The Agricultural Tenancies Act 1995, also known as The Farm Business Tenancy (FBT) was introduced to govern farming tenancies on and after 1 September 1995.
The Farm Business Tenancy was introduced to deregulate the market for land to encourage agricultural land to be utilised for non-agricultural purposes and to improve the productivity of the agricultural sector. This in turn provided more bargaining power and flexibility to landlords to gain repossession of their land as the Agricultural Holdings Act 1986 provided to much security to tenants that it was often impossible for landlords to terminate the tenancy and take repossession of their land.
Clauses in a Farm Business Tenancy
Generally, tenants under a Farm Business Tenancy (FBT) have security only for the contractual term of the tenancy. If the fixed term of the Farm Business Tenancy has come to an end, the landlord has the option of serving a notice to quit to end the lease. If the landlord does not serve a notice, the tenant has the right to remain in occupation beyond the contractual term. If this happens, the tenancy will be automatically renewed each year on an annual periodic tenancy with the terms of the original tenancy, until the landlord or tenant decide to take action to end the lease.
A Farm Business Tenancy may contain a break clause. A break clause is a provision in a lease which allows either the landlord or tenant to end the lease early. To end a lease through a break clause you will need to provide notice of your intention of exercising the break clause.
The Farm Business Tenancy also provides the opportunity for landlords to add a forfeiture clause into the tenancy allowing the landlord the right to forfeit the lease if the tenant fails to comply or is in breach of the covenants in the Farm Business Tenancy. This allows landlords the right to re-enter the property and bring the Farm Business Tenancy to an end. Depending on the severity of the non-compliance or the breach of covenants, the landlord may or may not have to provide notice.
How to Terminate a Farm Business Tenancy (FBT)
The process of terminating a tenancy under the Farm Business Tenancy (FBT) is different for a tenancy on a contractual term and a tenancy under the annual periodic tenancy. Terminating a tenancy is also different depending on the length of the contractual term of the original tenancy.
If the tenancy is on a contractual term of two years or more, the landlord will need to serve a notice to quit if they are looking to repossess the land. A notice to quit must be served at least 12 months before the end of the tenancy. There are exceptions to this if the tenant agrees to shorten or waive the notice. If a landlord has not served a notice to quit, once the tenancy has come to an end of the fixed term, the tenancy will become a periodic tenancy where it will renew each year. If either the landlord or tenant wishes to end the annual periodic tenancy, they will need to serve a notice to quit and give notice of at least one year for the landlord to regain possession of the land.
If the original tenancy has a contractual term of less than two years, the tenancy will automatically end at the end of the tenancy. The tenancy will not be renewed so the landlord will not need to provide a notice to quit.
It is important that you complete and serve a notice of quit correctly as there are severe consequences as an incorrect or incomplete notice can be considered defective and you may have to wait for another year before having another opportunity to end the tenancy.
Agricultural law is a complex area of law. It is advisable to seek legal advice at the earliest opportunity so that you can make informed decisions in the best interests for you and your property.
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