Can you claim for improvements at the end of a Farm Business Tenancy?

Farm Business Tenancies (FBT) were introduced under the Agricultural Tenancies Act 1995. The majority of new agricultural tenancies granted after 1 September 1995 are likely to be FBT’s.

The differences between a FBT and other types of business leases are mainly in relation to the terms of the agreement and notice to quite, rent and review, and compensation for improvements made by the tenant.

Contract terms

Most FBT are granted for a term of two to five years. This has given rise to concerns that in today’s farming businesses, given the level of investment the tenant has to put into the land to produce a profitable return, they are not a suitable lease.

What can be claimed

A tenant under a FBT can, on termination of the tenancy, claim compensation for physical improvements made to the agricultural holding, and for intangible advantages which increases the value of the holding. These advantages could be a milk quota acquired during the course of the tenancy for example, or planning permission acquired but not used (provided the Landlord consented to the application being made before work commenced). The improvement or advantage must have been made or claimed by the Tenant and have been wholly, or partly at the tenants own expense.

When can a claim be made

A claim for compensation must be made within two months of the date on which the FBT ends. Compensation is calculated as being an amount equal to the value added to the holding by the improvement or advantage.  If there is no agreement as to the settlement within 4 months of terminations, the matter can be referred to arbitration.

How can we help

This is only a brief overview of how and when compensation can be claimed. At Butcher & Barlow we have a team of specialists in both agricultural tenancies and dispute resolution should the claim not be accepted by the landlord.

For in depth advice on your own situation, contract our Agriculture and Rural Affairs team on 01606 334309 or email agriculture@butcher-barlow.co.uk