When can a Grazing Agreement Become an AHA Protected Tenancy?
Published January 2010
For the majority the granting of a grazing licence would fall outside the scope of the Agricultural Holdings Act 1986. This is because the 1986 Act applies to a ‘contract of tenancy’ of ‘agricultural land’. However, Agricultural Land includes land used for grazing and a contract of tenancy means a letting for a term of years or from year to year and it is worth considering whether a so-called grazing agreement granted before 1 September 1995 enjoys the protection of the 1986 Act.
Section 2 of the 1986 Act provides for anti-avoidance, and makes an express provision that the grant of lesser land interests, say, the grant of an agricultural licence will be treated as a tenancy from year to year in certain circumstances. If so, the 1986 act shall automatically convert the agreement into a protected contract of tenancy.
The 1986 Act is designed to go behind sham agreements. Many arrangements allowing farmers to graze animals on land are legitimately short-term with no expectation or intention of either party to create formal rights.
Under the 1986 Act a grazing agreement is one made in contemplation of the use of the land only for grazing or mowing (or both) and during some specified period of the year. Activities that encourage the growth of grass are included, however, the cultivation of any arable crop is not consistent with grazing or mowing and will not be covered by the exception. For the purposes of the exception it is irrelevant whether the grazing animals are defined as livestock, and so will include horses.
Some specified period of the year does not require any agricultural significance. However, the more cautious landowner may wish to steer clear of 364 days to avoid inadvertently extending to the 365th day and insist on actual vacation of the land between expiry of the old and commencement of the new agreement.
A grazing agreement may be challenged if it was always the parties’ intention to create an agricultural tenancy despite containing terms appropriate to a grazing licence. Labelling an arrangement as a grazing licence may not defeat a challenge, if the terms agreed between the parties should be construed as a tenancy.
Whilst the significance of grazing agreements has been greatly reduced by the Agricultural Tenancies Act 1995, agreements could well give rise to fixed term farm business or periodic tenancies. In such circumstances, there is no long-term security of tenure, however, parties should be aware of inadvertently creating a Business Tenancy and taking with it the provisions of Part II of the Landlord and Tenant Act 1954.
Farmers and Landowners alike are advised to obtain legal advice as to potential interests in land.
