The farmhand has lived there his whole life, my friend does think of him as a squatter.
Words cannot express how disgusting your friend is. Is he completely without morals or just very thick?
The rent has all been paid, as agreed, albeit upfront. Instead of being paid a fair wage for all his work and then paying rent, the rent has been deducted 'at source'. I agree that this sounds like modern slavery - and I would make this clear to your friend. If the man is illiterate, I'd say there's a very high likelihood that he has been seriously exploited in a way that would not have been possible with a more-educated, less-vulnerable person, and a judge would view your friend very harshly. In fact, the issue of your friend needing somewhere to live could be taken care of anyway - at His Majesty's Pleasure.
I think it's even more disgusting that, although there is another property that the man could move to, if your friend really needs the bigger place, he isn't willing to let him have it, as it's 'too good' for him. He's not only protecting his own interests but also wilfully acting against the old man's interests, out of spite. Where does he expect him to go? I presume he just doesn't care; nasty, nasty man.
Does the old man know what your friend's intentions are? Does your friend just see him like a docile old horse that he can have sent to the knacker's yard, now that he no longer has a need for him?
I've felt weird throughout this writing 'your friend' as he really does not sound like somebody that anybody would ever want as a friend. I realise that he isn't the old man's son, but if he has children of his own, I wonder how he would feel if they deliberately tried to throw him out on the streets and likely send him to an early grave - just for fun, effectively.