Grazing leases can be an excellent option for people who aren’t using their land but want to lease it out for a specific period without dealing with the extra responsibilities that come with other types of leases. A grazing lease involves granting the right to graze livestock or mow silage/hay to a tenant for a period of no more than a year. Find out more at Net Lawman. When exploring the possibility of grazing lease, there are a few key things to bear in mind:
Ensure the Agreement is in Writing
As with any domain where you want to avoid uncertainty, it’s imperative to get the agreement in writing, properly mentioning the rights and obligations of each party, including a plan showing the area of ground to lease.
Specify that The Land is Meant for Grazing Only
For your lease to be treated as a grazing let, the land needs to be leased and used for mowing or grazing only (as stated in Section 3 of the Agricultural Holdings Act 2003). If other activities like storage and breeding are allowed on the land, it’s likely that the lease will convert into an SLDT (Short Limited Duration Tenancy). This kind of lease offers several rights and protections to tenants who are not under a grazing lease agreement.
Ensure the Lease is No More than 364 Days
A grazing lease can only be legally granted for 364 days. If the tenant doesn’t remove after this timeline, the lease can become an SLDT, as mentioned above, if you do not take action. Typically, grazing leases are for a specific season. For instance, a spring grazing lease may run between March and November, and a winter one may last between November and March.
However, it is imperative to not lease for the same purpose to the same tenant after the initial period expires without an occupation break by the tenant on the clear day. This simply means that tenants should remove their herd for a day every year and then come back for a new grazing new lease.
As the landowner, you can retain your Basic Payment Scheme Entitlements over the land when you lease it for grazing purposes. To ensure that your Basic Payment Scheme Entitlements are not violated, consider seeking advice before leasing out the land.
Your land will still be eligible for the agricultural property after 2 years of ownership, instead of 7 years if a tenant is considered to be occupying the land.
Ensure You Monitor the Tenant’s Activity
It is advisable to check what the tenant is using the land for on a regular basis. If they are using it for reasons other than grazing and you don’t take action within a reasonable period, then the tenant can argue that you have agreed to the new use of the land and this poses the risk of your lease changing into an SLDT.
If you want to keep your Basic Payment Scheme Entitlements over the leased land, then you need to stay in control and make sure that the tenant isn’t using the land for other purposes that might you in breach of the Cross Compliance Rules.
After the recent Land Court decisions regarding the intention as well as actions of people getting into grazing leases, it’s important to ensure that your lease is created and implemented properly in order to prevent ambiguity and disputes down the line. With proper drafting and implementation, an agricultural lease for growing for whatever purpose can be a great source of revenue for both landowners and agricultural tenants.
If you want a feasible revenue stream, ensure you follow the above tips. Do not just accept any tenant and ensure that your rights are protected and the agreement is put into writing before signing any contract. The last thing you want is stressing over some land you didn’t have a particularly good use for in the first place.