Farm Business Tenancy
If you wish to rent a farm for the purpose of carrying out business as a farmer then you will need to enter a farm business tenancy for the particular land in question.
What is meant by a Farm Business Tenancy?
In order for a business tenancy to be termed a farm business tenancy under the Agricultural Tenancies Act 1995 one of the following qualification criteria must be met:
- Part of the tenanted land must be “farmed for the purposes of a trade or business” and this must be throughout the life of the tenancy meaning it cannot simply be for a short period of time during the tenancy.
- If it is the case that the tenancy is primarily agricultural in the first place the parties entering into the tenancy can exchange notices prior to the commencement of the tenancy stating that their intention that the tenancy will remain a farm business tenancy for the entire duration.
- The second option is often the preferable route as it will enable the tenants to diversify away from agriculture with the tenancy remaining as a farm business tenancy even in the case when the main use of the land ceases to be agricultural.
- If these notices are not exchanged prior to the commencement of the tenancy the question of whether the tenancy is in fact a farm business tenancy will depend on whether the character of the tenancy is “primary or wholly agricultural”.
- There is therefore more scope to enter into other forms of business if notices are exchanged prior to the commencement of the tenancy.
- Whether the land continues to be farmed will depend upon the circumstances of the individual case with a variety of factors being taken into account as there is no definition found within the Act as to how far farmers can go with diversification for the tenancy to remain a farm business tenancy.
- If it has been found that a tenancy is no longer primary or wholly agricultural then it will cease to be governed by the Agricultural Tenancies Act and will be regarded as a standard business tenancy under the Landlord and Tenant Act 1954.
For more information on:
- How long with a farm business tenancy last?
- Amount of rent required to be paid
- Will the rent I pay remain fixed during the term of the tenancy?
- The Tenancy
- What happens if I wish to terminate the tenancy?
- What happens if both parties wish the tenancy to continue?
- Can I insert a break clause?
- As a tenant what happens if I have improved the land during my tenancy?
- What is meant by intangible advantages?