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Letting or taking on agricultural land in England and Wales sits under one of two very different legal regimes, and knowing which applies to your arrangement changes almost everything about how it runs. Tenancies granted on or after 1 September 1995 generally fall under the Agricultural Tenancies Act 1995 as Farm Business Tenancies, while older lettings continue to be governed by the Agricultural Holdings Act 1986.
The two frameworks treat security of tenure, rent reviews, succession and end-of-tenancy compensation in quite distinct ways, and a misstep at the point of grant or renewal can lock parties into something neither of them intended. This page walks through how each regime works in practice, what landlords and tenants should expect, and where the common pitfalls sit.
If you are weighing up a letting, inheriting one, or trying to bring one to an end, the detail below should help you get your bearings before you commit.
Overview
An agricultural tenancy is a lease where land is let primarily for use in a trade or business of farming. In England and Wales, two statutory regimes sit behind these arrangements. Farm Business Tenancies, introduced by the Agricultural Tenancies Act 1995, apply to most lettings created from 1 September 1995 onwards and offer a more flexible framework designed around freedom of contract.
Tenancies granted before that date, and a small number of successions to older lettings, remain within the Agricultural Holdings Act 1986, which is far more protective of the tenant and harder for landlords to unwind. The practical difference matters. A 1986 Act tenancy can carry lifetime security and, in certain cases, rights for a close family member to succeed on death or retirement.
A Farm Business Tenancy, by contrast, tends to be fixed in length or terminable on notice, and the commercial terms are largely what the parties agree between themselves. Both regimes include specific rules on rent review, compensation for improvements, fixtures, and the tenant's right to payment for disturbance where the landlord brings things to an end.
Key steps
Work out which regime applies. Check when the tenancy was originally granted and whether any later variation or surrender has reset the clock. Lettings from 1 September 1995 onwards are usually Farm Business Tenancies, while earlier lettings generally stay within the 1986 Act. Get this wrong and the rest of your analysis falls apart.
Confirm the agricultural character of the use. For a Farm Business Tenancy, at least part of the land must be farmed commercially throughout, and the parties must usually exchange a notice before the tenancy begins if they want to preserve that character when diversification is planned. Without the right notices, the tenancy can drift outside the 1995 Act.
Put the commercial terms in writing. Agree the term, rent, review mechanism, repairing obligations, permitted uses, break rights and any provisions for diversification or environmental schemes. A written agreement reduces disputes later and, under the 1995 Act, is essential for certain statutory protections and notices to operate as intended.
Diarise rent reviews and key notice dates. Both regimes allow rent to be reviewed at broadly three-year intervals unless the parties have contracted out where permitted. Missing a trigger date or serving a defective notice can postpone a review for years, so the calendar side of tenancy management is not an afterthought.
Plan carefully for the end of the tenancy. Notices to quit, compensation for improvements, dilapidations claims and tenant right valuations all need to be dealt with in the right order and within statutory timescales. Taking advice early, before notices are served, almost always produces a better outcome than trying to unpick things afterwards.
Q What is the main difference between a Farm Business Tenancy and a 1986 Act tenancy?
A 1986 Act tenancy typically gives the tenant lifetime security of tenure and, in limited cases, succession rights for close family. A Farm Business Tenancy under the 1995 Act is more contractual in nature, usually running for a fixed term or on notice, with the parties free to negotiate most commercial terms between themselves. The date the tenancy was granted is the starting point for working out which applies.
Q Can a 1986 Act tenancy still be created today?
New 1986 Act tenancies cannot generally be granted now. The regime was closed off to new lettings from 1 September 1995. However, existing 1986 Act tenancies continue, and in narrow circumstances a succession on death or retirement can bring a new person into an existing 1986 Act tenancy rather than ending it. Any letting granted afresh today will almost always fall under the 1995 Act.
Q How often can rent be reviewed?
Under both the 1986 Act and the 1995 Act, rent reviews broadly take place at three-yearly intervals from the start of the tenancy or the last review, unless the parties have agreed otherwise where the legislation allows. The review must be triggered by a valid notice within the correct window. A missed or defective notice can push the next opportunity back by another three years.
Q What compensation can a tenant claim when the tenancy ends?
Depending on the regime, tenants may be entitled to payment for physical improvements they have made with the landlord's consent, for the added value those improvements leave behind, and for disturbance where the landlord terminates the tenancy. Under the 1986 Act there is also a specific framework for tenant right items such as growing crops and cultivations. The detail varies considerably and is often negotiated at the point of exit.
Q Do succession rights still apply to 1986 Act tenancies?
Statutory succession rights can apply to certain 1986 Act tenancies, particularly those granted before 12 July 1984, allowing an eligible close relative to apply to take over on the current tenant's death or retirement. The applicant has to meet eligibility and suitability tests set out in the legislation. Succession does not apply to Farm Business Tenancies, which end according to their contractual terms.
Q Can a Farm Business Tenancy include non-agricultural activity?
Yes, within limits. The 1995 Act contemplates a degree of diversification, but at least part of the holding must remain in agricultural use throughout the tenancy, and the parties usually need to serve an agricultural character notice before the tenancy begins to preserve its status if significant non-farming activity is planned. Without that protection, the arrangement can fall outside the 1995 Act altogether.
Q What notice is needed to end a Farm Business Tenancy?
For a fixed-term Farm Business Tenancy of more than two years, at least twelve months' written notice is generally required to bring it to an end on the term date, otherwise it will continue as a yearly tenancy. Shorter fixed terms and periodic tenancies have their own rules. Getting the form, timing and service of the notice right is essential, since a defective notice can be worthless.
The difference between a Farm Business Tenancy and a 1986 Act letting shapes rent reviews, succession and what happens when the tenancy ends. An experienced legal adviser can talk through the position on the phone and help you think through your next step based on what you describe.
✓A plain-English explanation of which regime likely applies based on what you describe
✓Practical perspective on rent review, notice and succession points in your specific situation
✓What to watch out for before granting, varying or ending the tenancy
✓Clarity on where specialist input from a solicitor or land agent may be worth the cost
Personal call · For information only · Independent advisers
Written & reviewed by
Brad Askew Solicitor (non-practising)
Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice. LegalDocuments.co.uk is not a law firm and does not provide regulated legal advice.
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.
