Farm Business Tenancies – What Landlords Need To Know

June 9, 2009 - PRLog -- “Much landlord and tenant law is complex and hard to understand. The rules relating to agricultural tenancies could be regulated by one of two acts depending on the start date of the tenancy so it makes good business sense for landlords to seek specific agricultural legal advice as there are potential pitfalls for the unwary,”
says Alistair Millar, partner at Tallents Solicitors in Southwell.
The Agricultural Tenancies Act 1995 ("the Act") introduced the concept of ‘Farm Business Tenancy’ to replace the old style agricultural holding. The Act was introduced to ensure that the relationship between landlord and tenant would be governed by the agreement between them.
Says Alistair,
“Prior to the introduction of this Act all tenancies were governed by the Agricultural Holdings Act 1986 under which tenants enjoyed extensive security of tenure rights and rights of compensation upon quitting of the tenancy. Although this new Act takes precedence landlords should note that the 1986 Act will still continue to have practical implications for some time into the future.
“It is also important to understand that some types of tenancy can be within the Act even if the land is not used for what one might normally be considered to be "agriculture". That word is given a particular meaning by the Act and borderline cases can arise which will require special attention.”

So, what is a farm business tenancy? Certain qualifying conditions must be met in order for a tenancy to come within the scope of the Act:
•   At least part of the tenanted land must be ‘farmed for the purposes of a trade or business’ throughout the life of the tenancy and either;
•   Provided that the tenancy is primarily agricultural to start with, the parties can exchange notices, before the tenancy begins, confirming their intention that the tenancy will remain a farm business tenancy throughout, or;
•   If notices are not exchanged before the start of the tenancy, the question of whether it is a farm business tenancy will depend on whether the character of the tenancy is "primarily or wholly agricultural".
Alistair comments,
“This Act will allow tenants to diversify away from agriculture (perhaps by opening a farm shop or running a caravan site, provided that the tenancy agreement permits this) without calling into question the nature of the tenancy.
“Also, exchanging notices before the tenancy begins will help to ensure that the tenancy remains a farm business tenancy even if during the course of the agreement the main use made of the holding ceases to be agricultural.”  

There are four key areas of the Act that landlords should be aware of: term of agreement and notices to quit; rent and review; compensation for tenant's improvements and disputes procedures.  These are all complex areas of the law and Tallents has agricultural legal specialists who can help landlords understand these fully.

Concludes Alistair,
“The intending landlord of agricultural land is now placed in a very favourable position and if properly advised can take steps to maximise the return on his investment in ways which the previous legislation did not allow.”

For more information, contact Tallents


3 Middlegate, Newark, 01636 671881
2 Westgate, Southwell, 01636 813411
28A Westgate, Mansfield, 01623 666700

www.tallents.co.uk


ABOUT TALLENTS

Established in 1774 and with offices in Newark, Mansfield and Southwell, Tallents Solicitors services the legal needs of private individuals, company and commercial clients and farmers in North Nottinghamshire and Lincolnshire.

We still offer a personal service to our clients and our size and structure ensures that partners are never remote from our clients. We provide a full range of legal services and our expertise covers all areas of law including:

Agricultural law, criminal law, commercial and domestic property transactions, inheritance tax planning, trust and estate administration, wills and probate, commercial and general litigation, employment law, company and commercial law, intellectual property, matrimonial and family law, personal injury claims and children issues.

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