Tenanting the Vines
The Farm Business Tenancy has provided a standard model since the Agricultural Tenancies Act 1995 and generally speaking that model provides a fair balance between Landlord’s investment interests and tenant’s operational needs. However, in our experience that model requires adaption to make it best apply to the business of growing vines.
So Vineyard Blanc
Typically a holding will start out as an unplanted area of arable land with grape-growing potential. It may take years to transform that blank slate into a fully productive vineyard and the parties should consider how they want the land to be handed back at the end of the Term. Should the landlord require the holding to be returned with vines in-situ or grubbed up? If the tenant considers the variety of grapes grown part of its intellectual property, it will need to ensure that it has the option to remove them unless it is happy for them to be used by a successor.
Compared to the shrinking duration of tenancies on the high street, the long life of a vineyard requires a lease term with longevity. With fifty years as the maximum likely duration and ten years a speculative short term, a twenty five year term provides a good middle ground for fully establishing your terroir. As with standard commercial tenancies, the inclusion of a photographic schedule of condition will assist in recording the handover condition of the property, if that is how the holding is to be returned.
With limited availability of prime vineyards sites, landlords may present their property to market with the expectation that it be used solely for growing grapes and limit its use in the tenancy to just that. However, given the investment required to plant out a vineyard, it’s reasonable to agree that parcels of land within the tenancy be permitted alternative agricultural uses so that vines can arrive in phases. To support that, consider whether it will be necessary to allow the tenant to share part of the property with third party farmers for the purpose of complementary uses before those parts are planted to vines.
Bacchus to the Future
The standard Farm Business Tenancy provides for open market rent reviews. If the tenancy only permits the holding to be used for viticulture and the rent reviewed on that basis, Landlord’s should be sure that there will be a sufficient number of comparable tenancies with accessible rent information. Equally they will need to be reconciled to the fact that the legislation prohibits “upwards only” rent reviews and therefore confident that the relatively new viticultural market will hold up in the future compared with more established agricultural uses.
In that context, a prudent landlord may well want to agree that the rent be the higher of the market rent or an alternative index linked rent such as the retail prices index. However, they should bear in mind that such a mechanism may be interpreted as another means of achieving an upwards only rent review (and therefore unenforceable) even though it doesn’t preclude the possibility that the rent ascertained via either method may go down. Alternatively, consider allowing the rent to be reviewed on the basis of uses similar to viticulture such as arable land or fruit in order to increase the availability of comparable rent information.
Most likely a tenancy will be granted with no rights to light over neighbouring land. If the property adjoins areas of woodland or other features likely to shade out the edges of the holding, it may be reasonable to allow the tenant the right to lop adjoining trees or overhanging branches to preserve a certain profile of light (i.e. the light the holding enjoyed at its commencement).
Additional tenant rights will also need to factor in the water supply requirements of the vineyard and connection to the landlord’s existing supply. They may need the flexibility to install welfare cabins for pickers and other facilities temporary to harvest time.
If you would like advice in connection with viticultural tenancies or simply wish to share some grape puns of your own, please contact Oliver Copp on 01892 506240 or at email@example.com.