Licensing your land: a guide to the benefits and pitfalls of innovative arrangements for farmers

With this year’s Glastonbury festival behind us, where the working dairy herd at Worthy Farm in Somerset makes way for the world’s biggest music festival, many farmers may have been wondering what innovative ideas they too could explore to boost their income and get the most out of their land.

These days there are an increasing range of opportunities for short-term farm diversification from letting someone use part of your land for grazing or storage purposes, to holding one-off events like a car boot sale, weddings or even a festival.

However, before you allow another person to use your land it is important to take legal advice to ensure that your arrangement is properly documented and that you both understand the remit of the permission granted. 

Andrew Little, commercial property law specialist at Pearsons & Ward Solicitors in Malton explains how you go about granting a temporary agricultural license for such activities and the potential pitfalls to be aware of.

If you grant a licence to another person they become a licensee and the licence gives them the right to do something specific on your land. It does not give them any ‘interest’ in the land or any right to occupy it on an exclusive basis.

This can be contrasted with an agricultural lease which gives a tenant exclusive possession of the land for a fixed period of time. A lease creates an ‘interest in the land’ which can in some cases be transferred or sold.  A tenant therefore has more rights than a licensee.

An agricultural licence is appropriate to use if the land in question is only going to be needed for a matter of days, weeks or just a few months. They are preferable to a lease in many respects because they confer no right for the licensee to occupy the land once the licence comes to an end and the agreement can be terminated with very little or no notice.

When drawing up a licence agreement, great care must be taken not to accidentally grant a lease; be aware that a court will consider the terms of the agreement and not its title when considering this question.

It may be tempting when drawing up a licensing agreement to impose conditions on the licensee requiring him or her to maintain the property; however, such terms are more likely to see the agreement classed as a lease.

If you think you have granted a license and it is subsequently judged to be a tenancy, you may have key original clauses excluded, such as how and when the licence can be terminated, so you could end up with a problem tenant and have all of the obligations of a landlord with none of the benefits which you would enjoy from a properly drafted agricultural lease.

When drawing up an agricultural licence, therefore, you should ensure that:

• the use of the land is for a short period only, certainly less than a year;
• no exclusive rights to occupy the land are conferred on the licensee;
• you retain the right to access the licensed land at any time;
• the terms of the use of the land are carefully defined and restricted to specific purposes;
• you remain responsible for services, such as electricity, gas and water, and bigger maintenance works;
• the licensee is responsible for obtaining any necessary permissions from the local authority, such as an alcohol license;
• the agreement restricts the number of visitors allowed on the licensed land;
• it does not allow the licensee to take up residence on the land.

How we can help

Falling foul of the accidental lease scenario is easily done when trying to grant a license, so it is highly recommended that you take expert legal advice before agreeing anything.

The property law specialists at Pearsons & Ward have helped a number of farming clients successfully license parts of their land. We will talk you through your requirements, and then draft a bespoke licensing agreement which exactly reflects your needs.

We will ensure that all the legalities are in place, that all rights and obligations are clearly spelt out, and that you get your land back, free from any obligations, whenever you want it.

For more information on agricultural licensing agreements, or any other enquiries regarding property or agricultural law, please contact Andrew Little on 01653 692247 or email andrew.little@pearslaw.co.uk