must pay the Rent.
Clause 3 contains the Tenant’s covenants. These cover matters such as payment of utilities charges, the Landlord’s rights of entry, use and maintenance of the land, alterations, alienation (a prohibition on assignment and underletting), indemnity and payment of Landlord’s costs.
Clause 4 contains the Landlord’s covenant for quiet enjoyment (the Tenant’s right to use the Holding without interference from the Landlord) and a covenant to insure the buildings on the Holding.
Clause 5 contains repairing covenants.
Clause 6 relates to the Rural Payments Agency ( formerly known as the Basic Payment Scheme)under the Common Agricultural Policy.
Clause 7 states that notices have been exchanged under Section 1(4) of the Agricultural Tenancies Act 1995 confirming that the tenancy is a Farm Business Tenancy.
Clause 8 contains various standard lease clauses including forfeiture.
Clause 9 deals with service of notices by the Landlord and Tenant.
Clauses 10 and 11 contain optional break clauses (termination rights) for the Landlord and Tenant. These clauses should be amended or deleted as appropriate. Note that where a Farm Business Tenancy has a fixed term of more than two years, a break notice must give at least 12 months’ notice. This is reflected in the definition of Break Date.
The Tenant’s break option is conditional on rent have been paid up to date, the tenant giving up possession of the Holding (i.e. vacating) and the tenant not leaving any underleases in place. If these conditions are not satisfied, the Tenant’s break will not be effective and the lease will continue. If the Tenant is in breach of other terms of the lease, the break will be effective but the Landlord will retain the right to sue the Tenant for any breaches of the lease.
Clause 12 contains optional Guarantor covenants.
Clauses 13 and 14 deal with dispute resolution and jurisdiction respectively.
The lease must be executed as a deed. Various types of execution clauses are included and the parties should choose the appropriate clauses.
The First Schedule sets out the rights that the Tenant has to use other property. These rights should be checked carefully and amended or deleted to suit the circumstances.
The Second Schedule sets out the rights that the Landlord has in respect of the Holding, including rights of entry and the right to carry out work to neighbouring property. If any additional rights are required, they should be added to the Second Schedule.
Optional phrases/clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.
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