Need help regarding tenants rights

[Rhubarb]

DH is one of 7 siblings that would inherit his parents farm when they die. But at the moment most of the land and farm buildings are being leased by an outdoor activity company.

They want to extend their contract by 25 years and build on the land.

Once dh's parents die, would not the fact that their business is tied up in the farm and they've actually built on it give them rights to be tenants for life? Dh is worried that they'll never be able to sell the farm as they'll never get rid of the tenants.

There are a number of issues here that can only be resolved by careful planning by a good lawyer.

The solution will probably be quite complex (perhaps transferring the freehold of the asset to a company with a golden share for the in-laws, or possibly a trust and/or offshore if we are talking big bucks, gifting shares to the children etc.), and it needs to be to avoid big problems on inheritance when the freehold would have to be sold to divide up the estate or just to pay Inheritance Tax.

But to answer your question, unless the new lease is written very badly, no, they won't acquire any rights simply because they have invested in their business on the land.

I tend to disagree with Mranchovy I am afraid. If the tenants are business tenants then they may well have security of tenure under Ss 24 -28 of the landlord and Tenant Act 1954. This very basically states that tenants who occupy property for the purpose of a business have a statutory right to have their lease renewed on substantially the same terms at the end of the lease term. There are certain specified circumstances in which the effect of the Act can be avoided. I would suggest that your in-laws or DH take advice from a property lawyer (specifically a commercial property lawyer with experience of property tax).

(As an aside, there are also inheritance tax reliefs (business property relief and agricultural property relief) and other lifetime tax planning methods which should be considered by your in-laws.

It is impossible to advise of a quick answer because much more information is required to assess the particular issue. But I would recommend that advice is taken - get an hour or two of advice with Dh's siblings maybe sharing the cost?

Thanks guys.
They are talking about putting clauses into the lease that states the lease can be terminated once his parents die and the children want to sell off the land - would that work?

Dh's main worry is that once they become legal tenants (at the moment there is no official contract although they've been renting land and buildings for 10 years), then they will have all the rights that come with such a tenancy. With their business so reliant on the farm, if ever they wanted to end the lease, it could go to court with a court deciding in their favour because of their business investment and the fact that the farm is no longer being used as a farm. Once his parents die, could this company claim tenancy for life?

LittlePushka - your post is exactly what dh fears the most. The farm is worth a small fortune, much more than they'll ever pay in rent. Atm dh and I are struggling and may never be able to afford a house of our own. The rest of his family are however very well off and don't need the money. Once his parents die the rent will go to all of us, but shared between 7 it amounts to nothing and the family will have to fork out for building and land maintenance.

Would the family have any rights to turf them off the land they have invested in, if they wanted to sell the farm and land in the future?

Get yourself down to commercial property lawyer. Now. Compare the cost of a couple of hundred quid shared round the family now versus tenants you can not evict......its no brain-er to me.

Dh is planning to go up to the farm this weekend for family business talk. I will press on him to urge for a commercial lawyer to be involved, they have the money to pay for one.

But at the moment dh feels that it's already been decided like every other decision concerning the farm. His voice is ignored.

This company have been renting the land and building now for 10 years and paying peanuts in rent, because dh's dad has no idea about market value for things. Even the improvements to farm buildings have been done partly with his dad's cash. Now the family are pushing for them to pay market value rent they are coming back with this 25 year lease offer. I don't trust them at all, but my hands are tied as I'm not a family member. All I can do is give the info to dh to give to them this weekend and hope common sense prevails. If not then dh loses his inheritance and we'll just spend the rest of our lives privately renting.

if the tenants already been in occupation then unless steps were taken at the time to exclude the effect of statutory security of tenure then tenants will have it already - whether or not there is a written lease. A clause in any new lease permitting termination upon death of DH parents will not work of itself if tenants have security because there are only very specific circumstances in which the tenants rights ended. However, that does not mean to say that all is lost - because your DH may be within one of circumstances which ARE laid down (or if not, carefull planning now can bring them into play in due course.

it is very rare now to grant business leases of 25 years - even to high street blue chip tenants. At the very least resist this because it makes dealing with termination so inflexible.

Get DH and his family to take legal advice. Soon. Serious

Agree with indaba totally. IMHO it could be the best few hundred quid your DH family has ever spent.

Thank you, I am cutting and pasting this into emails for dh which he is then forwarding onto his siblings.

So if they have tenants rights, what are the circumstances under which we can terminate the lease?

If they do put a build on the land, how will this affect their rights, will it strengthen them? And if they refuse a termination or refuse to vacate the land, do we have to take them to court?

You need to go and see a solicitor Rhubarb because without knowing much more information it is impossible to apply a detailed law to your position accurately. The above is the basics of how the law applys very simply but much more detail is required to give to an answer that is applicable to the specific circumstances!

Well the meeting is tomorrow and dh is armed with all this info from you lovely peeps. He is also pushing for them to get a commercial lawyer involved.

It now transpires that the owner of the said outdoor pursuits business has left his rented home because the rent was too high and is now living on the farm in a mobile home.

Various other staff members have also used the farm buildings as accommodation or lived in a caravan on the farm land for a time. I think dh's mum and dad are being taken for a ride.

He is determined to make his opinions known and since he has emailed your info to his siblings, they are beginning to side with him. But whilst the farm is still in his dads name, all they can do is advise and make their opinions known.

Hope it goes well,...Pleased to hear that the family may seek professional advice, though it is a commercial property lawyer you need (one with knowledge of inheritance tax planning applicable to agricultural property would be IDEAL!). A commercial lawyer specialises is a different area of law.

Hope it works out for DH