Grazing and Mowing Licences are typically short-term agreements that allow a grazier (Licensee) access to another parties land (Licensor), to graze livestock and take crops of grass.  There are no rights of renewal for the agreement, and the licence does not grant exclusive possession of the land to the grazier, meaning the landowner remains ‘in occupation’.  In simple terms, the landowner is selling the grass.  The landowner is liable for all maintenance obligations, including boundaries, drainage and weed management, however remaining in ‘occupation’ can have tax benefits, including qualification for Business Asset Disposal Relief or Roll-Over Relief from Capital Gains Tax and potential Agricultural Property Relief from Inheritance Tax. 

A Farm Business Tenancy (FBT) is an agreement between a landowner (landlord) and occupier (tenant).  This agreement grants exclusive possession of the land or property to the tenant for a given period and is governed under the Agricultural Tenancies Act 1995.  FBT’s are normally utilised where an agreement covers a period of over 12 months or the property being rented includes buildings or dwellings.  A Farm Business Tenancy agreement can cover a full range of matters, including repairing liabilities for each party, the rent and rent review process, rights reserved by the landlord and rights for termination etc. 

FBT’s and Grazing Licences have their own advantages and disadvantages, and careful consideration needs to be given to which is most appropriate in each individual case.