Dangers of a farm tenancy agreement


29 October 2014

By Keri Constantatou

A farm tenancy agreement is vitally important when a farmer is to use a landowners land for agricultural purposes. However, farmers have been urged to seek professional help when signing, as such agreements can often contain onerous terms that the tenant had not contemplated.

Below are just some examples of the points that should be considered when reviewing their farm tenancy agreement.

Break clauses: Break clauses can be included in a fixed terms lease allowing either the Landlord or Tenant to terminate the lease early. Such clauses may arise on specific dates or may be exercisable at any time during the term on a rolling basis.

Tenants that are unaware of such agreements could expend large amounts of money on a property in the belief that the expenditure can be warranted when taking into consideration the length of their tenancy agreement, only to find that the Landlord can end the agreement much earlier than anticipated.

End of the term:  Consideration should also be given to the end of the term. As discussed above, tenant farmers can often spend large amounts of money on the property which can significantly increase its value. Provision should be made that upon leaving the property, the tenant farmer is able to benefit in some form from this increase in value that the Landlord has gained.

Rent: clauses for rent payments should also be given consideration. For instance the rent could be linked to the retail price index, causing rent payments that were much higher than the tenant anticipated.

Restrictions: There are a variety of restrictions and other clauses that can occur in a farm tenancy agreement that can be detrimental to the activities and profits of the tenant farmer with such clauses having to be decided on a case by case basis.

Whilst this article highlights the problems that tenancy agreements may cause for tenant farmers, it should also be borne in mind that Landlords may also be on the receiving end of harsh and onerous terms.

The above is not legal advice; it is intended to provide information of general interest about current legal issues.

If you are currently looking to enter into a farm tenancy agreement, please do not hesitate to contact Gepp & Sons’ Rural Services team – contact Edward Worthy on 01245 493939 or worthye@gepp.co.uk