BREXIT has left the agricultural industry with a number of uncertainties.  Agricultural tenancies is one area of concern, therefore caution needs to be taken when drafting a tenancy agreement for a Farm Business Tenancy that’s term may run from now, through to our departure of the European Union.
Currently, the UK is part of the EU and the single market, this allows us to market any goods such as agricultural products and employ labour from the EU until our withdrawal, nevertheless on the day of departure this may be taken from us.
Flexibility is vital when drafting an agreement, currently break clauses are not widely incorporated in an agricultural tenancy agreement, however, break clauses have now raised an area of concern where the tenant may be in a position that becomes economically unsustainable and in turn, influence farm rents.  Break clauses need to be drafted so that they can be operated by both Landlord and Tenant.  Issues of most concerns are:
• the inability to recruit labour (particularly those in dairy and horticulture)
• A sustained, adverse or radical change in the marketplace.
Knowing when to trigger these clauses is also particularly important – options needed to consider are:
• Providing twelve months’ notice to terminate the fixed term;
• Providing a timed break clause to take effect e.g. 12 months following the withdrawal from the  EU
• Providing more regular opportunities for a break clause e.g. on a proposed date on a three, four-year cycle?
Nevertheless, wording of these clauses need to be drawn together with particular care.
Regarding rent reviews, these are often reflected in most economic changes.  But when drawing together a new agreement, negotiating a date for the first rent review needs to consider the statutory notice period but also allow for a suitable time frame to consider the economic conditions.

For further advice on negotiating and drafting Farm Business Tenancies, please contact either Steph at stephemmerson@fcgagric.com or your local FCG office for an independent assessment.