Farm Business Tenancies (FBTs) are the default commercial agricultural tenancy in England and Wales for arrangements entered into from 1 September 1995. They replaced the old Agricultural Holdings Act 1986 structure, which gave tenants very strong succession and security-of-tenure rights. FBTs strip most of that away — so for tenant farmers, every clause in the agreement matters. Before signing an FBT, understand what the Agricultural Tenancies Act 1995 gives you (and what it doesn't), and where the agreement departs from the statutory baseline.
What is a Agricultural Tenancies Act Compliance?
A Farm Business Tenancy (FBT) is a tenancy of agricultural land entered into on or after 1 September 1995 that meets the 'business conditions' and either the 'agriculture condition' or the 'notice conditions' in the Agricultural Tenancies Act 1995. Most FBTs give the tenant a fixed term with limited statutory protections beyond rent review and end-of-tenancy compensation for improvements. Unlike the old AHA tenancies, FBTs do not automatically give the tenant succession rights or lifetime security of tenure.
Red flags to watch for
The ATA 1995 sets a default rent-review formula based on open-market rent for a comparable holding. Tenants should understand whether the agreement uses this default or an upwards-only indexed method that could quickly outstrip market rent.
Sections 15–27 ATA 1995 give tenants a statutory right to compensation for improvements at end of tenancy. Clauses restricting this (e.g. requiring written landlord consent for every improvement) should be read carefully.
FBTs can be granted for any length. Short terms with landlord-only break rights give tenants almost no security and make long-term investment risky.
Section 7 ATA 1995 requires 12 months' notice to end an FBT of more than 2 years. Clauses that circumvent this by providing for shorter notice are unenforceable.
Sporting rights, mineral rights and solar/wind reservations are common landlord reservations but should be disclosed and compensated fairly to the tenant farmer.
FBTs require 'commercial' agricultural use. Restrictions that prevent diversification into on-farm processing or direct sales can reduce the viability of the business.
Your legal rights
UK Farm Business Tenancies are governed by the Agricultural Tenancies Act 1995 (for England and Wales) and, in Scotland, by the Agricultural Holdings (Scotland) Act 2003 (which provides a different Short Limited Duration Tenancy and Limited Duration Tenancy structure). Key statutory rights for English/Welsh FBTs: rent review default formula (Part II ATA 1995); compensation for improvements and crops at end of tenancy (Part III); 12 months' minimum notice for tenancies over 2 years (s.7); and arbitration procedures for rent-review disputes. The Landlord and Tenant (Covenants) Act 1995 affects covenant enforcement, and Wales has a Welsh Government framework for agricultural tenancies under the Agriculture (Wales) Act 2023.
Questions to ask before you sign
- 1What is the initial term, and who can break the tenancy (and on what notice)?
- 2How is rent reviewed — by the statutory formula or by an indexation mechanism?
- 3What improvements are included, and what is the compensation mechanism at the end?
- 4What sporting, mineral or renewable-energy rights does the landlord reserve?
- 5Are there restrictions on diversification, direct sales, or agri-environment scheme participation?
- 6How are disputes resolved — arbitration, RICS, or the courts?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.