Many occupiers of agricultural holdings are happy to allow others to use farm buildings for non-agricultural purposes, often at a low rent, rather than see them sit empty and disused. However, allowing this type of use can result in that occupier being unwittingly caught out by laws relating to commercial leases and/or planning consent.
Where a lease (or a sub-lease) is granted for non-agricultural, commercial purposes which is not ‘contracted out’ of certain provisions of the Landlord and Tenant Act 1954, the tenant of that lease has a right for the lease to be renewed at the end of the term. It is a simple process to serve a notice at the commencement of the lease to ensure the right to renew is removed but many occupiers do not realise that they are granting a lease which falls within the 1954 Act. The rules apply even if the parties have an unwritten arrangement in place and can apply in circumstances where the parties are unaware that they are actually granting a ‘commercial’ lease. This is because the term ‘commercial’ covers a wide range of situations and includes leases granted to not-for-profit organisations, such as tennis and gun clubs.
Granting a lease to a third party for non-agricultural purposes (including, for example, simply for storage) can also result in the occupier of an agricultural holding being in breach of planning laws. If the holding only has planning consent for agricultural use then an application for change of use for the buildings concerned may be needed. This can also affect a landlord who is not in direct breach but whose immediate tenant has granted a commercial sub-lease as the landlord could find itself being held accountable for the breach.