mfg Blog

Services
People
News and Events
Other
Blogs

Landlords asking for a 'surrender and re-grant'?

View profile for Nick Playford
  • Posted
  • Author

Over the past few months, and despite the current lockdown situation, I have been approached by some tenant farmers asking advice about the running of a small shoot on their land – with their landlords asking for a ‘surrender and re-grant’. They have asked what this means and therefore I wanted to clear up any grey areas.

A surrender and re-grant is the giving up or relinquishing of your existing tenancy agreement and, in return, you will be given a new tenancy agreement. It is difficult to give specific advice on this scenario without having further accompanying facts.

However, the key aspect is to identify what sort of tenancy you currently have, with two likely possibilities being an Agricultural Holdings Act 1986 tenancy or a Farm Business Tenancy (FBT) and, here, there is potentially more than your shooting rights at stake. The advice is to tread carefully and seek proper legal counsel.

If, for instance, you have a long term 1986 Agricultural Holding Act Tenancy then you might be the first-generation successor to the original tenant (benefiting under the original agreement and potentially locking the land up for 60 years or more). You may well benefit from a reduced rent than you might otherwise have received under an FBT. There may be another succession permitted under the existing legislation, and in such a case, you would be unwise to surrender this without due consideration. Any new activity must either have express permission from the Landlord or be incorporated in the new tenancy agreement, otherwise it could result in a breach of the tenancy, giving rise to a notice to quit.

The landlord may have requested that you enter into a surrender and re-grant of the existing tenancy for very legitimate or practical reasons, such as increasing the Agricultural Property Relief available to him or her from 50% to 100%. However, always remember that your landlord’s tax requirements will not necessarily align with your own as the tenant. Often a surrender and re-grant should adopt a collaborative professional approach, with the involvement of experienced land agents and accountants who can advise.

Concentrating more on the shooting perspective (or even other sporting pursuits), it is always worthwhile documenting the tenancy you have in a written tenancy agreement for a sustainable term or duration.

Often I come across a two or three year shooting tenancy or licence. These are often basic agreements and little thought is given to the parties’ positions at the end of the term. In practice this probably favours the landlord. In reality, without heavy investment (or even with it by and large) most readers associated with the shooting industry will appreciate that it can take many years to build up a shoot and to get the best out of it, assessing how the birds will fly where the guns should stand, the most effective feeding locations, how the shoot succeeds throughout the days and also throughout the season and, generally, the particular nuances of each shoot.

By the time the two or three years are up, significant labour and investment management in the shoot will have been undertaken and the landlord will often be in a position to call time on the tenancy. The shooting infrastructure such as the pens and the shoot’s goodwill may be significantly undervalued (or not accounted for at all) as valid improvements on the land. The landlord can reap the dividends and will be free at that point in time to grant a new agreement to a different occupier.

Nick Playford, a respected agricultural solicitor and regular media contributor on rural issues, can be contacted through nicholas.playford@mfgsolicitors.com.

 

Comments