2 Length of Term

3.38 The parties are free to agree the contractual length of the tenancy, and will need to decide whether it is to be a periodic tenancy (and if so whether yearly, quarterly or monthly), or a fixed term.⁷⁹ The parties will be contractually bound for the length of the tenancy agreement, as the 1995 Act (unlike its predecessor, the 1986 Act) does not interfere with the bargain struck between landlord and tenant to confer security of tenure on the tenant.

Under the 1986 Act the tenant enjoys lifetime security of tenure, in that he has a statutory yearly tenancy that cannot be determined by the landlord except in limited circumstances.⁸⁰ The tenant, on the other hand, was entitled to terminate the yearly tenancy by giving a minimum of 12 months notice to quit ending on a term date of the tenancy.⁸¹ Under a fixed term farm business tenancy the tenant will have no such facility, and will be contractually bound for the length of the term. If a long fixed term tenancy is agreed, he may therefore wish to include a break clause allowing for early termination during the agreed term eg following an increase in rent. A fixed term for less than two years will terminate on its term date, however, without the need for a notice of termination.

3.39 If a periodic term is agreed, the length of notice required to terminate it will depend on the periods of tenancy. For an annual tenancy, the 1995 Act requires the tenant to give a minimum of 12 months notice to quit ending at the end of a year of tenancy.⁸² No minimum notice period is prescribed, however, for tenancies with shorter periods, and these will be terminable in accordance with the common law rules for notice to quit – a quarter’s notice will be required to terminate a quarterly tenancy, and a month’s notice for a monthly tenancy.

3.40 The choice for the parties, for example for short term seasonal grazing lettings, will therefore be between a short fixed term of less than two years, which will determine automatically without notice: a long fixed term for two years or more, which will continue on expiry as a yearly tenancy and require at least 12 months notice of termination: a short periodic tenancy which will require one period’s notice to quit to terminate: and a yearly periodic tenancy, which will require at least 12 months notice to quit to terminate. Each of these options will be suitable in different circumstances.

A short fixed term will be appropriate.⁸³ If, on the other hand, the landlord wishes to encourage participation in Environmental Land Management Schemes, the term length will have to be longer to allow for performance of management agreements under one or more of the agri-environment schemes currently in force. Agreements under the Environmentally Sensitive Areas programme, for instance, were usually for 10 years, and those under the Countryside Stewardship scheme will typically be for 5 years. Clearly, the farm business tenancy must give the tenant occupation rights for at least this length of time if it is to enable him to guarantee performance of the terms of an environmental agreement with DEFRA or Natural England. Alternatively, the landlord will have to give appropriate guarantees securing the performance of the agreement. A tenant planning capital investment funded by borrowings will also need long-term security under the agreement for the purpose of securing finance. Short term agreements, on the other hand, have the advantage of conferring flexibility – both on the landlord, who can maintain greater control via renewal on the management of the holding,¹ and on the tenant, who will not be locked into an agreement which could be rendered adverse by changing trends in farming practice and changes in eg the subsidy regimes of the Common Agricultural Policy.

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Source: Rodgers Christopher. Agricultural Law. Bloomsbury Publishing,2016. — 914 p.. 2016

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