What's happening on the ground is crucial with legal tenure
Whether you have a written agreement or not, the legal tenure of agricultural land is actually determined by what’s going on, on the ground.
So, you’d set up a grazing and mowing licence years ago and religiously re-print it each year, changing the dates for each new season, you retain the control of the land and can obtain vacant possession at the end of each season, right?
An early cut of silage is followed by aftermath grazing but over time the cattle, which used to come off the land over winter, have been replaced by sheep pretty much all year round. The farmer cuts the hedges and you let them apply the fertiliser as they have the farmyard manure, they know what they need and to be honest it’s just easier to let them get on with it. But your grazier has just become your annual farm business tenant, requiring a minimum 12 months’ notice to quit.
Or, perhaps you have a gentleman’s agreement on that ground away from the main holding. It wasn’t THAT long ago it started, maybe 10 to 15 years, but time flies and that 10 to15 years is actually 25 years and you don’t have a Farm Business Tenant with 12 months’ notice to quit, but a lifetime tenant under the Agricultural Holdings Act.
Maybe you’ve been approached by your existing agricultural tenant for the next generation to succeed. As a starting point, providing the proposed new tenant meets the criteria, succession is available on the same terms as the original tenancy. However this does not prevent making amendments by mutual agreement, and it may well be a good opportunity to update relevant terms or even consider a new long term Farm Business Tenancy as an alternative, which could provide adequate security for the tenant and tax benefits for the landlord.
New Farm Business Tenancies for this autumn are seeing terms allowing the tenant the flexibility to terminate at various key Brexit event dates, if the eventual circumstances of leaving the European Union are not favourable.
Rental calculation clauses reflect the proposed de-linking of farm subsidy payments during the fixed term, which provides a fair deal to the farmer and a realistic and sustainable position for the landlord.
When reviewing land occupation and management, it’s important to check the facts, not just the paperwork (if there is any) and make sure your agreements are worth the paper they’re written on!
Melanie Holt is a rural chartered surveyor, agricultural valuer and planning consultant at Moule & Co.
