Farm business tenancies

The Agricultural Tenancies Act 1995 (the 1995 Act) applies to most tenancies of agricultural land beginning on or after 1 September 1995, subject to limited exceptions (section 4). Tenancies granted and governed by the 1995 Act are commonly known as farm business tenancies (FBTs).

The 1995 Act substantially deregulated the relationship of the landlord and tenant in respect of agricultural property. The aim was to leave as many issues as possible to be contractually agreed between the parties. A further aim in the deregulation was to simplify the legal code. Compared with the highly regulated statutory framework applied in relation to the Agricultural Holdings Act 1986, the main features of the 1995 Act are:

  • freedom of contract for the parties to negotiate the terms of the tenancy;
  • no minimum term;
  • minimal security of tenure, primarily by way of a requirement of a minimum of 12 months' notice in relation to a fixed-term tenancy of more than 2 years;
  • limited freedom in respect of rent review;
  • almost complete freedom for the tenant to remove the tenant's fixtures;
  • no restrictions on the parties' ability to negotiate compensation, other than in relation to the tenant's improvements;
  • a formal statutory encouragement to use alternative dispute resolution (ADR); and
  • the encouragement of diversification.

This section is maintained by Josie Edwards and Vivienne Williams of Michelmores LLP.