How do I end a Farm Business Tenancy?


05 January 2022

One of the most frequent questions that I am asked about tenancies by clients is “how do I end a Farm Business Tenancy (FBT)?”. We would usually start that same conversation with the more basic question of “what is a FBT?”, and so this article will hopefully help answer the very basics of those two questions!

What is a Farm Business Tenancy (FBT)?

This sounds as though it should be a short answer but I’m afraid it’s not. 

First, it’s important to remember that your agreement need not be in writing. 

You will very probably have a FBT if you have an agreement with someone who occupies your land and:

  1. that amounts to a lease (usually that means someone has the right to exclude all other people); and
  2. it is an agreement that allows land to be used for the purpose of a business and either the land is used for farming throughout the lifetime of the agreement or, failing that, there were specific notices served between the parties before the agreement began. 

Difficulties often arise with even this seemingly simple definition. Remember that what is an agricultural use of the land can be a tricky point (and isn’t just a straightforward common sense interpretation of the word). You also have to be sure whether the agreement you have is really a lease rather than some form of licence. And of course you might have an old form of tenancy agreement known as an Agricultural Holdings Act (AHA) tenancy. AHA tenancies often have succession rights attached to them. Importantly, FBTs do not have succession rights.

So you’ve got an FBT and you’d like to bring it to an end – how do you do that?

1. Just wait

This only works if you have got a written FBT for a term of less than two years. If this is the case then the FBT will just come to an end on the last day of the term. The tenant just has to leave, and the landlord has to make sure that the tenant does indeed go.
If the original term was for more than two years and no notice to end the FBT is served by either landlord or tenant then the FBT will just roll on year-to-year (usually) until someone does serve a notice to end it. I recently had a telephone conversation with a client whose tenant hadn’t left on the last day of a five-year FBT but he had very much wanted him to! He was dismayed to discover that he needed to wait another year to be able to get his tenant to leave so it’s always worth keeping a close eye on what the dates are in any agreement – especially with an eye to the future use you might have in mind for the land.

2. Serving up a notice

If your original FBT is for longer than two years or runs from year-to-year then to end it the landlord would need to serve a notice to quit. This must be in writing, for a minimum of 12 months’ notice and expire at the end of a year of the tenancy. It is not possible to agree a shorter period for that notice if your original FBT was for more than two years so be careful when it comes to notices to quit! It is easy to make a mistake when serving a notice to quit and end up with a delay before the tenant is obliged to leave the holding. I recommend that you contact us and ask for help before serving a notice yourself. 

3. Maybe make a break for it?

An FBT might contain what is known as a ‘break clause’. This is a provision in a tenancy which enables either the landlord or the tenant (or both) to end the tenancy early. The length of notice which must be given will depend on how long your original FBT was for as well as the terms of the agreement. Again, this is one to bring to us as it can be tricky to make sure you operate a break properly and at the right time. 

4. Let’s just agree!

An FBT can be surrendered up if both parties agree. This is when the tenant and the landlord simply agree to bring the FBT to an end. The timing of a surrender and whether either party pays any consideration to the other will depend on the commercial circumstances in each case. It’s usually best to document any surrender and, like with all of the other points above, we can help with this.
 

The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at January 2022.

Author

Esther Round

Senior Associate

+44 (0)1603 756432

+44 (0)7507 780389

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