Agricultural Tenancies Explained: AHA vs FBT

AHA vs FBT: The Main Differences

The simplest distinction is historical.

Most agricultural tenancies granted before 1 September 1995 fall within the Agricultural Holdings Act 1986 regime and are commonly referred to as AHA Tenancies. Most new agricultural lettings created after that date are Farm Business Tenancies governed by the Agricultural Tenancies Act 1995.

The differences are significant enough that an apparently similar farm can represent a very different proposition depending on its tenancy structure.

How Much Agricultural Land Is Still Tenanted?

The AHA regime remains economically important despite no longer being the normal structure for new lettings.

Defra recorded approximately 2.9 million hectares of land rented for a year or more in England in 2025.

Of that total, around 1.27 million hectares were occupied under Farm Business Tenancies, representing approximately 44% of the area, while around 1.12 million hectares remained under Full Agricultural Tenancies.

The Farm Business Survey also estimated approximately 29,700 FBT agreements and 10,900 Full Agricultural Tenancy agreements in England in 2024/25.

FBTs are now the more common agreement

The area occupied under FBTs increased slightly in 2025, while the area under AHA agreements continued to decline.

That does not make AHA agreements marginal.

A single AHA tenancy can cover a substantially equipped farm and may remain in place for decades. Its effect on a landed estate can therefore be considerably greater than the number of agreements alone suggests.

What Is an AHA Tenancy?

An Agricultural Holdings Act tenancy is an agricultural tenancy governed principally by the Agricultural Holdings Act 1986.

These agreements can provide the tenant with substantial statutory protection. Serving a notice to quit does not necessarily mean that possession will automatically be recovered.

The 1986 Act places significant restrictions on the circumstances in which a tenancy can be terminated, and tenants can have statutory rights to challenge certain notices.

Why AHA status can materially affect an estate

An AHA tenancy may influence decisions concerning:

• Future vacant possession.
• Redevelopment or alternative land use.
• Farm restructuring.
• Estate sales.
• Succession planning.
• Capital investment.
• Valuation.

A landowner considering development, environmental schemes or a change in farming structure therefore needs to establish the tenant's rights before assuming that the land can be brought back in hand.

Our rural landlord and tenant work begins with the existing documentation, statutory framework and long-term objectives rather than looking at rent in isolation.

AHA Succession Rights

Perhaps the most distinctive feature of the older regime is AHA succession rights.

Tenancies granted before 12 July 1984 can generally carry statutory succession rights on death or retirement, subject to the relevant eligibility and suitability requirements.

Up to two statutory successions can potentially occur, allowing a holding to remain within the original tenant's family for as many as three generations.

An application following the death of a tenant normally needs to be made within three months.

Succession rules have been modernised

The Agriculture Act 2020 changed parts of the succession framework.

From September 2024, the former commercial unit test was removed in England. Greater emphasis is instead placed on whether the proposed successor has the capacity to farm the holding commercially to a high standard.

The minimum age of 65 for succession on retirement was also removed, allowing succession planning to take place earlier where appropriate.

For both landlord and tenant, succession should therefore be considered well before retirement or death.

What Is a Farm Business Tenancy?

Under the Agricultural Tenancies Act 1995, for an agreement to qualify, at least part of the holding must be farmed throughout the tenancy for the purposes of a trade or business.

Where the parties serve the appropriate notices before the tenancy begins, an FBT can retain its status even if the business later becomes less predominantly agricultural, provided the terms of the agreement allow the relevant activity.

This greater flexibility was one of the principal reasons for introducing the 1995 regime.

Term length can be tailored to the holding

Unlike the traditional AHA model, an FBT does not carry a standard lifetime security regime. The parties can agree a term appropriate to their circumstances.

Defra's 2024/25 Farm Business Survey recorded an average FBT term of five years and seven months.

A short bare-land letting may justify a relatively short agreement. An equipped holding requiring substantial expenditure on buildings, soils or a diversification enterprise may need a longer term if the tenant is expected to justify that investment commercially.

For landlords, flexibility should therefore not automatically mean selecting the shortest possible tenancy.

Ending an FBT

An FBT is generally easier to structure around a defined termination date than an AHA agreement.

Government guidance states that a notice to quit under an FBT is subject to a minimum 12-month notice period. The precise position depends on the agreed term and wording of the tenancy.

The expected exit should therefore be considered when the agricultural tenancy agreement is drafted, not only when the landlord later wants possession.

Agricultural Rent Reviews

Rent is one of the most visible differences between AHA and FBT holdings, but headline averages require caution.

Defra recorded an average annual rent in England in 2024/25 of:

• £174 per hectare for Full Agricultural Tenancies.
• £230 per hectare for Farm Business Tenancies.

In the North East, Yorkshire and Humber, the average Full Agricultural Tenancy rent was £183 per hectare in 2024/25.

These figures should not be used as direct rental evidence for an individual farm. They combine different farming systems, land quality, buildings and residential elements.

Why FBT rents are often higher

FBTs frequently command stronger headline rents because they may be exposed more directly to open-market competition and usually provide less security than older AHA holdings.

AHA rents are determined within a separate statutory framework and cannot simply be benchmarked against the highest neighbouring FBT.

Both landlord and tenant have statutory rights to farm rent reviews, generally at three-year intervals under the AHA regime. FBT parties have greater flexibility to agree their own review structure.

In 2024/25, only 17% of farm tenancy agreements in the Defra survey had a recorded rent review. Among those reviewed, the average annual rent change was an 8% increase, while Full Agricultural Tenancies recorded the lowest average increase at 4%.

Improvements and Compensation

Investment by the tenant is another area where the tenancy regime matters.

AHA tenants can have statutory rights to compensation for qualifying improvements, including certain buildings, roads, drainage and other works.

Compensation can also arise for tenant right, such as growing crops and specified husbandry costs.

FBTs have their own compensation framework. A tenant can be entitled to compensation for qualifying physical improvements where the required landlord consent has been obtained, as well as certain changes that increase the value of the holding.

Consent should be dealt with before investment

Substantial expenditure should not be undertaken on an assumption that compensation will follow. The tenancy should be checked first.

This is increasingly relevant where farms are investing in slurry infrastructure, renewable energy, environmental improvements, farm shops or other diversification projects.

A project that makes commercial sense can still create a landlord-and-tenant problem if consent, ownership of fixtures and end-of-term compensation are not agreed in advance.

Diversification and Environmental Schemes

Modern farm businesses increasingly generate income from environmental schemes, holiday accommodation, renewable energy, storage, commercial lets and natural-capital projects.

An older AHA agreement may contain restrictions on non-agricultural use, alterations or participation in certain schemes.

FBTs can usually be drafted with anticipated diversification in mind, although poorly drafted agreements can still create ambiguity over planning, rent, ownership of improvements and sharing of income.

Our wider rural consultancy service considers tenancies alongside diversification, environmental schemes, renewable energy and long-term estate strategy.

Which Is Better: AHA or FBT?

There is no useful answer without knowing whether the question is being asked by the landlord, tenant or purchaser.

For an existing tenant, an AHA tenancy may be extremely valuable because of its security and possible succession rights.

For a landowner granting a new tenancy, an FBT generally offers substantially greater flexibility and the opportunity to align the agreement with the estate's future objectives.

For an investor purchasing a let farm, either arrangement may be appropriate — but the price needs to reflect the rights being acquired or inherited.

The tenancy changes the investment

A farm subject to a secure AHA tenancy cannot be assessed as though vacant possession will be available shortly.

Likewise, an FBT with three years remaining should not be valued on the assumption that the current rental income will continue indefinitely.

Before a purchase, the due-diligence review should establish:

• The tenancy type and term.
• Rent-review provisions.
• The succession position.
• Repairing obligations.
• Improvements and compensation.
• Notices.
• Any potential disputes.

The agreement is not simply an administrative document. It is part of the asset.

Avoiding Informal Arrangements

Not every occupation of agricultural land begins with a carefully drafted lease.

Arrangements may evolve from seasonal grazing, family discussions or agreements that were never properly documented. This creates risk for both parties.

Defra estimated around 83,300 farm tenancy agreements across the Farm Business Survey population in 2024/25, with informal arrangements becoming an increasingly significant category over the preceding decade.

Our landlord and tenant advice regularly includes licences and informal grazing arrangements alongside AHA and FBT agreements.

Where occupation is continuing beyond a genuinely seasonal arrangement, it is usually better to establish clearly what legal relationship is intended rather than allow the position to develop by accident.

Managing Agricultural Tenancies as Part of the Estate

Rent reviews, repairs, consent applications, improvements, environmental schemes and succession can all change the value or operation of the holding over time.

A tenancy that was appropriate twenty years ago may also need to be considered differently as the wider estate strategy changes.

For larger portfolios, individual tenancies should therefore form part of the wider estate management plan rather than being reviewed only when a rent review or dispute arises.

The starting point is straightforward: establish which statutory regime applies, understand the rights of both parties and ensure the arrangement remains consistent with the long-term objectives of the holding.

Further information on our approach to AHA tenancies, Farm Business Tenancies, rent reviews and rural landlord-and-tenant matters is available through our rural landlord and tenant service.