Jeremy's Blog 13th August 2021: Tenancy Agreements
This article by Jeremy Moody first appeared in the CAAV e-Briefing of 12th August 2021
The CAAV has now published new editions of the model FBTs for England: one for largely bare land agreements for two years or less, the other for longer agreements and more fully equipped land – weblinks given below. New editions for Wales were issued earlier in the year. Revisions last year responded to Brexit; these pick up on the new policies under the Agriculture Act and the Environment Bill. They are offered as a starting point for professional preparation of agreements for clients, whether owners or farmers, when testing and then recording the deals they are making.
An agricultural tenancy is an important agreement covering land, business and, sometimes, housing with rights and obligations, whether for the short term, long term or even the very long term. With the terms as well as the rent, the tenancy agreement is an important document: a business contract for both tenant and landlord and it can be seen as the tenant’s “title deed”.
The agreement should record what the parties have agreed – and best done while they are agreeing with the matter fresh in their minds. Should they later disagree, a “gentlemen’s agreement” may be of little value or understood differently by each. Yet there are tenancies without written agreements. Others have agreements signed without review of their relevance to the circumstances, clients perhaps begrudging the cost or not focused on the issues. That can look almost more like a talisman against evil than a conscious, tailored business contract.
From the user clause to repairing liabilities, landlord’s rights of access for pre-development surveys to the basis for rent review, the agreement is the rule book. Covering interactions during the tenancy, it is critically the rule book for what happens at the end of the lease. Which tenant’s works are improvements and which fixtures? What is to be left and what taken away? What condition is the land to be left in?
An agreement written now might consider the changing economics and policies; an agreement written a generation ago might not have contemplated them. What is needed for a productive holding to be successful and give a good rent? What, if anything, might be the beneficial diversification? What could be the agreed approach to the world of payments for nature, carbon or water management?
A significant tenancy is a substantial venture, warranting thought and care in its agreement. The CAAV models are offered as a starting point for recording real practical commercial intentions and consequences for the coming years.