Grazing licence or farm business tenancy?
Letting a field for someone’s sheep or horses is one of the most common arrangements on a farm, and one of the most often left unwritten. Whether it is a licence or a tenancy decides how and when you can get the land back.
The guide
A grazing licence
A grazing licence gives permission to graze, usually for a season of less than a year, without giving the grazier the land itself. The landowner keeps control: they can come and go, they usually look after the boundaries and water, and the licence ends on its date with nothing to serve.
A mowing licence works the same way for taking a cut of grass or hay.
When it becomes a tenancy
What the document is called does not decide it. If the arrangement in practice gives the grazier exclusive possession of the land for a term, at a rent, it is likely to be a tenancy. Since 1 September 1995 a new agricultural tenancy is usually a farm business tenancy under the Agricultural Tenancies Act 1995.
Why the difference matters
- A licence ends on its date. An FBT of two years or less ends at the end of its term; a longer one carries on from year to year until 12 to 24 months’ notice is given
- An FBT tenant can ask for a statutory rent review
- An FBT tenant can claim compensation for improvements at the end
- Who has the land at their disposal can matter for who may enter it into a scheme such as SFI
What to put in writing
- The field or parcels, ideally by their RPA references
- The start and end dates, and that it is a licence for grazing or mowing only
- The kind and number of stock
- Who looks after fences, gates, hedges and water
- The fee, when it is paid, and what happens if stock are left on after the end date
- Who may claim any scheme payments on the land
Keeping track
TenantTool keeps grazing and mowing licences and farm tenancies against the fields they cover, on the estate map, with their end dates and notice dates on the calendar. A season’s licences can be seen together.
Where this applies
This guide covers England. Wales, Scotland and Northern Ireland have their own rules, so check the requirements for where your property is.
Arrangements made before 1 September 1995 may fall under the Agricultural Holdings Act 1986, where tenants have much stronger security. Take advice if an old arrangement has never been written down.
Common questions.
- Can the same grazier have a licence every year?
- Yes, but a run of back-to-back licences with no real break, where the grazier has the land to themselves, starts to look like a tenancy. Keep the terms real and written down.
- How much should a grazing licence cost?
- It is agreed locally, usually per acre or hectare for the season, or per head of stock. The farm rent checker shows Defra’s figures for what land lets for.