What is an agricultural tenancy?

An agricultural tenancy is a legal agreement that grants a tenant the right to occupy and farm land belonging to someone else. These arrangements are a core feature of rural life and agricultural business in England and Wales, forming the basis on which much of the country's farmland is managed. Agricultural tenancies govern the responsibilities and expectations of both landlords and tenants, covering everything from rent and repairs to improvements and succession. The type of tenancy in place will determine the legal framework, rights, and obligations for both parties.

The two types of agricultural tenancy are:

Full Agricultural Tenancies (1986 Act Tenancies)

Full agricultural tenancies that began before 1 September 1995 are governed by the Agricultural Holdings Act 1986. These agreements, often referred to as 1986 Act Tenancies or AHAs, offer one of the most secure forms of agricultural occupation in England and Wales. Tenants under this regime benefit from extensive statutory protection, including long-term security of tenure and the right to receive compensation for qualifying improvements when the tenancy comes to an end.

These tenancies were designed to promote stability and investment in the land, and as such, tenants are entitled to claim compensation for various improvements made during their occupation. The law recognises the value of these contributions, particularly where they have enhanced the land’s productivity or added to its physical infrastructure.

Compensatable improvements typically fall into three categories:

• Major long-term improvements: these are substantial investments that often require the landlord’s consent, such as the construction or alteration of agricultural buildings, the creation of water meadows, the planting of orchards, or the installation of infrastructure like roads, bridges and silos. Repairs to fixed equipment may also qualify, depending on the circumstances.
• Short-term improvements: include activities that benefit the holding for a shorter period but still contribute to productive land use. Examples include mole drainage, protection of fruit trees from livestock, clay burning, liming, chalking, and the use of fertilisers, manure, soil improvers, and digestate (in England) to support soil health.
• Tenant rights and disturbance compensation: when a tenancy ends, tenants may claim for the value of any growing crops left on the land, as well as any investment in cultivations, such as seed sowing or land preparation. If the landlord serves a notice to quit, the tenant may also be entitled to disturbance compensation, reflecting the impact of the unexpected termination.

At Walker Foster, we understand that 1986 Act Tenancies often form part of a family’s history, a farming legacy, and a way of life. Our agricultural law team offers clear, practical advice to protect your rights, fully realise your entitlements, and represent your interests with care and professionalism.

Farm Business Tenancies (1995 Act Tenancies)

Farm Business Tenancies, introduced by the Agricultural Tenancies Act 1995, apply to most agricultural tenancies that began on or after 1 September 1995. These agreements are far more flexible than their predecessors and are often the preferred choice for modern farming arrangements.

A tenancy will qualify as a Farm Business Tenancy (FBT) if it meets the following criteria:

• The tenant is granted exclusive possession of the land.
• The land is used primarily for agricultural purposes throughout the life of the tenancy.
• The tenant is operating a farming business on the land.
• The tenancy is granted for a fixed term, with the duration and terms agreed by both parties.

FBTs allow landlords and tenants to negotiate terms that suit their individual needs, including rent, responsibilities for repairs, rights to carry out improvements, and end-of-tenancy arrangements. However, unlike 1986 Act Tenancies, FBTs do not offer the same level of statutory security or succession rights.

At Walker Foster, we work with both landowners and tenants to draft, negotiate and manage Farm Business Tenancy agreements that are clear, compliant and practical. Our aim is to foster positive, productive relationships while protecting our clients' long-term interests. Whether you are entering into a new tenancy or reviewing an existing one, we are here to provide the legal clarity and support you need.