Farming Tenancies: Key Legal Issues, Risks, and Dispute Resolution
Introduction
Farming tenancies sit at the core of agricultural land use in England and Wales. For many farming businesses, a tenancy agreement determines not only how land is occupied and farmed, but also the long-term viability of the enterprise itself. Given the scale of investment involved in agricultural land, machinery, and infrastructure, disputes relating to farming tenancies can have serious financial and operational consequences for both landowners and tenant farmers.
The law governing farming tenancies is complex and highly technical. It is shaped by statute, case law, and the specific terms of the agreement between the parties. Many disputes arise where historic arrangements continue without review, where agreements are poorly drafted, or where parties do not fully appreciate the statutory regime that applies to their relationship.
This article provides an overview of farming tenancies under English law, the most common legal issues that arise, and how disputes are typically resolved.
The Legal Framework for Farming Tenancies
Farming tenancies in England are primarily governed by two statutory regimes: the Agricultural Holdings Act 1986 (AHA 1986) and the Agricultural Tenancies Act 1995 (ATA 1995). Which regime applies depends largely on when the tenancy was created and the nature of the agreement.
Tenancies granted before 1 September 1995 are generally governed by the AHA 1986 and benefit from strong statutory protection for tenants, including security of tenure and succession rights. Tenancies granted on or after that date are usually Farm Business Tenancies (FBTs) under the ATA 1995, which were introduced to provide greater flexibility and encourage landowners to let agricultural land.
In addition to these formal arrangements, disputes also arise in relation to grazing licences, short-term occupation agreements, and informal or undocumented arrangements. Correctly identifying the legal framework that applies is critical, as it affects termination rights, rent review procedures, succession, compensation, and dispute resolution mechanisms.
Agricultural Holdings Act 1986 Tenancies
AHA tenancies are often long-standing arrangements, sometimes spanning generations. The AHA 1986 provides tenants with significant security of tenure, meaning that a landlord cannot simply bring the tenancy to an end at will. Termination is only permitted on specific statutory grounds and must follow strict procedural requirements.
Common grounds relied upon by landlords include non-payment of rent, bad husbandry, breach of tenancy obligations, or the landlord’s intention to farm the holding personally. Even where a ground exists, the landlord must usually obtain consent from the First-tier Tribunal (Property Chamber) or satisfy statutory tests before possession can be recovered.
Rent under an AHA tenancy is assessed by reference to statutory assumptions and disregards, focusing on the productive capacity of the holding rather than open market value. Disputes frequently arise over valuation methodology, comparable evidence, diversification income, and the condition of the holding. These disputes are commonly resolved through arbitration.
Repair obligations, claims for compensation for tenant’s improvements, and compliance with good husbandry standards are also frequent sources of disagreement under the AHA regime.
Farm Business Tenancies Under the Agricultural Tenancies Act 1995
Farm Business Tenancies were designed to provide greater freedom of contract between landowners and tenants. Under the ATA 1995, the parties are largely free to agree the length of the tenancy, rent review provisions, user clauses, and termination rights, subject to basic statutory safeguards.
FBTs do not generally confer long-term security of tenure. Fixed-term FBTs will usually come to an end automatically at the expiry of the term, provided statutory notice requirements are satisfied. Periodic FBTs can normally be terminated on at least 12 months’ written notice, unless the agreement provides otherwise.
Despite this flexibility, disputes under FBTs are common. Issues often arise as to whether an agreement qualifies as an FBT at all, whether notices have been validly served, or whether break clauses and termination provisions have been properly exercised. Because FBTs rely heavily on contractual terms, careful drafting and compliance with those terms is essential.
Tenancy or Licence? Classification Disputes
One of the most frequent and contentious issues in agricultural land disputes is whether an arrangement constitutes a tenancy or a licence. This commonly arises in relation to grazing agreements, seasonal arrangements, or short-term occupation intended to avoid creating security of tenure.
Under English law, the court will look at the substance of the arrangement rather than the label used by the parties. The key indicators of a tenancy include exclusive possession of land for a term at a rent. Where these elements are present, a tenancy may be found to exist even if the agreement is described as a licence.
Classification disputes are highly fact-sensitive and can have significant consequences. A finding that a tenancy exists may confer statutory rights, security of tenure, and compensation entitlements that the landowner did not intend to grant. These disputes require careful analysis of the written agreement and the parties’ conduct in practice.
Rent Reviews and Valuation Disputes
Rent review disputes are a common feature of both AHA tenancies and FBTs. Under the AHA 1986, rent must be assessed in accordance with statutory criteria, often leading to disagreement over productive capacity, comparables, and the relevance of diversification income.
Under FBTs, rent review provisions are governed by the contract. Reviews may be based on open market value, index-linked increases, or fixed uplifts. Disputes often arise where review clauses are unclear, where market conditions have changed significantly, or where one party challenges the methodology applied.
Rent review disputes are commonly resolved through arbitration or independent expert determination, depending on the statutory framework and the terms of the agreement. Early preparation of valuation evidence and clarity as to the applicable mechanism are key to resolving these disputes efficiently.
Repair, Maintenance, and Dilapidations
Repair and maintenance obligations are a frequent source of dispute in farming tenancies, particularly at or near the end of a tenancy. These disputes may involve farm buildings, fixed equipment, fences, drainage systems, and other infrastructure.
The scope of repair obligations depends on the statutory regime and the wording of the tenancy agreement. AHA tenancies are influenced by statutory provisions and established case law, while FBTs rely more heavily on express contractual terms.
Dilapidations claims can be complex and expensive, often requiring expert evidence. The use of schedules of condition at the start of a tenancy and careful record-keeping throughout the term can significantly reduce the risk of dispute.
Succession and Assignment Issues
Succession rights under AHA tenancies remain a significant and often sensitive area of dispute. The statutory regime allows certain close relatives of a tenant to apply for succession, subject to eligibility and suitability criteria. Landlords may oppose succession applications, leading to contested tribunal proceedings.
Assignment of farming tenancies is generally restricted and subject to statutory or contractual controls. Disputes may arise where tenants seek to reorganise their business, introduce partners, or transfer interests without appropriate consent. These issues require careful legal analysis to avoid unintended breaches or loss of rights.
Termination and Notices
Termination disputes are among the most serious farming tenancy disputes. Whether under the AHA 1986 or the ATA 1995, termination usually requires careful compliance with statutory and contractual notice provisions. Errors in drafting, service, or timing can render a notice ineffective and lead to costly disputes.
Disagreements may arise over whether a tenancy has validly ended, whether a break clause has been exercised correctly, or whether grounds for possession have been made out. Given the high stakes, termination should always be approached with caution and specialist legal advice.
Dispute Resolution in Farming Tenancy Disputes
Farming tenancy disputes may be resolved through negotiation, mediation, arbitration, or litigation, depending on the nature of the issue and the applicable legal framework. Arbitration is particularly common for rent review and valuation disputes, while mediation is often effective where parties wish to preserve an ongoing relationship.
The courts increasingly expect parties to consider alternative dispute resolution where appropriate. Early identification of issues, preservation of evidence, and informed legal advice can significantly improve the prospects of achieving a proportionate and commercially sensible outcome.
Conclusion & How We Can Help
Agricultural contracts are legally binding and often sit at the heart of farming and land-based businesses. When disputes arise, they can carry significant financial, operational, and relational consequences. Understanding the scope of your contractual rights and obligations, and the remedies available under English law, is crucial to protecting your position and achieving a workable resolution.
Agricultural disputes frequently involve technical issues, informal arrangements, and long-standing relationships. Early legal advice can help clarify liability, assess risk, and identify the most effective route to resolution, whether through negotiation, mediation, expert determination, or litigation where necessary.
Our specialist civil dispute resolution solicitors regularly advise farmers, landowners, agricultural businesses, and rural contractors on a wide range of agricultural contract disputes. We carefully review contractual documentation, assess the strengths and risks of your position, and provide clear, pragmatic advice tailored to the realities of the agricultural sector. Where appropriate, we support clients through alternative dispute resolution to achieve timely and cost-effective outcomes, while remaining fully prepared to litigate robustly if required.
We usually offer a no-cost, no-obligation 20-minute introductory call as a starting point or, in some cases, if you would just like some initial advice and guidance, we will instead offer a one-hour fixed fee appointment (charged from £250 plus VAT depending on the complexity of the issues and seniority of the fee earner).
If you are involved in an agricultural contract dispute or would like advice before taking action, please do get in touch with us as a first step. Please email wewillhelp@jonathanlea.net providing us with any relevant information or call us on 01444 708640. After this call, we can then email you a scope of work, fee estimate (or fixed fee quote if possible), and confirmation of any other points or information mentioned on the call.
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This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited.