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To Licence or to lease?
- AuthorJames Cornforth
What could be simpler than allowing a friend, neighbour or a third party to use your field for grazing their animals? It is not as straightforward as it may seem and there are a number of different issues to consider, the first of which is whether you are granting a lease or a licence.
A grazing Licence is a simple instrument that allows temporary but not exclusive access to a property for the grazing of animals. It can be agreed either orally or through writing. It can also generally be terminated on short notice by either party and does allow the owner unrestricted access to the property whenever they want or need. Licences are desirable for short term arrangements as they are flexible, can be easily agreed and easily ended.
However, sometimes the parties want a longer relationship with greater security and certainty for the future. Therefore, in these circumstances, a lease of the land should be considered. A Lease of the land grants the tenant a legal right to the land for a definite period. The tenant during that period will have the right to occupy said land subject to any terms which are agreed as part of the lease. A lease can also be agreed through either writing or verbal agreement. In relation to grazing, there are three types of leases which can all be created with different implications for the parties involved.
A common law tenancy does not attract any special provision or assumptions under law. The terms of your agreement will govern the period of the lease. This type of tenancy will cover non-business grazing purposes such as the renting of the land to keep a person’s show cow or a personal pet.
If the lease is being granted for the grazing of livestock as part of an agricultural business, then it will be governed under Agricultural Tenancies Act 1995 (‘ATA 1995’) and is termed a Farm Business Tenancy. This includes the traditional livestock of cattle and sheep which are raised commercially to produce products such as hide, meat, and wool. However, it would also include more exotic animals such as ostriches kept for their eggs and feathers.
The ATA 1995 will insert terms into the tenancy which will override any contrary agreements between the landlord and tenant. For example, if the agreed term is greater than 2 years when the lease expires it will continue as a yearly tenancy and a notice of termination of at least one year will be required to end the tenants occupation. Unless the tenant has broken some other specific condition of the lease such as the condition to farm the land competently. Such terms will make it harder for the Landowner to reclaim possession if they should desire but also provide greater security to the tenant.
If the lease is being granted for non-agricultural business purposes such as the grazing of horses which are used for recreational purposes or the letting of land for a tourist petting farm, then the lease will be a business tenancy and governed by the Landlord and Tenant Act 1954. Under a Business Tenancy the tenant does have a right to a new lease of the land if they occupy the property for the purposes of a business unless the Landlord can establish a specific reason to evict them. This could result in a lengthy tenancy.
A landowner should be particularly careful when considering the letting of land for grazing for animals which are not typically considered livestock such as horses. These are the most likely tenancies to be interpreted as a business tenancy and the distinction between the two is not always clear. Alpacas for example are simultaneous kept for their wool but often are also used for tourist attractions such as a trekking business where people will pay to walk the alpacas.
It is important to keep all these different options in mind when agreeing to allow animals to graze upon one’s land or when trying to negotiate terms for land on which you want your animals to graze. However, Licences can be interpreted as leases by the court no matter the label which is placed upon them. Therefore, it is important to obtain legal advice before entering into grazing agreements so one can be certain of their implications for you.
If you would like more information on grazing agreements and for us to review them before you enter one to ensure it meets your needs, please contact a legal advisor in our Agricultural Team on 01653 600070.