Our leases and licence agreements cover most situations in which you will want to let agricultural land and property.
Which you should use depends largely on the use of the land, and also the terms of the deal you want. We explain more about each type of document after we help you find the right one.
If you need any help, please ask us.
What type of document you should use
Land law is complicated, having been designed to protect tenants dependent on living from the land from owners who otherwise would have power to dictate terms of occupation. Using the wrong type of document has implications for a landlord on what a tenant may do on the property and the ease with which a contract can be ended. In disputes, the law is more likely to be applied to the circumstances of occupation rather than the title of the legal document.
Grazing
If the person who wishes to use your land will use it for business purposes, such as for grazing a herd of sheep that will be sold for meat then in most circumstances you should use a FBT agreement.
The exception is if he uses the land only for grazing and not for any other purpose, such as breeding, and the horses or livestock will be on the property for less than a year. In that case, a profit à prendre grazing agreement could be used.
In fact, a profit à prendre grazing agreement can be used regardless of whether the grazing is for personal or other benefit - the key is that the only activity that takes place is grazing.
If the person who wishes to use your land is not using it for business, but could use it for purposes other than just grazing (such as storage of vehicles as well), either a licence to occupy or a lease could be used. A licence agreement must be for a short term and the owner keeps responsibility for looking after it, but it gives the user far fewer rights than if he were a tenant under a lease.
Farming and other agricultural business uses
If the land will be farmed to raise livestock or grow a crop - then you must use a farm business tenancy agreement.
Other non-agricultural business use
If the property will be used for non agricultural activities, then you should use an agricultural land lease. It is a standard business property lease for land that includes additional relevant provisions for special care.
Examples of use might be:
- running a paintball business, a camp site or a livery yard
- using buildings to store stock, machinery or vehicles
For very short-term business or non-business use
If you will let someone use the land for a specific purpose for a very short time (less than a couple of months) then an agricultural licence can be used. Most likely, the purpose will be to hold an event requiring the land for only a few days, such as a car boot sale, market, or wedding.
Types of agreement
Profit à prendre grazing agreement
Most of our competitors sell grazing agreements that are agricultural leases which restrict the tenant to using the land for the single purpose of feeding livestock.
Using a lease is fine, but doing so gives the tenant certain rights at the expense of the owner.
For example, the landlord must notify the tenant of his intention to end the grazing lease well in advance and in a certain way.
The Net Lawman grazing agreement is different. It is neither a lease nor a license to occupy. It is known in law as a 'profit à prendre'. It grants a right to buy a crop and to take the crop using animals to graze the land.
The agreement can be used for livestock of any type, including sheep, horses and cows. It is suitable if there is a shed, shelter or barn on the land, but the building must be used for the animals only. The owner must maintain the property.
Because it gives the licensee no rights of occupation, the owner concedes far fewer rights than he or she would do under a grazing lease.
To qualify as a profit à prendre, a single specified crop must be sold (in this case grass) and the collection of the crop must take less than a year. A 9 month contract is often used. No other use is allowed. However, the law is unspecific as to where the line should be drawn.
Farm business tenancy agreements
These tenancies were created under the Agricultural Tenancies Act 1995, and later modified by the 2006 Agricultural Tenancies Order. The law applies only in England and Wales.
A farm business tenancy agreement is lease for a commercial farm. Like a business lease, what matters is not what you call it, but the nature of the arrangement. If you let property to someone for use in his farming business, you create a farm business tenancy.
You can also create this tenancy by mutual agreement - likely to be because the tenant wants the particular protection provided by such a lease.
The parties must sign and exchange copies of a notice before the start of the tenancy that states that both sides intend for the arrangement to be a FBT. Mutual service of this notice is a legal requirement under section 1(4) of the 1995 Act. We have included a copy of this notice for your convenience with these documents.
Definition of a farm business
This is defined in similar terms to what anyone would expect the term to mean. 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 for recreation or as a hobby (e.g. grazing riding horses ) in itself is not an agricultural business but horse breeding is. A garden centre is not an agricultural business, but plant growing is.
The scale of the business is not important: the same tenancy laws apply whether the property is a commercial dairy farm with hundreds of acres of pasture, or ten metres of poly-tunnel under which a prize plants are cultivated for sale to the retail public.
Changes in use of land over the duration of a farm business tenancy
If the circumstances of occupation suggest that the character of the tenancy is primarily agricultural, then it is a FBT.
Change of use may be anticipated. But over a long term, there will inevitably be changes which the parties did not anticipate at the start. A change will not necessarily disqualify the agreement. The law does not make clear how far diversification may go. However, it seems that peripheral or additional business operations will not prevent a tenancy from being a farm business tenancy, 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. If a change is in breach of the lease terms, he can take action.
Example tenants who might use this type of tenancy agreement
- a farmer renting additional property.
- someone grazing animals.
- someone running a horse stud as a 'hobby' business and using the property for keeping horses.
- a brewer who grows hops or apples on the rented land.
- a nurseryman who sells his plants from a building on the site.
- a mushroom grower.
The shorter lease comes with a menu of over 50 options to empower or restrict the tenant. The terms have been carefully considered to protect the owner's interests while remaining fair to the tenant.
The longer lease has 23 sections and 3 schedules, plus over 62 optional covenants. This lease also includes provisions you may require in the long terms but which would be quite unnecessary for a short term occupancy.
Leases where the tenant is a non-agricultural business
These leases can be used to let any sort of property where care of the land is important. The property is most likely to be fields, but could be woodland or moorland, and could include buildings.
One can be used whether the tenant is a private individual or a corporate person. The only circumstances in which they are unsuitable are if the tenant is a farmer (in agricultural business) and the land is in England or Wales.
The use could be varied, from private use for riding or storage of gardening machinery, to other uses, such as running a mountain bike rental shop.
For property in England and Wales, the term of the lease should be at least 6 months and less than 7 years.
These documents include extensive positive obligations on the tenant on how the property should be maintained. We presume that the property being let is of high quality. The obligations should help it remain so.
In England and Wales, the leases are drawn under the Landlord and Tenant Act 1954. Account has also been taken of:
- The Landlord and Tenant (Covenants) Act 1995
- The Regulatory Reform Regulations 2003
In balancing the codes with the law and the interest of the Landlord, we have followed the codes where reasonable, but have preferred his interest, where there may be a difference.
In Scotland, the leases are drawn under common law, providing much more flexibility as to the arrangement.
Key points covered in the leases include:
- rent payment, interest and further payments
- tenant’s use and covenants
- agricultural restrictions on the tenant
- competitions, vehicles and grassland damage
- landlord's access: to view or show prospective lenders or buyers
- condition, repair and maintenance
- transfer and sub-letting
- provision for premature termination - a break clause
- rent review
- guarantor
Licences to occupy
As a land owner, a licence agreement is often a preferable agreement to a lease, largely because the licensee has no security of tenure and therefore the agreement can be ended with very little notice.
In order to avoid the agreement being construed as a tenancy, many owners have let land for less than 365 days, under the supposition that a term of less than a year makes the arrangement a licence. However, since 1995, that is not sound law.
The length of the agreement is indicative, but what matters are the terms of the deal. Any contract that gives exclusive possession either for a particular term of years or regularly from year to year will be deemed to be a tenancy in law.
If the agreement also sets out terms which are usual in a lease (such as that the licensee should maintain the property), the case for it being a lease is even stronger. This applies even if the written agreement is called a licence and the written contract is dressed up to look like a licence agreement.
To make matters worse for the landlord, his “faux” license is likely not to contain provisions that protect his rights in the same way that a proper lease would do, for fear of looking like a lease. So he is stuck with the obligations of a landlord but none of the benefits and fine tuning that a proper lease would have given to him.
Despite all the law about exclusive possession, there are still many occasions when your deal can be arranged through a commercial contract where the terms create what is technically a licence and not a lease.
The key is to make sure that the term is short, that the uses of the property are carefully defined and limited, and that the owner retains access to the property at all times and remains in control of and responsible for services (such as electricity and water) and larger maintenance works.
You can always renew a licence once it expires - on the same or different terms. If you are letting for longer than a year or so, we recommend that you use a lease.
Our agricultural licence agreements cover avoidance of damage by vehicles, numbers of visitors there may be, and the licensee’s obligation to obtain local authority or other permissions (such as for selling alcohol). In all our licence agreements we are looking to protect just one interest - the owner's.
One more small point about a licence - avoid allowing anyone to live on the property. It is always more difficult to remove a person who has established residence than if they have parked their van and gone home. They are a squatter, so you would not have the problems that arise in terminating a residential tenancy - but still best to avoid.
Practical considerations
You should enter into a lease or a licence agreement with your eyes open as to the damage to the surface of the land which can be inflicted by over use and by wet weather. If the licensee is to graze 4 pet sheep on the land, the damage is likely to be very different to that caused by a herd of cows.
If you use a licence agreement or profit à prendre agreement, you can help to protect your land by setting the period of occupation for much less than a year, allowing the field or pasture to recover.
If the land is being grazed, remember that different animals eat different plants. It might be a good idea to alternate the types of livestock allowed on the land so as to keep certain species of plants from overwhelming others. Some animals, particularly horses, also deposit worms, resulting in 'horse-sick' land.
Prescribed lease clauses
If the property is in England or Wales and the term of your lease is longer than seven years, the lease must be registered with the Land Registry.
For that you will need prescribed lease clauses (PLCs), which you can download for free. We include instructions on how to add these to your lease.
There is no need to use these if your intended term is seven years or shorter, or if the property is in Scotland.
