Things to chew over with grazing licences

It is worth giving consideration to the different types of tenancies that a landlord can have on the land. Here’s a brief summary of the different types and some things to think about.

Gone are the days now that the landlord would be in danger of creating a secure tenancy by granting a licence with a term of 365 days. A secure tenancy would be governed by the Agricultural Holdings Act 1986 and would give, depending on when it was granted, either lifetime security for the tenant or succession rights. While there are ways to terminate these tenancies, it is typically very difficult to get vacant possession.

Since 1995, we now have Farm Business Tenancies, which are governed by the Agricultural Tenancies Act 1995. These do not create security of tenure and there is much more flexibility for agreeing length of term and terms of the agreement.

Tenancies can be granted for less than a year, year to year, less than two years and over two years. Obtaining vacant possession is dependent on the length of the term. For a tenancy with a term of under two years, the tenancy will just expire on the last day of the term without the need for a notice to quit.

It is worth keeping an eye on the expiry date because if the tenant stays on the land after the end of the term and the landlord accepts rent then a further tenancy is likely to have been created. For tenancies with a term of year to year and of over two years then there is a requirement to serve a notice to quit in order to end the tenancy.

Grazing and mowing licences are typically a seasonal contract to allow the right to graze stock or take the cuts of grass. If there is a notice provision within the licence it is usually a month’s notice.

There are a number of matters to consider when letting out land ranging from the type of land, what a tenant would want to use the land for, the owner's tax situation and tax planning, as well as claiming of any agricultural subsidies.

Rachel Kirk, Fisher German