An agricultural tenancy, or lease, of vineyard land is different to a tenancy of commercial properties such as offices. They are not just different in how they are written, but also what laws apply to them. There are also different types of agricultural tenancies which are broadly split into two camps depending on when they were granted:
- Tenancies granted before 1st September 1995 (called AHA 1986 tenancies after the legislation that applies to them, the Agricultural Holdings Act 1986)
- Tenancies granted on or after 1st September 1995 (called Farm Business Tenancies or FBT).
Many of the AHA 1986 tenancies still exist. This legislation provides protection for tenants who have a long-term investment in their agricultural property and gives them sufficient time for e.g. their vines to grow and make the tenancy a worthwhile endeavour.
If you are being granted a new tenancy now you will be granted a Farm Business Tenancy. AHA 1986 tenancies and FBTs operate in different ways so it is important to understand which tenancy you have.
If you have one of the above tenancies, there are a few pitfalls that you should be aware of:
Pitfall 1 – if you have an AHA 1986 tenancy that began before 12 July 1984
The 12 July 1984 date is critical. These tenancies are unique as they give the tenant succession rights. On the death or retirement of a tenant, a close relative (such as a spouse or child) can apply for a new tenancy of the land (on the basis that certain criteria are met e.g. the new tenant’s principal source of livelihood comes from the property).
This succession can pass twice so the first tenant’s child could continue the tenancy and afterwards their child could also continue the tenancy. Assuming each tenant remains for 50 years, you could see a tenancy that spans three generations of a family over 150 years. These succession rights mean these tenancies will be around for many years to come.
Surprisingly these tenancies can be orally agreed or in writing. The problem arises when the agreement has been forgotten or is vague. Unless there is an express clause that stops the tenant from selling their tenancy, the tenant can sell freely – and there is a danger that the tenant can sell to a company. As companies cannot die or retire the succession rights mean this tenancy can last forever.
If you are a landlord you can skirt this problem by quickly serving a section 6 notice (this notice says you want to clarify the terms of the tenancy). After the landlord serves this notice, the tenant cannot sell their lease until the terms of the tenancy are agreed. The parties can then agree the conditions of selling the tenancy on.
Tenancies granted between July 1984 and September 1995 do not have these succession rights (there are a few exceptions) and generally last one lifetime.
Pitfall 2 – if you have a FBT granted after 1 September 1995
FBTs can also be in writing or by oral agreement. The law doesn’t really get involved with FBTs and the parties are left to agree terms themselves. This does mean though that if you don’t have a clause that covers a particular point then you don’t have the safety net of the law stepping in to imply a clause for you. If it is not covered then you will need to negotiate that point. An example is if you are a tenant and want to build a new tasting room but that is not covered in your agreement. You would not be allowed to build anything without your landlord agreeing.
The main takeaway is not to rely on oral agreements or vague tenancy agreements. If you are agreeing a new lease it is important to have a robust tenancy agreement that covers all bases. Not only does this give certainty and means both sides have thought through all their concerns, but it also saves headaches and legal costs further down the line.
This article does not constitute legal advice