Business Clinic: Informal grazing agreement – what are our rights?

Whether you have a legal, tax, insurance, management or land issue, Farmers Weekly’s Business Clinic experts can help.

Here, Duncan Sigournay, partner and head of agriculture at Thrings, advises on the common issue of long-standing unwritten grazing arrangements and their implications.

Q. My uncle has rented a seven-acre field for the past 38 years, we have grazed it and made hay on it. We have carried out all the maintenance during this time.

He has no formal agreement. As you can imagine, 40 years ago it was agreed with a handshake. Sadly the owner of the land has passed away and all his property is now going through probate.

We wondered what, if any, rights we or whoever inherits have? We would ultimately like to buy the field.

A. When you say your uncle has rented the field I presume you mean he has had exclusive use of the land for that entire period without any interruption or interference from the landlord. Likewise I also presume you have been paying rent for that entire period.

See also: Business Clinic – are undocumented grass lets a problem?

I would stress that the payment of rent is not a pre-requisite to the existence of a tenancy. However the payment of rent does make it harder for the landlord to argue against there being a tenancy.

Similarly the lack of a formal agreement does not in itself undermine a tenancy claim, although it can lead to issues over the precise terms of the arrangement.

On the basis that the tenancy started in approximately 1980, the agreement would appear to be a protected tenancy under the Agricultural Holdings Act 1986, which affords tenants significant security by placing certain restrictions on landlords in relation to the service of notices to quit.

The other point to note is that the 1986 Act is very comprehensive; it imports by default a number of terms including in relation to rent reviews, compensation, notice periods and repairing obligations.

In addition, one must not overlook the fact that the tenancy will potentially have succession rights that entitle a “close relative” to apply for a succession tenancy either upon the death of the tenant or upon their retirement.

There is no automatic entitlement to a succession tenancy, merely an entitlement to apply for such a tenancy. An applicant will only be granted a succession tenancy if they can show that they satisfy both the eligibility and suitability criteria. 

The good news is that your uncle’s tenancy will be largely unaffected by the death of the landlord (the tenancy survives and your uncle’s rights remain unaffected).

The personal representatives of the deceased landlord should notify you of any change in payment arrangements and, indeed, of any subsequent sale or disposal of the land.

The position is very different on the death of a tenant, since that potentially provides the landlord with an opportunity to regain possession.

Regarding your objective ultimately to buy the land, the existence of the tenancy should help, not least as it is likely to deter buyers as well as suppress the price as it will have to be sold with the burden of the tenancy.

Potential buyers will also be aware that the rent achievable under such tenancies is relatively modest compared with rent under more modern farm business tenancies. As such, your uncle is the only buyer who can unlock the vacant possession value.

Having said that, your uncle may take the view that he is happy paying the modest rent and remain as a tenant rather buying it. Clearly ownership would give him greater certainty for the future but it would also bring greater responsibility.

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