Farm Business Tenancies – Horses
When formulating a Farm Business Tenancy (FBT) Agreement under the Agricultural Tenancies Act 1995, there are certain conditions as set out within Section 1 that must be complied with.
Section 1 details that a tenancy will be a FBT if it meets the “business conditions” together with either the “agricultural condition” or the “notice conditions”.
We are often asked whether the keeping of horses on the holding meets the conditions above. Horses, unless they are kept for consumption or in connection with the farming of the holding, are not livestock under the definition within Section 38. “Grazing” is an independent agricultural activity under the Agricultural Holdings Act 1986, regardless of the type of animal that is grazing the land. As such grazing is farming.
If the grazing of horses is supporting a trade or business, the business conditions are complied with. If, however, the horses are kept for recreational purposes the business conditions are not met and the tenancy would then be governed by common law.
If the grazing of the horses supports a non-agricultural business, off the holding, for example a stud farm or riding school, then the only activity being carried out on the subject holding is grazing and as such it is wholly agricultural and the arrangement would be governed as an FBT.
The set-up and structure of non-agricultural businesses including the start date and its location on or off the holding can affect whether the activity is partly or wholly agricultural.
It may be that the arrangement is not primarily agricultural, and it is in-fact commercial in nature in which case the agreement could fall within the parameters of the Landlord and Tenant Act which could in-fact give the tenant greater security.
Kathryn Williams is director and RICS registered valuer at Davis Meade Property Consultants
