CLAS Topic: Leases
Guidance for Lease Template – Agriculture land
Introduction
The lease templates available to download from the CLAS website1 are intended as a starting point for negotiations
between a landowner and a tenant. Simplifying the lease process for community groups and landowners is intended
to help increase community access to land. A lease is a binding contract setting out the rights and responsibilities of
both parties as discussed and agreed. It may not be varied or set aside without the agreement of both parties and
you should ensure you are fully aware of the obligations you are accepting before signing a lease.
Where Do I Begin?

Using the flowchart on the CLAS website2, choose which type of lease is most suitable for your project and
download the relevant template. This template will probably need to be changed to suit your individual
circumstances.

Download also the Heads of Terms (HoTs)3 which will help you to decide which things to discuss with your
solicitor and landlord/tenant.

Have a look at the Glossary of Scottish Legal terms and the Guide for Landowners on the CLAS website.

Read the HoTs and the Lease Template in conjunction with this guidance note and decide which of the
optional conditions are necessary for your project or site, if any.

Discuss and agree with your Landlord or Tenant both the essential conditions outlined in the HoTs and any
others which may be relevant to your project or site.

The CLAS lease templates have been drafted by lawyers, but we recommend that you take legal advice
before entering into a binding contract by signing the lease. You may wish to instruct your Solicitor to finalise
the lease template based on the agreement you have reached with a Landlord or Tenant. You may prefer to
finalise the lease template yourself.
Note: This guidance is designed to help you understand the content of the lease template. It is not a substitute for
legal advice. The Community Land Advisory Service accepts no liability for any loss, damage or injury suffered or
caused by any party as a result of entering into any Agreement based on this guidance or lease templates referred
to.
1
http://sc.communitylandadvice.org.uk/sc/resouce/leases-sample-lease-templates-scotland
http://sc.communitylandadvice.org.uk/sites/communitylandadvice.org.uk/files/Flowchart_Agreement_type_SC_0.pdf
3
http://sc.communitylandadvice.org.uk/en/resource/leases-heads-terms-summary-scotland
2
www.communitylandadvice.org.uk
CLAS: Agricultural Lease Template Guidance. Version 1, 2012 p1
Lease Template
Length of Lease: This is determined by legislation and is shown on each template.
Rent and Other Outgoings: The tenant will be responsible for paying the rent on a monthly basis. VAT may be
charged in addition if required by the landlord’s VAT status. If the lease starts mid-month, the rent may be calculated
on a daily basis for the part of the month following the date of entry and this apportioned amount will be the first
rent payment due. The tenant will be responsible for all other payments including but not limited to any rates, fines,
taxes, utility charges and insurance premiums. The landlord may charge interest at an agreed rate on any rent which
is overdue. Arrears of rent can be grounds for the landlord to end the lease.
Rent is defined in law as money or money’s worth so it is possible to consider provision of a service as part or all of a
rent. Rent may be agreed at a nominal level and works carried out by a tenant to the let area may also be agreed in
lieu of rent. See CLAS’s Guide for Landowners4 for further information on rent options. Whichever form the rent
takes, the rent and the dates for payment or performance of a service or works should be clearly defined in the
lease.
Insurance: This lease provides for the landlord to insure the site and any buildings there may be against all the usual
commercial risks and to recover the cost of the premiums from the tenant. The tenant will be responsible for
obtaining their own public liability, employer’s and third party insurance for an amount to be approved by the
landlord and must show proof of this to the landlord if asked.
Tenant’s Obligations: These are clearly set out; ensure you understand them. Note that the tenant is agreeing to
accept the site as being in good condition and to keep it that way. Make a record of the condition and annexe it to
the lease – descriptive or photographic. Permission for any alterations to the site or to the use of it must be sought
from the landlord before any alterations are carried out. The use of the site will be for agricultural purposes only. It
is the tenant’s responsibility to ensure their proposed use of the site complies with planning legislation. The tenant is
obliged to comply with all existing and future rules or legislation that are or may become relevant; ensure you
understand all this may involve. Again, see the Guide for Landowners for further information on legislation relating
to the use or letting of land.
Option To Buy Buildings: if there is a building on the site to be let, then paragraph 11 of the lease may be included.
This provides a basic framework for requiring the tenant to look after the building but will only be suitable for very
straightforward situations such as a storage shed for example. A building will also require to be checked for
compliance with safety, fire, insurance, planning and other conditions and you should take further advice on these
matters. This is usually the responsibility of the occupier but a tenant should check who is responsible in any event.
The inclusion within the leased area of any building which requires special treatment (for example, in terms of
condition, repairs, works to be carried out or one which carries a statutory designation or repairs notices) will mean
the lease terms need to be more specific; this template will not be suitable and you should take appropriate advice.
Assignation or Sub-letting, Opportunity to Break or Extend the Lease, Opportunity to Purchase: This lease does not
include automatic provision for a transfer or sub-let, an opportunity to break or extend the lease or have an option
to purchase included. A clause specifying any or all of these may be included if both parties agree but otherwise may
form part of a future negotiation opened by one or other party.
4
http://www.communitylandadvice.org.uk/sites/communitylandadvice.org.uk/files/FCFCG_CLAS_Guide_For_Landowners%5B1%
5D.pdf
www.communitylandadvice.org.uk
CLAS: Agricultural Lease Template Guidance. Version 1, 2012 p2
Legal Costs: This lease template is silent on the responsibility for the initial costs of preparing the lease, allowing for
negotiation and agreement between the parties about payment responsibilities. The template provides for the
tenant to bear the landlord’s legal costs where there is any cost incurred by the landlord as a result of action or
inaction on the part of the tenant and any cost of changes to the legal documents during the lifespan of the lease.
SDLT and VAT: Stamp Duty Land Tax (SDLT) is currently payable for a lease of land if the rent is more than £1,000
per year or the net present value of the rent and any premium, or capital payment, is more than £150,000. The
tenant is legally responsible for filing a return for SDLT. A return must be filed even when there is no SDLT due. SDLT
is soon to be replaced by a Land and Buildings Transaction Tax but the effective date of the change is not yet
confirmed5 .
VAT: The lease of land is normally exempt from VAT unless the landowner has opted to waive exemption from VAT,
when VAT would then become payable by the tenant on the rent. Her Majesty’s Revenue and Customs (HMRC) have
useful advice notes about SDLT.6
Plans: The landlord should supply a plan of the area to be let which should be signed and annexed to the lease. A
good plan will clearly identify the site, delineate the boundaries and the access and relate those to recognisable
features on the ground and on an ordnance survey map. However, such a plan can be carefully hand-drawn if
necessary.
Schedule of Condition: A schedule of condition, which may consist of a detailed written description or a set of
photographs, should be compiled at the date of entry, agreed between the landlord and tenant and should be
annexed to the lease.
Short Limited Duration Tenancy and Limited Duration Tenancy – agricultural clauses
explained
Clause 7: Obligations at entry
When land is taken on, depending on the time of year, there may still be crops in the ground, or silage in the clamp
and these will become the property of the new tenant. When land is farmed well, nutrients will be added to the soil
either from chemicals or manure. These nutrients will be of benefit to subsequent crops grown on the land resulting
in the new tenant getting the benefit of the previous tenant’s efforts. This clause acknowledges the benefits of the
nutrients and the items will be left for the new tenant at no charge. When this tenancy ends and the tenant leaves,
should any crops still be in the ground, silage in the clamp or nutrients in the soil, then the tenant shall not expect to
receive any payment from the new tenant or the landlord for these items.
Clause 8.2: Cultivation and Cross Compliance
Rules of good husbandry are available online (sixth schedule) 7 in addition to relevant amendments8. Cross
Compliance are the rules you have to obey if you are claiming the Single Farm Payment. For Cross Compliance
information, click here. Some of the requirements of Cross Compliance are general law (and are called Statutory
Management Requirements) such as ear-tagging and you would have to observe them even if you were not claiming
5
http://www.scotland.gov.uk/About/Performance/programme-for-government/2012-13/land-building-transaction-tax
http://www.communitylandadvice.org.uk/en/resource/landowners-vat-guide-land-property
7
http://www.legislation.gov.uk/ukpga/Geo6/11-12/45/schedule/SIXTH
8
http://www.legislation.gov.uk/asp/2003/11/section/18
6
www.communitylandadvice.org.uk
CLAS: Agricultural Lease Template Guidance. Version 1, 2012 p3
the Single Farm Payment. However, even if you are not claiming the Single Farm Payment you are still required by
this lease to comply with all the Cross Compliance rules.
Clause 8.5: Consumption of Produce
In order to maintain the nutrients in the soil, any produce grown for livestock feed, can only to be fed to stock which
are kept on the holding, so that their muck will fertilise the soil and maintain the nutrients. If the landlord has
granted permission for produce for livestock feed to be removed from the land, then fertiliser needs to be applied to
the land which will deliver equivalent nutrients back to the soil.
Clause 8.6 Cutting Weeds
Ragweeds include ragwort. Whin is another name for gorse.
Clause 8.7: Ground Vermin
Keep down means to destroy as many as is reasonably possible, but it is accepted that you will never wipe out the
population. Even if the landlord has retained the shooting rights on the land, or leased them to someone else, you
can still control ground vermin at the same time as they are. Click here for the Ground Game Act.
Clause 8.16 Returns
This information is required so the calculations can be made for the valuations of the nutrients left in the soil.
Clause 9.1: Compensation
If the tenant has re-seeded fields with grass and has not grazed these fields, then they are entitled to compensation
for the grass at the end of their tenancy. If these fields have been cut for silage or hay, then compensation is also
due as the nutrients from it will have been returned or still be available to the land. As in accordance with clause 8.5
the hay or silage would be kept on the holding or have been eaten by stock which is on the holding and nutrients will
have been returned to the soil. This valuation would be carried out by an agricultural valuer.
Clause 9.3: Termination
If your tenancy ends on 15th May, then you cannot graze any grass intended for hay or silage after 1st March in the
year you are leaving.
Clause 10: Single Farm Payment
The tenant is able to use this land to activate their claim for the Single Farm Payment. However no rights to claim
(also known as Entitlements) come with the tenancy nor any rights such as a “golden ticket” for any future claims
under new schemes.
Clause 14.3 Insurance
These are standard insurance requirements that an insurance firm offering insurance for tenant farmers would cover
in their standard policy. However it would be worthwhile giving a copy of this clause to your insurance broker when
arranging insurance, so that they are clear on your insurance needs.
www.communitylandadvice.org.uk
CLAS: Agricultural Lease Template Guidance. Version 1, 2012 p4