Farm business tenancy agreement
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About this document
This document creates a specific type of lease for a property where the tenant is in a farming based business.
The duration of the contract can be between 2 years and 60 years with regular rent reviews. Note that we also provide a similar document specifically for terms of less than two years (see below).
This document contains a large choice of 62 positive obligations and restrictions on the tenant to ensure that the land is used as the landlord wishes.
A FBT agreement is suitable in circumstances where:
- all or part of the land is farmed for trade or business throughout the tenancy
- the landlord and the tenant have exchanged notices at the beginning of the tenancy saying that the agreement is and will remain a farm business tenancy
- the circumstances of occupation suggest that the character of the tenancy is primarily agricultural
Definition of an agricultural business
An agricultural business is one that uses all or part of the property to grow plants (crops) or rear animals with a view to sale.
The scale on which this is done is not important to the classification of the agreement: the same tenancy laws apply whether the property is a commercial dairy farm with hundreds of acres of pasture, or 10 metres of poly-tunnel under which a prize garden plant is cultivated.
Farming encompasses all sorts of businesses, from those growing crops in fields (including grass, hay or silage), to those where the crops are grown in an orchard or under glass (e.g. rhubarb or mushrooms), to those where the "crop" is an animal (e.g. lamb farming) or a product derived from animals (e.g. milk). Keeping animals (e.g. grazing horses on the land) in itself is not an agricultural business but horse breeding is. A garden centre is not an agricultural business, but plant growing is.
Change of use may be anticipated and will not necessarily disqualify the agreement, if notice has been served. The Act does not make clear how far diversification may go. However, it has now become clear that peripheral or additional business operations will not prevent a tenancy from being an FBT, for example, operation of a farm shop or a camp site. In any case, any diversification of use other than farming is likely to require the consent of the landlord.
The following would all be likely to be recognised as farming businesses:
- a wheat farmer renting additional land
- a dairy farmer renting the land and outbuildings
- someone grazing animals on the land
- someone running a horse stud as a 'hobby' business and using the land or buildings for keeping horses
- a brewer who grows the apples on the rented land and makes the cider in an outbuilding
- a plant grower who sells his plants from a building on the site
- a mushroom grower using one of the outbuildings to develop a new breed for commercial sale
If you are unsure which sort of lease or licence you need, you wish to read further about choosing between types of lease for agricultural property. To summarise it here:
What is important is how the land and buildings are used, not the nature of them.
If the use is one of non-agricultural business, such as tractor repair and storage or feed merchanting, use one of our agricultural leases instead.
For shorter terms of a year or less, using one of our agricultural land licences might more appropriate.
We also offer a shorter version of this agreement for periods under 2 years.
The law relating to this document
This document complies with the Agricultural Tenancies Act 1995 and the 2006 Agricultural Tenancies Order.
It is the legal requirement under section 1(4) of the Agricultural Tenancies Act 1995 that landlord and tenant must acknowledge that each has received a written notice from the other to confirm that they are going to form a FBT. We have included the copy of this notice for your convenience with this document.
Features and contents
This lease comes with a menu of over 62 options to empower or restrict the tenant. The terms have been carefully considered to protect the landlord's interests while remaining fair to the tenant.
The document has 23 sections and 3 schedules, which include:
- creation of the tenancy
- rent and other payments: including further payments and interest on late payments
- rent review
- tenant's positive obligations and restrictions: a menu of 62 items
- milk quota: ensures no transfer from either party at any time
- tenant may not assign the lease or sublet the property
- redundant buildings: not required to be maintained
- tenant's fixtures
- insurance: choice for the landlord to be responsible, or for the tenant to be responsible
- access for the landlord
- tenant indemnifies the landlord
- termination: including notice period, and events at and after termination
- guarantor: essential if the tenant is a company
- other matters
- schedule 1: rights reserved
- schedule 2: redundant buildings
- schedule 3: tenant's incoming fixtures
Note that if the term of your lease is for more than seven years, the document must be registered with the Land Registry.
We provide prescribed lease clauses (PLCs) for long term leases free of charge for download here: prescribed lease clauses. There are instructions on how to add these to your lease within the document. There is no need to use these if your intended term is seven years or shorter.
This document was written by a solicitor for Net Lawman. It complies with current English law.
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