Grazing Licences, Common Law Tenancies, and Farming Business Tenancies: What are the Key Differences?
In agricultural land use, it is crucial for both landowners and occupiers to understand the legal distinctions between Grazing Licences, Common Law Tenancies, and Farming Business Tenancies (FBTs), as each differs in the rights they confer and the legal protections they provide.
A Grazing Licence is a short-term agreement allowing someone to graze animals on land for a specific period – this is typically seasonal. It does not give exclusive possession of the land. The landowner retains control and may access or use the land simultaneously. Because it is a licence, not a tenancy, the licensee has no security of tenure or legal interest in the land. Grazing licences are ideal for limited, informal use.
A Common Law Tenancy arises when exclusive possession of land is granted for a term in return for rent, but the use does not fall under agricultural tenancy legislation (e.g. where the land is not used primarily for agriculture). These tenancies are governed by general property law rather than specific statutes. They may look similar to Farming Business Tenancies but lack the statutory protections of the Agricultural Tenancies Act 1995. They often emerge inadvertently, such as when a Grazing Licence is poorly structured and in practice gives the licensee sole control of the land.
A Farming Business Tenancy (FBT), created under the Agricultural Tenancies Act 1995, gives tenants exclusive possession of land for agricultural purposes, including grazing and cultivation (crop production). FBTs are formal, legally binding agreements offering greater security for tenants, including rights to compensation for improvements and statutory notice requirements for termination.
Misunderstanding or misclassifying these agreements, especially mistaking a tenancy for a licence, can lead to unintended legal consequences.
In summary; Grazing Licences are informal and non-exclusive, Common Law Tenancies offer exclusive possession without statutory protections, and Farming Business Tenancies provide formal, legally protected arrangements for agricultural use.
