Grazing of horses
We are often asked for advice by Landowners who are considering letting land for grazing of horses. This can provide a regular income but careful consideration must first be given to ensure that they are able to recover possession of their land should they wish to do so in the future.
It is good practice to have a formal agreement in place when letting land for grazing of horses. An agreement in writing provides clarity as to what has actually been agreed rather than an assumption.
A grazing licence allows a horse owner to graze horses for a short period of time. It does not allow for any rights over the land and the landowner remains in occupation and control of the land.
Traditionally, grazing licences run from April to October although they can be renewed regularly so that the licence applies all year round. A licence must not carry any obligations, such as repair to fences or hedges, or else it will be in danger of taking on the characteristics of a tenancy.
A horse owner will have a tenancy agreement if they are given exclusive possession of the land. Exclusive possession means that the horse owner will graze the land solely by them excluding all others – including the landowner unless certain rights have been reserved within the tenancy agreement. If possession is excluded, the landowner may not enter upon the land or let part of the land to another.
There are three types of tenancy agreements for letting of land for grazing by horses and the type of tenancy to be used will be dependent on the terms of the tenancy, the nature of the use of the land and whether the land is to be let to an individual or a business. It is important that the correct form of tenancy is used to enable the landowner to recover possession of his land.
(a) Common law tenancy A common law tenancy is the letting to an individual whereby the land is used for private purposes only and not connected to any trade or business. The tenancy agreement will set out the rights granted to the horse owner, for example, the right to use an accessway and the rights reserved by the landowner. It will record covenants, or promises, to be given by the horse owner, for example to maintain the fencing and restrictions such as not to allow the land to become poached during the winter.
(b) Business Tenancy If the horse owner wishes to use the land in connection with a trade or business, for example for the purpose of schooling of horses, the grazing of land becomes incidental to the business meaning that the tenancy will be governed by Landlord and Tenant Act 1954 (“1954 Act”). Part II of the 1954 Act confers a degree of security of tenure on the tenant and it is important to ensure that the business tenancy is excluded from Part II of the 1954 Act to avoid creating security of tenure as the landowner would only be allowed to take back occupation of the land on limited grounds. This is particularly important if landowners are considering developing the land in the future or if landowners wish to use the land for their own purposes.
(c) Farm Business Tenancy (“FBT”) If bare land is let to a horse owner who uses the land just for grazing purposes, and is carried out in connection with a trade or business (such as a riding school), a FBT will be required. A FBT can only be used where the trade or business is non-agricultural so long as the non-agricultural activities take place elsewhere and the let land is used just for grazing. If the landowner, allows any non-agricultural activities to take place on the grazing area that will negate the FBT and give rise to a business tenancy. It is important to ensure that the use of the land is for grazing purposes only. It is worth noting that the tenant will have exclusive possession of the grazing land meaning that the landowner would not be eligible to claim basic payment scheme (“BPS”) payments or take advantage of agricultural property relief for example.
Where the grazing is to be shared by more than one horse owner there can be no tenancy of the land as there will not be exclusive possession of it. The landowner may also wish to use the land for his own purposes, for example, to graze his own horse.
A Profit à Pasturage (also known as a Profit à Predre) is an agreement whereby one or more graziers are given the right to take something – in this case grass – from another’s land.
The landowner is still regarded as being in possession of the land and grows the grass meaning that for BPS purposes, the landowner is deemed to have the land at his disposal. The landowner will be responsible for keeping the land in good agricultural and environmental condition by observing cross compliance obligation under the BPS scheme.
In conclusion, if the horse owner is to be given exclusive use of the land then a tenancy agreement should be used. If the land is to be grazed by horses belonging to more than one owner, then a profit of pasturage agreement would be recommended.