Farm Business Tenancy – How do I bring it to an end?

Farm Business Tenancy – How do I bring it to an end?

Released On 7th Jul 2023

A landlord under a Farm Business Tenancy (FBT) might wish to bring the tenancy to an end for a number of reasons. For example, they may wish to redevelop part of the land the subject of the FBT. Alternatively, their tenant might be in breach of their lease covenants.

Below is an overview of the ways in which a FBT can be brought to an end. As specialist legal advisors in agricultural law, the Property Disputes team at Porter Dodson can provide reliable legal advice and set out your options, bespoke to your needs and your ambitions as a landlord in respect of an existing FBT.

  1. Break clause
  2. Surrender
  3. Effluxion of time
  4. Forfeiture

Break clause

Some FBT’s will include an express provision that the tenancy can be brought to an end sooner than the termination date, by either the landlord, the tenant or both being able to serve a break notice.

Surrender

Circumstances change and sometimes it can suit both landlord and tenant to bring the lease to an end sooner than the termination date. A surrender will involve the tenant handing back the keys and vacating the holding or farm. This must be agreed by the landlord to be effective in law. If only one party wishes the lease to be surrendered, and the other wants it to continue, then a surrender will not be effective.

Effluxion of time

FBT’s are granted for specified periods. If the FBT was granted for a fixed term of 2 years or less, it will come to an end automatically on the final date stipulated in the tenancy agreement. If the initial term was more than 2 years, then unless notice is served and if the tenant remains in occupation beyond the date, the FBT will continue to run from year to year (annual periodic tenancy). It will continue to have FBT status.

Forfeiture

Standard form FBT agreements will include a right to forfeit. ‘Forfeiture’ provisions entitle a landlord to recover possession of the farm or holding sooner than waiting for a notice to expire, but only in circumstances where the tenant is at fault. For example, arrears of rent, or other breach of lease.

There are two ways forfeiture can take place:

  • By peaceable re-entry; or
  • Possession ordered by the Court

Peaceable re-entry can be a quick and cost-effective means of recovering possession where the tenant is in arrears of rent. However, there are many pitfalls to peaceable re-entry and falling foul could lead to unwanted costs and implications for a landlord. I suggest that it is imperative that a landlord seek legal advice before peaceably re-entering, to avoid falling foul and the implications of that.

A possession order from the Court is a more failsafe route to securing possession and must be pursued if the holding or farm includes residential property. Prior to this step, a Section 146 Notice should be served, setting out the breaches of the lease, which entitle the landlord to treat the lease as forfeit.

Should you require legal advice on FBT’s or their termination, either as a landlord or a tenant, please contact our Property Disputes Team.

Should you wish to put in place a Farm Business Tenancy or receive advice on any aspect of agricultural law, please contact Rob Oliver in our Agricultural Services Team at Rob.Oliver@porterdodson.co.uk

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